Cameco Corporation

Thank you for standing by. This is the conference operator. Welcome to the Caneco Corporation fourth quarter 2024 results conference call. As a reminder, all participants are in a listen only mode and the conference is being recorded. Following the introductory remarks, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. Webcast participants are asked to wait until the Q&A session begins before submitting their questions, as the information they are looking for may be provided during the presentation. The Q&A session will conclude at 9 a.m. Eastern Time. I would now like to turn the conference over to Corey Koss, Vice President, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to CAMCO's fourth quarter and annual conference call. I would like to acknowledge that we are speaking from our corporate office, which is on Treaty 6 territory, the traditional territory of the Cree people and the homeland of the Métis. With us today are Tim Gitzel, President and CEO, Grant Isaac, Executive VP and CFO, Heidi Schake, Senior VP and Deputy CFO, and Rochelle Girard, Senior VP and Chief Corporate Officer. I'll hand it over to Tim momentarily to briefly discuss the current market fundamentals, which we believe are stronger than they've been for decades, as well as our progress with the continued execution of our strategy, which in 2024 saw us deliver strong marketing, operational and financial performance. After we will open up to your questions. Today's call will be approximately one hour concluding at 9 a.m. Eastern time. As always, our goal is to be open and transparent with our communication. However, we want to respect everyone's time and conclude the call on time. Therefore, should we not have time to get to your questions during this call, or if you would like to get into detailed financial modeling questions about our results, we would be happy to respond to any follow-up inquiries. There are a few ways to contact us with additional questions. You can reach out to the contacts provided in our news release. You can submit a question through the Send Us a Message link on the Investors section of our website. or you can use the Ask a Question form at the bottom of the webcast screen, and we will be happy to follow up after this call. If you join the conference call through our website event page, there are slides available, which will be displayed during the call. In addition, for your reference, our quarterly investor handout is available for download in a PDF on our website at Cameco.com. Today's conference call is open to all members of the investment community, including the media. During the Q&A session, please limit yourself to two questions and then return to the queue. Please note that this conference call will include forward-looking information, which is based on a number of assumptions and actual results could differ materially. You should not place any reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today, except as required by law. Please refer to our most recent annual information forum in MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I will hand it over to Tim.

