Summary
In this interview on The Royalty King, Justin Huhn, founder of Uranium Insider, explains why Russia's decision to buy uranium from Kazatomprom signals a tightening feed supply and why utilities will have to accept term contract pricing that producers are now setting. He also covers how contract structures have shifted in sellers' favor, the state of new mine development, and his views on SPUT, NexGen Energy, and Cameco.
Transcript
Key Takeaways:
- Rosatom–Kazatomprom Contract: Huhn notes that Rosatom signed a long-term contract with Kazatomprom large enough to require a special shareholder vote, meaning it exceeds 25% of Kazatomprom's book value. He estimates the contract at no less than 10 million pounds and sees it as evidence that Russia is short on feed stock.
- Tails Assay and Underfeeding: Huhn believes Russia is running its centrifuges at a higher tails assay than it historically has, which reduces the underfeeding material that once flowed into the spot market. He says that secondary supply has fallen from 20 to 25 million pounds a year to 10 million pounds or less.
- Contract Terms Shift: Huhn says contracts signed in 2016–2018 were often 60/40 to 80/20 fixed price, while current deals are mostly or entirely market-referenced. He cites floors of $70–$80 and ceilings of $140–$160, which producers are signing for delivery in the late 2020s and early 2030s.
- Producer Inventories: Huhn says utilities flexing up quantities under older contracts, up to 30% in some cases, has pushed producer inventories to multi-year lows. He states that Cameco has borrowed between 4 and 5 million pounds over the last few years and is below its target of 8 months of production in inventory.
- Utility Contracting Activity: Huhn reports that 44 million pounds have been contracted year to date in the long-term market, and he estimates the real figure at 85 to 90 million pounds once the India contracts and the price reporters' incomplete coverage are accounted for. By comparison, he recalls roughly 115 million pounds in 2025. He says state-owned buyers in India, China, and Russia are signing first while Western utilities hold out.
- Greenfield Supply Response: Huhn says the supply coming online is concentrated in state-owned projects in the East, including Husab, Budenovskoye, and Uzbekistan, and much of it will go to state-owned operators rather than the market. He cites a consensus that $150 per pound is needed to incentivize significantly more Western supply.
- SPUT and NexGen: Huhn calls physical uranium via SPUT an "absolute no-brainer," pointing to a 10% discount to net asset value, a spot floor in the mid-$80s, and upside he puts at close to double. He describes NexGen Energy as an interesting equity, citing the Arrow deposit and the Patterson Corridor East exploration, and says Cameco looks cheap if the Westinghouse IPO prices at $50 billion.
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