Uranium Miners and the Clean Energy Opportunity

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May 17, 2022 | (63 mins 38 secs)

A new uranium bull market is underway. Uranium miners are well positioned to take share within the energy sector as energy security and decarbonization take center stage globally. With the number of nuclear reactors planned to increase by 35%, governments are signaling the need to embrace the reliable, efficient, clean, and safe energy produced by nuclear to meet ambitious decarbonization goals. At the same time, a uranium supply deficit is looming on the horizon, and uranium miners are likely to be the beneficiaries of increased investment. In this webcast, we will discuss:

• Uranium and nuclear energy may be critical to the clean energy transition and help countries achieve energy security – reliable and affordable electricity
• Increased demand and decreased supply of uranium are supportive of a sustained bull market
• Uranium miners have exhibited a low/moderate correlation to major asset classes, providing diversification potential
• How Sprott became the largest manager of uranium investments in the world¹ with approximately $4.5 billion in uranium related, energy-transition AUM, as of April 30, 2022

Featured Speakers

Tim Rotolo
Founder and CEO
North Shore Indices, Inc.

John Ciampaglia
Chief Executive Officer
Sprott Asset Management

Edward C. Coyne
Senior Managing Director, Global Sales
Sprott Asset Management

Webcast Transcript

Stephanie Sullivan, RIA Database: Cover Slide

Thank you for joining us for today's webcast, Uranium Miners and The Clean Energy Opportunity, sponsored by Sprott Asset Management. Today's webcast will provide one CFP, one CIMA, and one CFA CE credit. If you have any questions on credit, please call us at (704) 540-2657.

We will cover quite a bit of information during today's webcast. If, at any point in time, you are interested in scheduling a one-on-one meeting with Sprott Asset Management, please click on the one-on-one folder at the bottom of your screen and confirm the request. In the event that you missed any part of today's webcast or simply would like to watch it again, a replay will be made available and all registrants will receive that information by email. With that, I'd like to go ahead and turn it over to today's first speaker Edward Coyne, Senior Managing Director, Global Sales for Sprott Asset Management. Ed?

Ed Coyne: Slides 2-5 Introduction

Ed Coyne: Thank you, Stephanie. Thank you all for joining our webcast today to talk about uranium and the uranium miners. As Stephanie mentioned, I'm your host Edward Coyne, Senior Managing Director at Sprott Asset Management. For today's webcast, I've asked both Tim Rotolo and John Ciampaglia to join us to talk about really all things uranium. From a background standpoint, I want to give you a quick bio on each speaker.

Tim Rotolo is the Founder and CEO of North Shore Indices and the creator of several unique indexes, including the North Shore Global Uranium Mining Index, URNMX. Before forming North Shore Indices, Tim was a Vice President at Sandalwood Securities Inc., a $1.25 billion Hedge Fund focused on distress credit and event-driven strategies. Prior to joining Sandalwood in February of 2009, Tim worked at Merrill Lynch's Private Banking and Investment Group. Tim received his BA degree from Tufts University.

Also, with us today is Sprott's very own John Ciampaglia. John has more than 26 years of investment industry experience and serves as the Chief Executive Officer of Sprott Asset Management. Before joining Sprott in 2010, he was a Senior Executive at Invesco Canada and held the position of Senior Vice President of Product Development. Prior to Invesco Canada, he spent more than four years at TD Asset Management. John received his Bachelor of Arts in Economics from York University and is a CFA Charterholder.

I've asked both John and Tim to cover a few unique topics for today's webcast outline. I've asked John to talk about the energy transition and security and explore what we believe to be the potential formation of a new uranium bull market. In addition, Tim Rotolo will cover why invest in uranium miners today and give a brief history of the North Shore Global Uranium Mining Index, URNMX. Lastly, I'll talk about how uranium miners might fit into a well-diversified portfolio and then we'll open up for some questions.