Well, thank you, Corey, and good morning, everyone. We appreciate you joining us for today's call. Earlier this morning, we released our fourth quarter and annual 2024 results, and in a word, from both a quarterly and an annual perspective, those results were strong, and I'll touch on them shortly. We expect our strong performance to continue in 2025, supported by our long-term contract portfolio, our Tier 1 assets, and our strong financial position. The reason for our optimism is relatively simple. We continue to see supportive market conditions throughout the fuel cycle and across the nuclear sector. Those supportive tailwinds continue to improve the outlook for existing nuclear reactors, for the reactors returning to service after previously being slated for decommissioning, and for the nuclear new builds that are underway and those on the horizon. That positive outlook for the installed reactor base and for new growth is expected to benefit both Cameco as well as our investment in Westinghouse. In fact, we believe the outlook for nuclear power and nuclear fuel fundamentals is more favorable than it has been for decades. Global geopolitical uncertainty continues to bring energy security and national security into focus, alongside the need to ensure that energy is clean. As you've heard us say for over a year now, we believe that is putting nuclear into a durable growth mode. And as we see that growth translate into demand and evolve into a cycle of replacement rate contracting, we as a significant supplier of nuclear fuel and nuclear fuel cycle services expect to have the ability to durably grow from our existing assets. Any additional supply will therefore have a home in our long-term contract portfolio, which does not expose us to a discretionary spot market and provides upside potential and downside protection from geopolitical changes and trade policy decisions. Positive market conditions that we expect to benefit our core uranium and fuel services businesses are also presenting significant future growth opportunities for Westinghouse. with continued interest in their technology and expertise for new build opportunities in nations including Poland, Bulgaria, Ukraine, and Slovenia, just to name a few. We continue to believe that the risk to uranium and nuclear fuel supplies and services are far greater than the risk to that durable demand and the growth we see coming. That belief is anchored in how we've seen the nuclear fuel market evolve over the past couple of years. Fuel buyers tend to work backwards across the fuel cycle, starting downstream and working their way up to the uranium. In 2024, there was a lot of downstream focus, and with good reason. Whether it was the U.S. legislation to ban Russian-enriched uranium imports or Russia reacting with an export restraint, a lot of attention remained on Western sources of fabrication, enrichment, and conversion services. That makes sense for a global market that is diversifying away from the Russian fuel cycle. And even if those geopolitics were to change, the self-sanctioning by many Western utilities is translated to long-term contracts that will now be in place for years to come. However, that downstream focus has also meant that there's been a persistent distraction from a focus on the natural uranium. the product to which those services are applied and for which there is no substitute. When those downstream bottlenecks are resolved, utilities do not rely on the spot market for the uranium needed to meet their fuel requirements. A producer with an unhedged strategy that expects to see that kind of near-term demand to absorb their uncommitted supply has not spent much time at all buying and selling uranium. We have. And I can tell you, the spot market is not where utilities go to meet their annual run rate requirements. It's completely discretionary, and it's non-fundamental. Of the 46 million pounds of uranium that transacted in the spot market last year, only about 15% was bought by utilities. As is the case every year, a great deal of the spot activity was churn. Traders, brokers, and financial players passing around 100,000 pounds five times which becomes 500,000 pounds of reported volume. That's not a reliable source of supply for the more than 175 million pounds a year needed to fuel the global nuclear fleet annually. And that's not a source of supply that can underpin the long-term operation of a nuclear reactor for 60 or more years. Instead, utilities are buying uranium and the fuel cycle services in the long-term market. years ahead of time, sometimes even for the decade to come or longer. Despite relatively muted long-term contracting volumes in 2024, which remained below £120 million, well below the replacement rate contracting level, Cameco continued to successfully negotiate off-market contracts, selectively adding to our long-term portfolio. Start 2025, we have commitments to deliver an average of about 28 million pounds of uranium over the next five years, with commitment levels higher than average in 2025 through 2027 and lower than average in 2028 and 2029. Our long-term book of business in the uranium segment now totals approximately 220 million pounds of uranium with a large and growing pipeline under negotiation. The pounds we are adding have pricing terms that provide downside protection while allowing us to retain exposure to improving demand. And at £220 million, it only represents about a quarter of our current reserve and resource base, meaning we can be strategically patient in our contracting as that demand forms. We are already seeing demand in the conversion segment driving prices to historic levels, And we also added to our fuel services long-term contract book last year, which now totals approximately 85 million KGU of UF6, supporting our fuel services operations for years to come. We expect the strength we are currently seeing in the other segments of the fuel cycle to continue moving upstream to uranium, because there is no way to avoid buying uranium for a nuclear fuel bundle. We've heard the negative, bearish views of those concerned about the pace of long-term contracting, but we don't share those concerns. In fact, a delay only serves to enhance our optimism. That's because demand is being pushed into a shorter contracting window where supply is tight and requirements are growing. And those requirements are only tied to high-confidence demand, such as the current operating reactor base and the 62 reactors under construction today. The industry growth story today does not rely on the blue sky potential demand from jurisdictions that are only thinking about adding nuclear, or from data centers in the tech sector, or from a meaningful build out of small advanced reactors. Those potential developments only add to the positive outlook for nuclear energy, which is already strong. Based on global fuel requirements, utilities have bought less than 40% of the uranium they need to operate through to 2040. That translates to about 2.1 billion pounds of uranium that is yet to be purchased, and it's putting an awful lot of pressure on supply in the mid-2030s, a time when several major global primary supply sources are thinning out, and the investments in construction of new mines required to replace them have not even started. In fact, our own Cigar Lake mine is expected to reach the end of its mine life in 2036. We plan our supply accordingly with our tier two assets and a pipeline of potential future projects in mind. But Cigar Lake satisfies 10% of global demand. That's an 18 million pound hole in supply that the market has not yet fully appreciated. And bringing on new production of that scale is incredibly challenging. So we continue to see exciting times ahead for us in the nuclear sector, and we've positioned ourselves to benefit while remaining protected should it not evolve as expected. We have more than 35 years of experience operating across the fuel cycle, and we've designed our strategy of full cycle value capture to be resilient. We have good visibility into when and where we need to deliver material. allowing us to carefully plan and prudently invest in our existing and potential supply sources well into the future. When we consider the supply tools and flexibility we have in place to work with our customers in satisfying their ongoing fuel requirements, we can be selective and opportunistic with our sourcing of supply. And we can be disciplined when considering future investments in our primary supply pipelines, We will continue to align our production with our contract portfolio and market opportunities, demonstrating that we are responsibly managing our supply in accordance with our customers' needs. We will also continue to look for opportunities to improve and operate our assets with more flexibility and efficiency, while working to improve our safety performance and reduce our impact on the environment. Our balance sheet is strong. and we expect it will enable us to self-manage risk, including risks related to global macroeconomic uncertainty and volatility, as well as uncertain trade policy decisions. Looking briefly at 2024, our discipline strategy has delivered a number of highlights worth noting. We delivered strong fourth quarter and annual net earnings and adjusted net earnings, which reflect a return to our Tier 1 production level, as well as higher sales volumes and an improvement in average realized price. Those earnings incorporate the expected full-year net loss from Westinghouse, which was primarily due to the impact of purchase accounting. So we view adjusted EBITDA as a measure that better reflects Westinghouse's strong underlying performance. And Westinghouse's adjusted EBITDA was indeed very strong. In our uranium segment, we delivered just under 34 million pounds of uranium in 2024 and produced about 23.4 million pounds. Production was slightly higher than our expectation as a result of very strong production from the MacArthur River Key Lake operation. In fact, the operation's 20.3 million packaged pounds last year sets both a new annual production record for the Key Lake Mill as well as a world record for annual production from any uranium mill. The increased run rate at the mill was made possible by our off-cycle investments in automation, digitization, and optimization projects to improve the Key Lake Mill during care and maintenance, supported by our access to stockpiled ore. It's critical to remember that when you see higher Tier 1 primary production from Cameco, it has a home. and does not flow into the spot market, as some like to speculate. The additional pounds are not only positive for our bottom line, but they have a home in our portfolio and merely serve to offset a drop from our other sources of supply, such as inventory, long-term purchases being pulled forward, or product loans. In addition, in 2024, the production flexibility from MacArthur Key offset lower production from our other Tier 1 sources. Uranium production at Inkai continued to be impacted by the ongoing supply chain issues in Kazakhstan, most notably related to the stability of sulfuric acid deliveries. As a result, total 2024 production from Inkai on a 100% basis was 7.8 million pounds, about 600,000 pounds lower than in 2023. Cigar Lake also came up a bit short of its plan due to some challenges earlier in the year at the McLean Lake Mill. In 2025, with the long-term contract book we have put in place and an ongoing pipeline of both on- and off-market contracting discussions, our plan is to produce 18 million pounds on a 100% basis at each of MacArthur River Key Lake and Cigar Lake. At INCAI, production plans for 2025 and subsequent years remain uncertain, and we remain in discussions with J.B. INCAI and our partner Kazatomprom to determine our purchase allocation for 2025. Over the coming years, we are undertaking capital projects to help ensure reliability and sustainability of our existing operations, including projects to address aging infrastructure and potential bottlenecks at Key Lake, and the advancement of freezing at MacArthur River. And while no decision has been made on changes to future production levels, we will continue to position ourselves for future production flexibility in alignment with our contract book. And if our contract book supports it, we expect to be in great shape to take advantage of that flexibility thanks to our financial discipline. Our balance sheet is strong. And we expect strong cash flow generation in 2025. Successfully refinanced $500 million in unsecured debt in 2024, extending the maturity to 2031. And of note, we did so with credit spreads that reflected a higher credit rating than we have currently been assigned. As of January 2025, we have also fully repaid the $600 million U.S. floating rate term loan that was used to finance the acquisition of Westinghouse. Although we're only about 50 days into the new year now, there are already a few key developments subsequent to 2024 year-end that are worth highlighting. To start off the year, JV Inc. production was halted on January 1 at the direction of Kazanomprom, the controlling partner in the JV, due to the delayed submission of certain regulatory documents to the Ministry of Energy. Production resumed on January 23rd, but we are still working with Kazatomprom and JV Inc. to determine the impact of the production suspension, as well as the continued issues with sulfuric acid supply on the operations 2025 production plans. Also in January, Westinghouse reached a resolution in its technology and export dispute with KEPCO, and KHNP, which establishes a framework for additional deployments to the mutual and material benefit of all parties. And we've now received our first distribution from Westinghouse. $100 million US was paid out to the partners, of which our share was $49 million US. Before going to Q&A, a quick comment on the topic that's on everyone's mind as we approach March. the threat of U.S. tariffs on Canadian energy. It's been a focal point ever since the new U.S. administration took office in January, and it's an area we are carefully monitoring. However, keep in mind that our industry faced a similar threat several years ago related to a Section 232 investigation in the U.S. related to critical minerals, including uranium. In any cases where there is a changing policy that could potentially impact our operating environment, we manage risk and plan accordingly to optimize the value of our portfolio. In the past, we've taken actions such as positioning material ahead of expected deliveries and revising our contract terms to protect us from unexpected future implementation of taxes or tariffs. the U.S. threatening the imposition of a 10% tariff on Canadian energy products, we have proactively taken some steps to minimize the potential impact. While we currently do not expect that a direct 10% tariff would have a material impact on Cameco's financial results in 2025, there continues to be uncertainty around the exact details of how any potential tariff may be applied. So with that, I'll stop there, and we are happy to take your questions.