Before we dive into all things uranium, I'd like to overview Sprott briefly. Sprott is a global leader in precious metals and real asset investments. With over 23 billion in assets under management as of the end of the first quarter, Sprott is one of the largest precious metals and real asset firms today. Sprott is a publicly-traded company under the Ticker Symbol SII and is listed both on the New York Stock Exchange and the Toronto Stock Exchange. Sprott is unique because we offer multiple ways to allocate to the precious metals real assets markets. With over $17 billion in exchange listed products, we allow investors to allocate directly to physical gold, silver, platinum, palladium and uranium. We also have a suite of ETFs, whether it's our factor-based ETFs that give you exposure to the large-cap senior miners or these small-cap junior miners. More recently, we acquired the Uranium Mining Equity ETF listed on the New York stock exchange under the ticker symbol URNM, which allows investors to allocate directly to uranium mining stocks. In addition to our exchange listed products, we have a suite of managed equities, whether it's our flagship gold equity mutual fund under the ticker symbol SGDLX or our closed-end value strategy, FUND. Lastly, we offer lending and brokerage services focused on precious metals and real assets.

Now onto the main event, let's talk about uranium. As I mentioned, I have John and Tim joining us to talk about all things uranium. Sprott is a leading provider in the uranium investment markets, so I think we have a lot to talk about today as far as where we're seeing opportunities both on the equity and physical sides. Sprott is one of the largest managers in the uranium investment world, with approximately $4.5 billion in uranium-related opportunities. Through Sprott, you can get exposure to either the physical market, which is the Sprott Physical Uranium Trust, which trades on the Toronto Stock Exchange and the OTC in the U.S. or, more specifically, you can get exposure to the mining space under the Sprott Uranium Miners ETF under the ticker symbol, URNM, which trades on the New York Stock Exchange.

For today's webcast, we will talk about all things uranium. I'd like to bring on John Ciampaglia to speak about the energy transition and security and the catalyst that we believe is forming for uranium going forward and nuclear power. John, once again, thank you for joining us on today's webcast.

John Ciampaglia: Slides 6-19

John Ciampaglia: Thanks, Ed. I'd like to start on slide 7 which addresses the global demand for energy and how much it's expected to increase. In the Western world, we take for granted having reliable and affordable electricity every day. But there are still huge parts of the global population that suffer from energy poverty, which means they essentially don't have access to electricity, or they have access to very sporadic energy, which means blackouts and brownouts are a way of life there.

The big conundrum here is that the world is trying to modernize and electrify economies. How do we produce all of this energy when there's increased focus on climate change and greenhouse gas emissions? This is really where nuclear comes in as a solution to this big challenge.

If we go to the next slide on Global Annual CO2 Emissions. As you can see, it's the dawn of industrialization. The amount of CO2 in our environment continues to grow, and there have been periods where economies have contracted or we saw COVID lockdowns lead to reduce CO2 emissions. But the trend you can see is clearly one way, which is up. This is causing a lot of countries to be concerned. I think all of us have experienced some form of climate change and it's becoming very top of mind for people. Governments around the world are acknowledging that they need to figure out how to provide reliable baseload and affordable energy while at the same time limiting the amount of emissions so that we don't continue to warm the planet. This is a real challenge.

Moving to the next slide. How are governments around the world responding to this? While you have government, for example, the United States, which has been very pro-nuclear under the Biden administration, which is not typical. Most democratic administrations tend not to be so pro-nuclear, but we're seeing a real shift in government policy. We think this is the cornerstone because it starts with energy policy, and from energy policy, a lot of investments get made and it paves the way for different forms of energy creation, infrastructure build-out, etc. There's been a real pivot here. If you go back to last fall at the top 26 climate summit, several governments publicly acknowledged that they have no way of meeting their Paris accord climate goals without nuclear being part of the mix. Governments around the world have been building renewable energy alternatives for the last 30 years and supporting them very heavily through favorable financial credits, carbon offset credits, subsidization, fixed power, power agreements, and all of which have helped to transition the grid away from fossil fuel sources of energy production, to low carbon sources.