We will now begin the question and answer session. In the interest of time, we ask that you limit your questions to one with one supplemental. If you have additional questions, you are welcome to rejoin the queue. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Webcast participants are welcome to submit questions through the box at the bottom of the webcast frame. The Canoco Investor Relations team will follow up with you by email after the call. Once again, anyone on the conference call who wishes to ask a question may press star one at this time. The first question today comes from Adam Wajaya with Goldman Sachs. Please go ahead.

Yeah, good morning, Tim, Grant, and team. Thank you for taking my questions. I wanted to first start on contracting activity. I know in 2024 we spent a lot of time on the year-over-year decline in reported contracting activity, but I wanted to get your updated views on what you're seeing in the term market right now, more near and medium term. Are you seeing utilities and fuel buyers really step back into the market to secure longer contracts? with more volumes, or do you think that there's really anything keeping fuel buyers sidelined for now?

Thanks. Morning, Adam. Thanks for the questions, Tim. I'm going to pass it over to Dr. Grant Isaac for a response.

Yeah, thanks, Tim. Adam, great place to start. I think the first message I just want to emphasize is actually, to me, the really telling story for 2024 was that, yes, Term volumes were down year over year, 160 in 2023 versus 120 last year. But term prices were up quite a bit year over year. And if that isn't a signal for the understanding that we're not at production economic pricing for future supply, I'm not sure what else that would signal. I mean, that seems to get lost a little bit in the noise as people are watching the spot market. But I think the term market is really an area that we have to emphasize. So not at replacement rate yet, obviously, 120 million pounds contracted in 2024. As Tim pointed out, that means that the utilities need to buy a heck of a lot of material on a go-forward basis. And you think about that demand, Adam, and it's being pushed into a window where not only are you looking at the end of Cigar Lake, you're looking at very significant depletion curves in Kazakhstan. This just sounds super constructive for pricing. And And for us, it is about being patient in the uranium segment. We've got a lot of time devoted to conversion right now and to heavy water and light water fabrication and all the opportunities for Westinghouse. And we can be a little bit patient with respect to waiting for the market to truly price in the challenge that's coming with respect to uranium. So when we look at the term market, I would say there is no doubt that across the industry, there has been some downward pressure on not the term price of uranium, which remember really focuses on base escalated, but a little bit of downward pressure on the floors across the industry. As the spot prices come down, you know, folks have tried to pull the floor price down. But interestingly, those ceiling prices have held. So, you know, floors were across the industry were in the $70. There's a bit of a push to try to get them down into the $60 escalated. but we're still seeing those ceilings hold in mid-130s, maybe even a little bit higher, again reflecting that there's a cliff coming for uranium supply if we don't start sending stronger price signals now. For Cameco, the final thing that I would say with respect to the term market is these are the kind of markets we step back. You see we have a big book. That book represents about a quarter of our future reserves and resources for us to even begin to contemplate going after those additional pounds, we need to see stronger price formation. We've got good contract protection. So when we see the spot market kind of pull down those longer-term market-related indicators, we simply step back. We're in a position we can do that, and we focus our attention on the historic conversion price and the historic prices that are now starting to build downstream of uranium. we'll capture that value and we'll just be patient waiting for the term market to evolve, but, but make no mistake. We're, we're pretty excited about this dynamic and the way it's setting up for an incumbent producer like us.