Unfortunately, the world has figured out that the intermittency of renewables is their downfall in the last year or so. What I mean exactly by intermittency is, if it rains less in a specific area, you've got less hydroelectric power. If it is less windy, you get less power generation from wind. If it's less sunny than expected, you get less power from solar. How does a grid function if you have less energy production from renewables? You have to fall back on baseload power and baseload power is something that you have control over. There are two or three options in terms of baseload power. You can have nuclear power plants, which run 92% of the time, or fire up natural gas or coal power plants, which has happened in many parts of the world in the last year.

You have governments trying to move to renewables, but renewables don't always work, and then they end up falling back on fossil fuel backup plans, which defeats the whole purpose of moving away from fossil fuels. Most countries in the European Union have currently acknowledged that they need to extend the lives of their existing nuclear reactors and make new investments in nuclear energy. China is clearly leading the world here as it tries to move away from coal, which still is the majority of its power source, and they want to build upwards of 150 new reactors over the next 15 years, which is mind boggling. Japan has recently acknowledged that they need to restart more reactors if it has any chance of meeting any of its greenhouse gas emissions. I haven't even started to talk about what's happened in the last few months since February 24 (2022). That brings a whole other topic to bear, which is about energy security, which I'll cover in a minute.

Moving to the next slide. This gives you a geographical map here of where all the nuclear reactors in the world are located today. You can see there's about 434, there's 57 that are under construction right now, mostly in emerging markets that have embraced nuclear, and then finally there's about 97 that are planned for construction over the foreseeable future. There's clearly been countries making investments and making commitments to the space.  And secondarily, there are a number of countries that have signaled that they would like to extend the operating life of many of their existing reactors to ensure that there's affordable and consistent energy for their countries and economies.

Let's go to the next slide and talk about Energy Security. This is the second pillar of what I think is really driving the Uranium market right now.  I talked last year about decarbonization of economies, commitment to Paris Climate Accord, and then all of a sudden, February 24 happens and it really highlighted to the world that energy security is just as important as energy transition. The countries in Europe in particular became very dependent on Russia for natural gas and coal, and parts of the uranium fuel cycle. This is really raising big concerns right now that between sanctions, self sanctions and potential embargoes, that the uranium market could become very disrupted because of Russia's role in the fuel cycle.

Governments around the world have realized that they just cannot simply off the nuclear power plants at a time when their reliance on Russia for fossil fuels is under attack. We're seeing governments, whether it's Belgium recently saying they're going to extend their power plants for 10 additional years, the UK has announced they would like to build eight more nuclear power plants, the new government in South Korea has already signaled that they want to extend the life of their nuclear power plants, so there's a real sea change going on right now. It's very similar to what happened after 1973, when we experienced the oil crisis, there were shortages of oil and gas that you may remember, and energy policies took a shift. I think that this energy policy is shifting right now. It's being signaled by governments around the world.

Let's go to the next slide. In North America, we've had higher natural gas prices, but nothing compared to what's happening in Europe. You can see on this chart here on the right, the natural gas price in the European Union, how it has spiked because of its reliance on Russia. This is where energy security all really is driven. This issue that you're beholden to a nation for your natural gas and that natural gas is basically used for heating, but it's also used for electricity production and you're at the mercy of your supplier because the choice is obviously turning off the heat or turning off the lights. That's something that utilities will not make that trade off. They pay the price. You see the price of that gas spiking a number of times, and this price increase trickles right down to the end consumer or the end business that has to pay for their electricity and heating.

Let's go to the next slide and talk about Russia and its role in the nuclear fuel supply chain. This is very technical and I'm not going to try to make it too complicated for everybody, but essentially Russia produces two elements of the uranium fuel cycle. They are a small producer of uranium, that's kind of the base feed stock that eventually gets turned into pellets that are put into reactor cores, but their role in the supply chain is very dominant when it comes to conversion market, which is when you take uranium and turn it into a gas and then ultimately enrich it back, they provide a lot of capacity to the west. Right now, you can imagine if you're a utility in France or United States or Canada, you're thinking very hard about, can you take delivery of those parts of your fuel supply from Russia, given what's gone on in the world. Right now, there are no sanctions, so the flow is continuing. There are bills being floated in the U.S. and Europe to post sanctions, but there are no sanctions. The reason why there are no sanctions as of yet, is because there's basically no excess capacity amongst the Western facilities to make up for this Russian shortfall. Once again, we're at the mercy of Russia and its capacity to provide and to produce conversion and enrich uranium for these utilities.