Got it. That's super helpful. Thanks guys. Maybe switching gears over to Inc. I understand that you're in discussion with Inc. I and Kazatomprom to determine how the recent production suspension could impact the 2025 production levels and then the subsequent purchases, but maybe, Can you just tell us how these conversations have trended thus far? And then maybe more broadly, is there any fundamental change on how you guys are thinking about chemical's relative position in Kazakhstan going forward? Thanks.

Yeah, thanks, Adam and Tim. Listen, we've been working with the Kazakhs now for I think it's 25 or 30 years. I think it went over there 30 years ago. And so, you know, our relationship is still strong. They're good partners. Yes, we have some hiccups from time to time. We've had some accidents. hiccups. There's been some changes in personnel over there that we have to adapt to. And now this piece on January 1st that came as a surprise to us, I have to say. But, you know, we were on it right away, and we did get a result by January 23rd. We're back in production. So, you know what? It's a long-term relationship. Our lease extends out to 2045 there. We intend to stay there and work with the Kazakhs. And so, no change, really. We'll be meeting with them next week. Grant and I... We'll be seeing them next week and spend some time with them, so no change to our strategy at this point.

Thanks, Tim. Thanks, Grant.

Thanks, Adam.

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

Hey, good morning. I'd like to ask a few questions regarding AP1000 builds. So when the Westinghouse deal closed, I think you provided a framework on the value capture of a new build. Can you maybe just update us on that framework if anything's changed? And then regarding the Westinghouse and THNP, does the settlement open the door for future cooperation? Does that open or widen the opportunity set potentially for new builds? And then just lastly, if you can provide an update on some of the major DP1000 project milestones that we should be watching for the next 12 months or so. Thank you.

Yeah, great questions, all of them, Andrew. I just say we're super excited about our Westinghouse deal and just the way it's behaved and operated in the first year and change that we've had today. our share of the ownership with Brookfield and the potential there is just outstanding. And the results are strong. They're likely predicted. But Grant's on the board at Westinghouse for us. So Grant, do you maybe want to comment on those three pieces?

Yeah, Andrew, thank you for your questions. That's about three hours worth of answers. So I'll try to be super brief about it. On AP1000, no change, no fundamental change to kind of that value flow the way we look at it. It's obviously about finding a utility, or quite frankly, a non-utility user. We have to contemplate those models going forward now with the hyperscalers looking at nuclear in a very, very significant way. But it begins with choosing the design. It then falls into a period of finalizing the engineering and the design of the technology to make it fit for purpose for the location. So if I use as an example the Poland project, The first three reactors in Poland are going through this feed one process to figure out how to properly deploy the technology at the chosen location in Poland. That then gives rise to the second feed contract. That feed contract, again, a lot of engineering and design work also begins to trigger the final investment decision. And with that comes the procurement part of the nuclear island, which is a very important scope for Westinghouse. That then gives rise to the broader construction program. And of course, Westinghouse doesn't participate in that broader construction program. Another constructor would. And then ultimately, as that kind of seven-year process peaks and comes down, then you have an asset that's just been built to run for 80 years and now will be part of the core of Westinghouse in terms of fuel fabrication and reactor services going forward. So every AP1000 is a unique step change in value for the energy systems, and then it gets pulled into the core of the business. It's a model that we obviously are very, very attracted to. When you think about the AP1000 opportunities, we talked about the six reactors in Poland. There's the two in Bulgaria. Slovenia is looking at reactors already running, Westinghouse reactors. There's obviously opportunities in places like the UK, perhaps Sweden. But make no mistake, the DOE liftoff report was very, very clear of the role that AP1000s, the only gigawatt-scale reactor out there, American-designed, technology is locked down, fuel cycle is locked down, doesn't have regulatory risk, doesn't have licensing risk. It's just big project deployment risk. So four of the five boxes are already checked. The liftoff report from the DOE was very clear on the powerful role AP1000s can play in helping the U.S. achieve its tripling nuclear pledge, 200 gigawatts of additional nuclear power. So those opportunities just continue to grow and don't fall asleep on Canada. I think the announcements in Canada are really poised to deliver the benefits of nuclear quickly rather than wait for a new design that doesn't yet exist. This is a deployable design that somebody can go down to Georgia today and see one operating and see it performing at really industry-leading operational standards. I'm going to bridge you over to the Korean deal. I mean, the Korean deal is more to come on this, but really it's taken Westinghouse and Team Korea and moved them from being competitors to potentially very powerful collaborators to provide solutions to countries that want energy security. They want the national security that comes from these 80-year assets of baseload, durable, hardened power that only really nuclear can offer. So watch that space. It's now expanding Westinghouse's energy systems business into where the Koreans have a lot more access. United Arab Emirates potentially considering two more reactors. The Czech Republic already choosing the Korean reactors. 2 plus 2 at Duchovny and the Temelin site. And they're very active in pursuing other markets. And now Westinghouse participates in all of that. Andrew, really important to emphasize, all upside to the acquisition case. Everything I just described was not valued as part of the acquisition of Westinghouse. So we're very excited at the opportunity that's being created. We're very excited about Westinghouse's position with the leading technology. And we're very excited about the new models that are emerging that we can take full advantage of to really achieve the tripling nuclear pledge.

Great. Thank you for that. Maybe just switching over a little bit onto some of the Russian sanctions. You know, there's been a lot of discussion on what might happen if there's a peace settlement. And obviously, we don't know how it'll all play out. But maybe if you just put on your hypothetical hat, like, How does lifting sanctions on Russia impact the uranium market? And I'm also curious how your utility customers are thinking about this, given that some of these contracts are much longer dated, and we don't really know how that Russia-Ukraine situation could play out even four-plus years from now. How does that impact your decision-making?

Well, Andrew, Tim, I'll start on this at least. I'd say let's wait and see what happens. We haven't seen the sanctions yet. being lifted yet. The U.S. has worked, and I say bipartisan, bicameral support to put in place all of those sanctions, all of the restrictions on Russian uranium and Russian LEU that are still in place and are legislative prohibitions that would take a long time to move to the side. Another point is that just letting Russian material flow into the U.S. runs completely counter to the new administration's goal of onshoring and energy dominance. And, you know, they just established that the National Energy Dominance Council that's led by Secretary of Energy Chris Wright and Energy Czar Doug Burgum that have clearly included nuclear and the nuclear fuel cycle in its plans to be that dominant player in the world. So, you know, wait and see. We'll see what happens. But, you know, as Grant said earlier, Our growth plan at Cameco doesn't depend on any of those things. Just the pure supply-to-end fundamentals in the market now will see us doing very well going forward. So, Grant, I don't know if you want to add to that.

I do. I want to just go back to risk is basically a function of likelihood and consequence. And I think Tim covered the likelihood piece really well. It is fair to ask. If ending the Russian ban is consistent with the U.S. energy dominance, and the answer is clearly no, it was quite the opposite. Russian fuel in the U.S. created energy dependence. It undermined energy and national security, and it undermined U.S. nuclear leadership. The facts are really clear, and it's hard to imagine, you know, when the Energy Dominance Council was created, part of the objective was actually to become dependent. Not an ally, but an adversary, a state-sponsored adversary, so that doesn't really make sense. On the HEU notion, or a new HEU, we just find this in the very slim chance category. Remember, Cameco was party to that agreement. We were part of the time and effort required to put an agreement in place, and I would just point out two things. That was a very long period of time that it took to put the agreement. So there's no quick solution. And secondly, the conditions that existed then in order to essentially for the West to take advantage of Russian nuclear materials and purpose them for the commercial market, those are not the conditions that exist today from a real politic point of view or from an international relations point of view. So on the likelihood side, we're seeing all of this rate really, really low. You did ask about consequence. If Russian material showed up, let's face it, there have been significantly greater tailwinds for global nuclear. There's just simply more demand than there was before. So it's not like the Russian material doesn't have a home out in the future. We're talking about a very significant structural deficit. Uncovered requirements in uranium have continued to grow, and quite frankly, the Russians are not a big uranium supplier, so it really doesn't change that dynamic at all. Primary supply has continued to face challenges and depletion. New capacity is not at replacement rate. And then the final piece from a consequence point of view, we didn't go into any markets to replace the Russians on a spot basis or a short-term basis. We did it. under long-term contracts. And we did it with utilities that had absorbed the switching costs to go to Cameco fuel, to go to Westinghouse's fabrication, utilities that won't be eager to bear those switching costs again. So there's a durability to what's been set up here that it really insulates from a consequence point of view any impact. So we see likelihood low, we see consequence low. We're watching this space closely, but I think some of the narratives around the peace talks in the Ukraine, which, by the way, everybody hopes for peace, have been absolutely overblown with respect to the uranium and nuclear fuel segment.

Thank you very much. Thanks, Andrew.

The next question comes from Alexander Pierce with Bank of Montreal. Please go ahead.

Great. Good morning, all. So, Tim, you mentioned, obviously, some of the mitigating steps you're taking to try and reduce the impact from tariffs. But I was wondering whether you can just talk about maybe some more opportunities you see within the portfolio. And also, does your existing contract book have terms already within those contracts that addresses potential tariffs and who essentially pays for whatever the tariff is? Thanks.