Let's go to the next slide. All of this between energy transition and energy security, all of these considerations, government policies and shifts, have obviously been very supportive for the price of uranium. This provides a wonderful perspective of the price of uranium going all the way back to late 1960s, and we've identified three bull markets. The first bull market came after the oil crisis of 1973, when governments said, we cannot be beholden to the Middle East and their oil reserves, and they started to build nuclear reactors across Europe and the United States. That first bull market lasted about five years and the gain in the price of uranium was about 600%. After the Three Mile Island accident, there was a downshift in the buildout and the price of uranium fell back for a number of years and meandered around as the world did not pay much attention to nuclear energy.

Then, you had the next bull market evolve from early 2000 to midway through 2007. This was really the commodity supercycle, where China was basically building out its fleet of nuclear reactors and acquiring huge amounts of every kind of commodity possible. At this point, the price in the spot market for uranium hit just shy of $140 a pound. That was obviously a significant price appreciation over the six and a half years of 1800 odd percent.

Fast forward to 2011, we had the earthquake, tsunami, an accident at Fukushima and uranium and the nuclear sector went into another down period and prices fell, which led to a lot of shut in production, mines were closed around the world and the market basically was dealing with an overhang of supply. This overhang of supply has been worked through, and the price of uranium has started to respond as a result. We think that the price of uranium troughed at about $18 a pound, and right now we're trading around $48 to $50 a pound. And although the market's been, been grinding higher for about five years, we still think it's in the early innings of this up cycle because we're just not anywhere near incentive pricing. The incentive price is a price that a producer needs to see that in order to make a decision to restart or reopen a mine that in many cases has been closed for four years and will take them the next one to two years to restart. Every mine has a different cost curve, and so for some mines that might be $50 for others it might be $60, and for new development projects, that price could easily be $80 or more. It's a very interesting market dynamic that we're seeing right now.

Let's go to the next slide. The other element that's happening right now is buying of uranium by non-utility buyers. Those would be financial investors and speculators, and they have historically been, they were active in the mid two thousands in that commodity supercycle that I mentioned, and then after Fukushima happened, they basically disappeared up until about 2021. You can see that last year, there was a very large amount of uranium purchased by non-utility buyers. Those would be Sprott Physical Uranium Trust, other junior uranium companies, hedge funds that have a bullish thesis on the price of uranium and want to get exposure to the commodity price. We've seen investors, financial investors and speculators move very aggressively last year. This move by non-utility buyers obviously had a big impact on the price as we saw the price kind of break out and hit multi-year highs, but it also did something very important, which is it signaled to the utilities that they better get in line and start contracting to ensure they have security supply for their futures. Utilities always have uranium on hand. It's the absolute opposite of adjustment time inventory model. For good reason, you never want to be short in uranium and have to turn your power plant off. They typically will buy years in advance with multi-year purchase agreements.

Let's move to the next slide. This is the fundamental element of the thesis that most investors have, which is the supply and demand in balance. Every year, those 434 reactors that I mentioned earlier, they need 180 million pounds of uranium in order to have their plants operate. Right now, there's 130 million pounds that is provided through primary production, so that would be mined uranium coming out of the ground, and that shortfall has basically been filled by secondary supplies. Both secondary supplies, particularly with what's happening as the world pivots away from Russia in terms of its supply chain, is going to create a lot more demand for uranium. It's not happening today because right now the utilities are more concerned about the elements of the fuel cycle that are further down the chain, but eventually it all starts with uranium because that's the feed stock that moves down the cycle. We believe that over the coming months, there will be increased demand for physical uranium as these utilities need more feed stock to split away from Russian conversion and Russian enriched uranium. Eventually, the market needs to find a price to incent producers, to develop new properties and also restart existing mines in order to balance the market out. As I said, that price is all over the place, depending on your stage of development and your cost structure. But I think it's fair to say that with the state of the world right now, that the cost to build new mines and the costs to operate new mines with the inflation we're seeing, has gone up substantially. And the cost first for the whole industry has started to move up.

Let's move to the next slide. This is kind of to provide some perspective on where uranium is currently priced relative to its cycle high versus other commodities. You could see that it is the lowest in terms of where the current price is relative to its 20 year high price. It's still very far away from last cycle price. Whereas most other commodities are much closer or at all-time highs right now. Interestingly, now gas is still 52% of its all time price and oil, even though it's a huge pop in the last few months, is still at 75%. There's still lots of room for the uranium price to increase.

Let's wrap up with our outlook. We think that there are many constructive supporters of the price for uranium, whether those are driven by decarbonization or energy security, right now it's fair to say that the war in Ukraine has completely disrupted the uranium fuel cycle and that the utilities in the West are trying to figure out how to wean themselves off Russian supply. That's going to take some time, but we ultimately think the sanctioning that will happen will be in place long after the war ends, and the industry's going to have to go through a period of transition that needs to restart uranium capacity and basically become more independent from places like Russia.

As I said, the price of uranium right now is trading about $50 a pound well off its last cycle high and at incentive price is starting to get to a point now where we're starting to see some mines reopen and we think this is very constructive for the long term supply and demand picture. With that, I will pass it over to Ed.

Ed Coyne: I think John made some nice comments about the overall opportunity within the uranium market, but more specifically talking about Russia and Ukraine. I think you can go beyond that and just talk about geopolitics in general. We're clearly setting up a stage here over the next coming quarters, years, or even decades that there will remain disruptions in the broader marketplace back couple with the fact that we've got this green initiative goal to be carbon neutral by 2050, I think does set a nice stage for the general core price of uranium. I think it's a good time to bring on Tim Rotolo to talk about the mining stocks themselves. I think Tim can give us some really unique insights into not only why to invest in uranium miners right now, but how to think about that both from an index standpoint and from just a general overall market opportunity standpoint. First and foremost, Tim, thanks for being patient and standing by, and second, thanks for joining us today. We'd love to get your comments on what's going on in the uranium equity side of this opportunity.

Tim Rotolo: Slides 20-28

Tim Rotolo: Thanks Ed for having me this afternoon. When we first started looking at uranium and thought about building this index, there were a couple of kind of key signals that we looked at that the market had kind of reached the bottom. One of them was just the overall capital destruction, which had occurred, and uranium is not unique in that fashion. I think it's happened in oil and gas and many of the other commodity markets over the last decade. And actually, if we were able to zoom this chart out and I think actually one of John's charts does a very good job and shows from peak to trough just how much capital was destroyed. From a price standpoint, you went from about $137 down to a low of about $16 or $18 over the last decade and now we started to rebound. The number of companies in the industry post Fukushima was about 500, at the lows. It was closer to 40, today, we started to see more significant capital formation and there's about 80 companies today. Just on a market cap basis. The market went from about $150 billion at the highs to under $5 billion at the lows. These were all signals to us that there was an emerging opportunity as an important sector like nuclear power, unless it was going away, which I think you had to believe it wasn't, given it was generating 10% of global electricity that there had to be some mean reversion, and we've started to see that.

Maybe we can go to the next slide. One of the reasons why I believe commodity equities and uranium equities in particular are so attractive, is that during the bull markets, they have the ability to generate really attractive returns relative to the physical commodities. You can see historically, the outperformance of the equities relative to the physical price as the physical price moved up. If the core thesis here is that there's a supply demand imbalance, which has to be met with higher prices, and I think there's a decent amount of agreement on that point, the equities provide a levered upside to that price appreciation. You can see even in this cycle so far, the equities have proven to be a superior upside participation vehicle. We can walk through just kind of the risk adjusted returns that you can generate in a more diversified vehicle.