Yeah, thanks a lot, Alex, for the question. It's a great question. We learned a lot of lessons, I think, after the 2017-2018 232 move on uranium. It was aluminum, steel, and uranium at the time. And we managed to – we spent a lot of time, Grant and I, in Washington, D.C., talking to the elected officials and the White House to just explain to them – how much the U.S. needs Canadian uranium. And I think we were successful. The DOE withdrew uranium from the 232. So we're hoping for that result again this time. They're talking about a 10% tariff. I mean, we've taken other measures out of that. We learned a lot of lessons there. I think Grant would tell you our contracting portfolio has added some new clauses in that regard since then. Any new contracts we signed since then would dip. would place any of those costs back on the customers. Buying the material, we're able to position material around the world in different jurisdictions. In pre-positioned material, we've certainly done that. Don't ever forget we have production resources in the U.S. at some point that we're holding on care and maintenance right now because they're just not – where we want them to be. But certainly those are extremely valuable these days. And so, you know, we think we can manage it, Alex. I've been, Grant and I were down in D.C. last week with some other commodity producers where it's going to be a whole lot worse story if those things go through. But for us, we think it wouldn't be really financially material and that we could manage it.

Yeah, that final point, Alex, is really important. We're saying no material impact because of the contracting provisions we've taken, as well as what we've done in anticipation of tariffs. And if they don't emerge, fine. No consequence on us at all. But I think what's lost in the tariff discussion a little bit is what the uranium market impact would ultimately be. I mean, it's not hard to figure out. It's kind of econ 101 to figure out what the impact of tariffs are in this situation. So think about the uranium market. A 10% proposed tariff from a major supply source like Canada will effectively raise the uranium price by 10%. Because if you think about it, U.S. domestic demand is inelastic for contracted volumes. Domestic supply substitution is low. You would still need imports from tariffed and non-tariffed countries to meet the inelastic demand. And what does history tell us? History tells us non-tariffed countries will simply increase their offer prices to just under 10%. So this will be a structural increase in the price of uranium because tariffs are very clearly a sales tax on imported goods. And that sales tax will be ultimately passed on, and those who aren't subject to it will take advantage of it. So Cameco is well mitigated. The market is just going to face more structural challenge, which will be price-supportive.

Great. Thanks, both. And then maybe if I can ask a second question just around MacArthur River production. Obviously, it is a touch lower this year in terms of guidance than it was last year. And so is this a sign that it's going back to £80 million indefinitely, or is that just part, you know, obviously you've increased the capex too, but is that just part of just getting on top of capex spend again, but we could see it back to 19 and beyond in 26?

Alex, I guess I'd start by saying we're still in supply discipline. No change to that. McCarthy Key had an exceptional year in 2024. All the conditions were right. The mill ran very, very well, and we had some excess inventory of ore available to push through, and so we did that. I can tell you now we're back down... to 18 at MacArthur Key, 18 at Cigar, and we will never produce a pound that doesn't have a home in one of our contract portfolios. So that's our plan. You mentioned CapEx. You know, we're going to invest. We always have to just ensure the reliability and the sustainability of our assets, and that's what we're doing there now. There's some that need some fixing up, but We want to optimize our production. So that's the story. There's nothing more to worry. Back to 1818, and we'll stay there until further notice.

Great. That's very clear. Thank you very much.

Thanks, Alex.

The next question comes from Oris Wokoda with Scotiabank. Please go ahead.

Hi, good morning. I just wanted to delve in a little bit more on the tariff issue. I guess If I understand correctly, you're saying your contract book is a mix of contracts where some of the contracts, Cameco's responsible for a tariff, and then the other part is that customer importing the uranium or fuel would be responsible. Do I understand that correct?

Yeah, let me go into a little bit more detail, Oris. So a tariff, which is a border tax, is paid by the party of import. And what we recognize with the Section 232 investigation is that the assumption that North America is a free trade zone is probably over. Our neighbor to the south has discovered the hammer in the toolbox, which is tariffs, and And we began to prepare for a future where they might use it, and good thing we did. So we wrote a number of contracts that effectively moved tariffs into the tax clause of a contract, right? And if you think about cross-border contracts, they're very clear. Taxes in the seller country are the seller's responsibility, and taxes in the buyer country are the buyer's responsibility. So when we saw the Section 232 investigation, we learned a very powerful lesson to be crystal clear that a tariff is a tax and a tariff in the buyer's country is the buyer's responsibility. So we would have a bunch of older contracts, less than half of our U.S. deliveries, where we were still in a presumption of free trade, where we might not have been quite as clear. So there would be certainly an interpretation, which we're not, hey, look, our goal is not to fight with our customers about what our old contract said, but there would be a discussion around whose responsibility that border tax now is. But rather than sort of prepare for a big fight there, we just said, look, it's a highly integrated market. We can move material around and we can get it, you know, inside a tariff wall if there is one. So we'll just go ahead and we'll do that now so that there is no material impact on us. And then going forward as our Older contracts roll off and our newer contracts become the bigger, bigger share of our delivery. This just becomes less and less of an issue for us to deal with. So, you know, it's a common refrain you hear from us. We position ourselves for reward and we manage risk. And this is a perfect example of how, on a forward-looking basis, we manage future uncertainty and future risk. And as a result, we're saying no material impact upon us.

Of course, let me add just a little bit of context that we use when we're down on the hill talking to the legislators and in the White House and everywhere else. The U.S., of course, has about 94 operating reactors that consume somewhere 45 million pounds, maybe 46, 47, moving up to 50 a year. So they consume 45 to 50 million pounds a year. Production in the U.S. today is less than 1 million pounds a year. They need imports. And they get to 27%, I think, or so from Canada. So, you know, that's just some of the arguments and some of the facts we have to lay on the table when we're down there. So that just gives you a bit of context for what we're talking about.

Thanks. Just a follow-up to that. Are you noticing any change of behavior in terms of your U.S. utility customers as you talk about negotiating new contracts? Like has this sort of proposed 10% tariff, is that impacting them? contracting activities at the moment, or is it irrelevant?