Ed Coyne: Hey Tim, this is Ed, I just wanted to jump in there for a second because I think this chart's a really good chart to think about the physical markets versus the equity markets. We talk about this all the time when we're talking about precious metals, the price of the physical metal versus the underlining mining stocks. You know, this has been pretty consistent where you've seen the equities do better than the physical. One of the questions I think that's on a lot of people's mind, it's certainly one that I get is, "With the cost of employment, the cost of equipment, the cost of fuel going up, what do you think that looks like going forward?" I know I'm asking you to kind of pull out the crystal ball here, but do you think that opportunity is still alive and well where the mining equities themselves specifically in uranium can do well in a rising uranium market given that other costs are going up as well? Can you just talk about that for a moment?

Tim Rotolo: Yes. I mean, I think that if the incentive price was $65, $75 before, with a more inflationary environment, it just increases the cost to pull that uranium out of the ground. I don't think that's a headwind necessarily to the equities. I think what's really interesting is with this pullback, once again, you've had a kind of significant disconnect between the equities and the fundamentals due to just kind of a broad liquidation of all risk assets. But I think, when I think about investing in anything, there's always a spectrum of risk opportunities across those, and depending on what one investor's risk appetite is versus another, you may want to be further out on the risk spectrum, or you may want exposure to just the price of uranium, the Sprott Uranium Miners ETF is a phenomenal way to go about getting that exposure. For people who are more risk seeking, they may want to go and look at exploration companies or producing companies. I think, different components of the thesis will work at different times and that's why we we've always taken a more diversified approach. But I don't think necessarily that inflation is going to increase or create a significant headwind for the equities relative to the overall thesis.

Ed Coyne: Great. Thank you. I just know that's on a lot of people's minds, so thanks for addressing that.

Tim Rotolo: Yes. And I'll get into some of the other portfolio construction or index construction rationale and kind of how that translates into what we can expect for performance.

Going back to one of the, your earlier points that I made, nuclear power continues to generate roughly 10% of global electricity and more than 50% of zero carbon emissions electricity. When you just think about the relative size of the uranium mining industry versus traditional energy, there's a strong case to be made that the sector remains undervalued relative to its kind of functional value in the economy. I think we've obviously seen a significant move in the equity so far, but again, if you look historically against the kind of peak market cap of about $150 billion in the last cycle, or if you just look at relative to traditional energy companies today, I think we can all make the case that nuclear power and uranium mining equities can increase in value pretty materially.

Let's just flip directly to the index and talk a little bit about its construction and its genesis. Really this was a trying to scratch my own itch, there wasn't a good solution out there when we started looking at the space. There were a couple of other indexes and we felt like they did not provide optimal access to the sector. And we felt like as the sector evolved, there really was a rationale for having a domain expert overseeing that process. Because, when we first built the index in 2018, there were still probably only about 30, 35 companies, many of which were not able to be in the index because they were so small in market cap. But we wanted to develop an index that was forward looking with the expectation that the market cap would grow, that there would be capital formation in new companies and we wanted there to be sufficient flexibility.

Just looking at the methodology. We start at the top with a proprietary universe of stocks, and then that universe of stocks is run through our methodology, the first and highest level being a market cap minimum, which is $40 million. During the rebalance and reorientation of the index, there is a $25 million minimum that has to be maintained for existing constituents. And then, we move to the next component of the methodology, which is the composition. And we did something unique here, and this gets back to one of the points that Ed was just making about physical versus the equities. We looked at the universe and said, this is historically a very volatile industry, and we also felt like the producers are historically a much, much larger market cap relative to the developers and exploration companies, but we recognized that much of the upside appreciation comes in those smaller cap companies. We wanted to ensure that investors had significant exposure to particularly developers. We actually segmented the index into two distinct components. One, is 82.5%, so there's always going to be 82.5% allocated to miners and then the other 17.5% is always going to be dedicated to physical uranium and royalties.