I would say it's largely irrelevant at the moment because it's a threat. It's not in place right now. And I'll go back to the point that I made earlier, that the demand is inelastic, certainly for the contracted volumes, the ones that are already committed to, that demand is absolutely inelastic. But our customers down there also realize that there's a very low domestic supply substitution. They still need to import a lot of material in order to meet their needs. So future contracts are really focused on incumbent producers with multiple sources of assets, a demonstrated history of risk managing, and providing lots of options for those utilities. So we don't see any diminishments in our pipeline with respect to U.S. demand. I could say, though, that with all of the demand opportunities in other markets, we are evaluating what the right diversification strategy is going forward. If we constantly have a market that threatens these kinds of trade actions versus markets that don't. So this is the luxury of being diversified in our marketing portfolio. And it's also the luxury of having all of these new customers in Central and Eastern Europe that we never had before. It's a broader-based market recovery than it's ever been. And I think the U.S. puts these threats out kind of at the peril to the security of their supply, which then goes back to my original point that this isn't very consistent with an energy-dominant strategy.

Right. Thank you very much.

Thanks, Orson.

The next question comes from Lawson Winder with Bank of America. Please go ahead.

Thank you, operator, and good morning, Tim and Grant. Nice to hear from you, and thank you both for the update. Can I maybe ask about the conversion market? And there is this narrative about overfeeding on the enrichment piece of the fuel cycle being limited by a lack of conversion. And I mean, there's no arguing that the fact that conversion prices are multiples of prior cycle highs right now. Should this not incentivize either further expansions at Port Hope or a restart of CCJ's 49% on Springfield's conversion facility?

Yeah, there's no doubt. There's no doubt that there's a lot of pressure on the conversion market right now, and there's no mystery why it exists. After many, many years of utilities globally banging on the table and saying to Cameco and to Converdine and Arano that they will not pay $15 a KGU in an $8 KGU market, well, they succeeded. They're not paying $15 a KGU. They're paying $50. If you let prices stay low for too long, they destroy their own supply, and therefore a violent correction has to occur. There's a very powerful analog building in the uranium space on exactly this principle. Now, what does it take then to restart? Remember, it isn't a price point loss. This is really important to emphasize. What we require are two things from a term supply point of view. Number one is Clear market access rules. And especially now, you've heard a couple questions that have already hit this table about Russia. We need to make sure that this talk of Russia coming back into the Western markets is only talk and it's not reality because we know that Russian capacity for enrichment comes with the ability to convert. It's all an integrated system. So we need clarity on that. We need to make sure the Russians aren't back in because they were a big contributor to conversion prices that destroyed Western supply. So we're looking for clear market access rules. Tim's been clear about that as he's been in Washington and other places. We're not asking for money, we're asking for clarity on market access rules. And then number two, as we always say, it's not about price, it's about long-term contracts. And we would need to see utilities come to the table and commit for the type of long-term contracts that support the restart of facilities. And let me just draw a parallel. A very exciting news announcement came out, Constellation working with Microsoft to restart Unit 1 at Three Mile Island, the Crane Clean Energy Center. And what's really important about that is, Constellation didn't decide to restart and spend $1.8 billion US on spec. They did it because they had a 20-year contract with Microsoft. The same logic that a utility requires to bring back an idled reactor is the exact same logic a supplier requires to bring back supply. It's not just about price. It's about the quality of the demand, and the quality of demand just hasn't been there yet. And the reason you know that is we haven't made any announcements. When we do make announcements, you know the quality of demand has already been through the market because we never front-run demand with supply.

Okay. Those are very helpful comments. You've made several comments as well on the call today on Westinghouse. I just wanted to follow up on the guidance there. First of all, is there any purchase accounting rules factoring into the EBITDA guidance for 2025, just in the context of the impact that those had in 24? And then when you think about the 6% to 10% growth in EBITDA guidance for the next five years, what What would it take to be at the 10% level versus the 6%? What's the differentiator between those ranges? Because on a compounded five-year basis, I mean, that's actually a huge difference. Like you're growing at 6% or 10%. And then, you know, what about getting outside of that range, particularly on the higher end?

Yeah, thanks, Lawson. So I'm going to ask Heidi maybe to tackle that first point that you made and then Grant on the 6 to 10 going forward. So Heidi, do you have any comments on the first part?

Sure. Hi, Lawson. In terms of the purchase accounting, there was really two parts that affected us in 2024. So we had to mark the inventory to fair market value. So that was a big piece, probably the bigger piece that impacted us. And the inventory has kind of worked its way through. So there's not a lot of inventory. If you look at the outlook table, there's just a small adjustment now for that. But we also had to recognize the purchase price across all of the assets. And so that resulted in higher depreciation and amortization. And that will continue on for a number of years and is still impacting the results, which is a big reason why we have a net loss. So there's a piece that's ongoing and a piece that's kind of 2024 only.

Yeah, and the way to look through that, Lawson, is we have that adjusted EBITDA number out there. And so we take that effect out, and that gives you a way to look at what the operational performance is there. So we encourage you to do that. On your second question, it's a good one, and it really does require a bit of explanation. We are, as everybody who's been following us for some time knows, We are very conservative in our forward disclosures. We require evidence-based triggers in order to go to, say, for example, higher growth rates in Westinghouse. So let me give you an example on the 6% side. That really reflects the core of the business growing into new markets like Eastern and Central Europe for fuel fabrication and reactor services. And it really reflects reactors being saved and reactors going through subsequent license renewal, there's some upside to the core. You began by asking about bringing back the natural conversion line at Springfield. If we did that, and if we brought back a RefU line at Springfield, that's upside to the core. That would take you beyond the 6% growth rate from the core alone. When you drift over to the 10%, that's really starting to see the early days of the energy systems uptake. But again, it's conservative. All that's in there right now is the front end engineering and design work being done in places like the first three reactors for Poland or the first reactor in Bulgaria, the one of two. So as those progress to final investment decisions, that will then trigger the guidance required for the broader scope around the nuclear island. It's just we don't get out in front. That decision hasn't been made. It would be wrong to include it in the growth, but you need to understand those decisions alone would be upside to the growth case, and now we have to add in the opportunities with the Korean collaboration. Now keep your eye on every project the Koreans are working on, like in Czechia, for example, or Units 5 and 6 in the United Arab Emirates if those go ahead. That will add upside to the 10%. So we are conservative. We wait for those triggers to come. But when they do come, that is upside to the Westinghouse story. And it really puts Westinghouse basically double the industry growth rate as we see it, which we think is a very, very strong story. And beyond the underwriting cases, part of why we continue to be so excited about this acquisition.

And you haven't mentioned AP3100s or Avinci reactors in that 10%. So that would be beyond the 10% as well.

It would be beyond. Like, it gets silly really fast. So I'm trying to keep it into sort of what is the basis for our conservative disclosures. But, again, that is all upside. If you see good news on Avinci reactors, if you see a utility working with Westinghouse on AP300, that is all upside to what I just talked about.

Thank you very much.

Thank you, Lawson.

We have time for one more question today. The last question comes from Craig Hutchinson with TD Cowen. Please go ahead.

Hey, good morning, guys. Just on Westinghouse, it's good to see you guys got your first inaugural dividend. Have you guys established a formal return of capital strategy at Westinghouse? And if you have, can you give some kind of framework around what we can expect going forward?

I will only give you a framework because it's an evolving situation, but for the right reason. And what I mean there is us and our partner, Brookfield, look at Westinghouse in the same way, and that is Westinghouse brings forward a strategy and a business plan that fully funds its OpEx, fully funds its CapEx, fully funds its G&A expense, fully funds its debt obligation, and provides a dividend. So it's not something where we intend to put money into. It's something where we intend to continue to get distributions out of. But I would say, for very good reasons, Westinghouse is enjoying all the tailwinds that Cameco is enjoying. And this is giving rise to opportunities to invest. So the previous question was about investing in a natural conversion line at a time when the conversion price is at historic levels. So what we obviously do is we ask the question about does it make sense to leave money with Westinghouse for them to invest to capture some of these really good opportunities? Or does it make sense to take it out of Westinghouse and deploy ourselves So it's a live question, but it's a live question for absolutely the right reasons, because whether it's the core looking at LEU plus fuel or BWR fuel or getting into the natural conversion business again or the ref-U business or investing in more market development for AP1000s or collaborating with the Koreans, those are all investment decisions that really weren't part of the conversation at the time of the acquisition, but they are for the right reason because they're just going to make the future growth a multiple higher than what we underwrote as part of the acquisition. So that's the framework we look at. We expect a distribution unless we can be absolutely convinced it makes sense to leave money with Westinghouse. But I have many things I want to do with that distribution, so it has to be pretty darn convincing.

Okay, great. Maybe just one quick follow-up. Just on the capital expenditures this year, obviously up quite a bit year over year. Is most of that just sustaining growth, sustaining capital, sorry, or is there any of that growth capital?

I would look at it as revitalization for optimization. You know, it's no surprise we're pretty bullish on the structural deficit that's coming to the uranium space. And we see a market yet that, quite frankly, has not priced in the end of CigarLink, and it has not priced in the depletion in Kazakhstan. And a market that believes perfection is going to be achieved with some of these new projects that are at the feasibility stage and don't even have a license and a permit yet. And that is all going to lead to stronger price discovery in our industry. We're strategically patient. We're waiting for that demand to show up. But it feels like for us this is a time to prepare our assets for maximum exposure to those higher prices. So this is a period where just like we were counter-cyclical with respect to the digitization and automation spend, we want to be forward-footed with respect to preparing our assets for when we need to call for more production because the demand has been there and do it for better value and start deploying some of this capital and doing this work at a time when there aren't a lot of resources available in Northern Saskatchewan. So I don't know what others who are gonna do, who think they're gonna bring projects forward. I don't know where they're going to find the skilled laborers and the contractors to deliver on their project when we're delivering on our revitalization and optimization projects. It's prudent and it's based upon a fundamental view that's very supportive. but we haven't yet made a decision to grow. It's just about being prepared.

All right, great. Thanks, guys.

Thanks, Greg.

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

Thank you very much, Operator, and thanks to everyone on the call today. These are certainly busy but exciting times for Cameco. So Cameco, as you know, is a responsible commercial supplier with long-lived Tier 1 assets and a proven operating track record. We're invested across the nuclear fuel cycle, and we believe we have the right strategy to help achieve a secure energy future in a manner that reflects our values. Embedded in all our decisions is a commitment to address the risks and opportunities that we believe will make our business sustainable over the long term. So thanks again to everybody. Have a great day.

This brings an end to today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.