And what that does also from a portfolio construction perspective is it actually creates in my opinion, a potentially better risk adjusted return profile because you have the downside protection of the built in physical component, but you have a larger weighting towards the smaller cap developers and exploration companies, which gives you more upside torque, but because they're pretty small positions, they don't create a ton of downside volatility. There's a maximum waiting of 15%, again, that was our way of limiting the producers from being kind of outsized positions, relative to what we felt like their upside was and then, there's a minimum of 30 basis points. There's a couple of, kind of more nuanced elements that get into what's called RIC Diversification, so SEC diversification requirements, and no five issuers greater than 5% can be more than 50% of a RIC Fund, and so we cap that at 4.7%. You'll see when we rebalance, there tends to be a handful of positions that are about 4.7%. We rebalance and reconstitute the index semi-annually at the end of March and the end of September.

Ed Coyne: Tim, touch on that for a moment. I'm sorry to interrupt you, but touch on the rebalance, because you know, at Sprott, we have two ETFs currently, the senior one re-balances quarterly, the junior one re-balances twice a year, semi-annually. Is that a byproduct of liquidity? Is that a byproduct of market cap? What's the thinking behind that just to help people get a little bit more of an insight into the construction of the index itself?

Tim Rotolo: Sure. When we launched the index, initially, we were at a quarterly rebalance. Because they are smaller companies and there are several other products out there, we decided that we wanted to try and reduce the volatility created by the index rebalance. We did two things, we made it from quarterly to semi-annually just so that the market doesn't have to go through that process four times a year, but then we actually moved to off months with the other products. We didn't want to have a situation where multiple uranium mining funds were re-balancing all at the same time. As the sector has evolved, we have made some other small tweaks to the weightings of the methodology again, so that we don't become a significant owner of some of these smaller cap companies. Also just recognizing that as the market evolves, as we go hopefully back towards a couple hundred companies, many of these will be smaller micro-cap companies. We did increase the market capitalization up to $40 million, initially it had been $25 million. We're always trying to evolve the index based on what we're seeing happening in the industry.

Ed Coyne: That's helpful. Thank you.

Tim Rotolo: The composition as of 3/31, there are 38 holdings, the largest market cap was about $11 billion, the smallest at $36 billion. You can see quite a significant dispersion in terms of the market caps of these companies, heavily diversified. But, another interesting component of the industry is just that, there is a very global nature to this industry, so you have a significant amount of the companies listed in Canada and doing business in Canada, but you have, Kazatomprom, you have a tremendous number of companies over in Australia, both doing business there, but as well as listed there. There's a smaller component in the US. We have Yellow Cake, which is what represents the United Kingdom listing, and then CGN Mining, which is over in Hong Kong. This gets to another, I think, unique characteristic of the industry, which is because it is smaller-cap in nature and global, I think there's a unique rationale for why owning an index-based product, which is a single ticket, makes a lot of sense. The trading commissions alone of trying to aggregate all these stocks, would be incredibly significant. There's some other unique characteristics of Hong Kong stocks where there's excise taxes that you have to pay. We've tried to simplify access to a fairly complex series of securities through the ETF, and then they obviously have the additional tax benefits of the ETF. I can leave it there and we can get into other questions if you'd like.

Ed Coyne: Slides 27-32

Edward: That's excellent, Tim. I think the simplification component is critical, particularly when you're talking about something like uranium, mining stocks, where, up until recently, most investors really didn't think about them all that often. Like many of the ETFs out there in the smaller parts of the universe, I like to say the corners of the room, certainly trying to do it on your own with the individual stock would be a challenge at best. We certainly appreciate you creating this index, we certainly appreciate the partnership we have with you and the support that we're getting and giving access to clients through URNM, the actual ETF itself, so we're quite excited about that.

Well, before we go into the Q&A, I'd like to address, how investors on this call may want to consider adding uranium or uranium equities as they look to build out a diversified portfolio. It really starts with one word, which is, correlation. Effectively, I guess is two words, which is low correlation. And that is really where we start. This is really not that different than allocating to gold, silver, other metals out there that have a low correlation or a moderate correlation to the broader markets. You know, uranium miners have exhibited low to moderate correlation to most major asset classes offering potential diversification benefits within a portfolio. I'm going to talk a little bit about how you should really potentially think about uranium as you look to figure out what bucket so to speak it fits in within your portfolio. But whether you're looking at uranium mining stocks relative to the S&P 500, even to gold and something as simple as a U.S. dollar, the moderate to low correlation over multiple market cycles is shown. For those looking for alternative assets relative to the current market or to existing solutions, both uranium and uranium mining stocks look very interesting right now. The big question I get all the time is how do uranium miners fit into an investment portfolio? This is something that I think is a moving target because, depending on the investor type and depending on the investment portfolio mandate, uranium miners can fit into several asset classes or categories, simply, you know, viewed as a commodity, right? You know, uranium is a commodity much like gold or silver, it's a pure commodity. So, just in a commodity basket, you can get that exposure.

The problem is, and most or if not all cases, if you buy a general commodity fund, you're not getting the opportunity that owning uranium or uranium mining stocks, is presenting, so you need to go beyond just a general core commodity fund, but certainly people think about this as a commodity from an allocation standpoint. The second one is something that Tim had mentioned, which is from a market cap standpoint. You know, many investors out there, they'll build out their portfolio based off market cap, large cap, mid cap, small cap, and they'll take liquidity constraints into consideration and so forth. For those looking to fill out their small cap sleeve or bucket, certainly uranium mining stocks fit that bill in the small to mid-cap space.

Then it's the energy side. You can look at energy as Tim mentioned, is 10% of, of all energy, but it's over 50% of current clean energy. Here's something I think that starts to create a new narrative in the marketplace that not only is nuclear and obviously uranium in the uranium mining stocks themselves, giving you exposure to the energy market, is giving you exposure to what I call the modern energy market, which is more to clean energy. That really puts you in the basket of alternatives. If you think about what precious metals and real assets represent, I like to say that it's really the original alternative asset and that's specifically the gold, but it's really all metals, all precious metals, all real assets. Going back to the correlation, the goal of an alternative asset is to perform differently at different times for different reasons. That's certainly something we've seen time and time again, both on the physical market, as well as the mining stocks themselves.

The one that I think is starting to build from a narrative standpoint is ESG. I think ESG is something that should certainly be considered when thinking about uranium or nuclear in general. You know, we believe that nuclear may help the world reach that 2050 carbon neutral goal in a clean, safe, effective way. For those looking to get an allocation or have part of their portfolio representation in ESG, uranium can fit that bill as well. There's a lot of ways to think about. Then the last two is really thematic or from a technology standpoint.

The bottom line is that we believe that uranium and the miners themselves have potentially moved from what has been largely viewed as a short term opportunistic trade to more of a true long term allocation. We think today, given the current landscape in the market, both the physical uranium market, as well as the mining stocks themselves, is something that should be looked at once again as a real diversifier in your portfolio in a liquid opportunistic or more importantly, a liquid long term way.

For those that would like to learn more about Sprott, we encourage you to visit us at sprott.com, and you can see here on this slide, we have a full suite of solutions, whether you're looking at the gold, silver platinum, palladium types of markets, or more specifically the physical uranium market, we offer multiple ways to get exposure to the physical side of the market. I think more opportunistically thinking about the mining stocks themselves, as we talked about today with URNM, the Sprott Uranium Miners ETF, is a very effective low cost liquid way to get exposure to the mining stocks themselves. For those that may already be familiar with us with our legacy in the precious metal space, whether it's our Active Mutual Fund, SGDLX, Sprott Gold Equity Fund, or our two factor-based ETFs, we offer multiple solutions, both in the physical market, as well as the equity market.

And for all those advisors that are on the call today and investment professionals that are managing money for their clients and being fiduciaries for their clients, we encourage you to reach out to your respective senior investment consultants. You know, whether it's Matt on the west coast, Julia in the central region or Sergio on the east coast. We have attempted to give full coverage to the U.S. market, and we're happy to serve as really an advisor or consultant to you to help you convey the story or build the narrative out for your clients. I'd like to turn it back over to Stephanie before we go into Q&A.

Stephanie: Great. Thank you so much Ed, John and Tim for such an informative presentation. Just a couple of reminders for our audience. A copy of today's presentation, as well as additional materials can be found on the documents folder at the bottom of your screen. We do appreciate your feedback.