Cameco Ord Shs T.CCO

TD Notes

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Uranium Weekly: Term Volume per Transaction Shoots Higher

TD Investment Conclusion

The Ux Consulting (UxC) weekly spot price indicator published earlier this week increased to US$53.60/lb (+US$0.20/lb w/w). Spot volumes remain low with 500,000 pounds transacted last week and 1.7 million pounds for the month of May so far; over the past five years, May has typically seen ~5 million pounds of spot uranium activity. Year-to-date, spot market activity is tracking well below past five- year averages at just 19.8 million pounds. Over the past five years, cumulative spot market activity to the end of May has averaged more than 33 million pounds. Despite the relatively weak spot market activity, the spot uranium price has held up well and YTD is up 11.7%.

Activity in the term market has been more robust with 99 million pounds of contracting activity completed year-to-date, which is the highest volume to this point in the year that we have on record dating back to 2010. Interestingly, the volume per transaction is also up significantly versus recent years. So far this year, the volume per transaction is running at ~5.2 million pounds (99 million pounds divided by 19 transactions). Over the past five years, volume per transaction has averaged ~1.97 million pounds.

The volume per transaction this year is likely being skewed by the two large transactions Cameco announced with Ukraine and Bulgaria. However, if we remove these two transactions from the calculation, we still arrive at an average volume per transaction of 3.1 million pounds, well ahead of the five-year average and the highest volume per transaction since 2012.

We believe increasing volume per transaction speaks to utilities seeking longer- duration contracts, utilities lessening their reliance on mid-term contracting, and utilities recognizing that uranium supply over the medium to longer term is getting more challenging as uranium demand increases (UxC is forecasting that global reactor uranium requirements will increase by 62% through 2040).

In our view, the outlook for uranium prices and the nuclear sector in general is the best it has been in more than 15 years. Governments around the world and across the political spectrum are waking up to the fact that nuclear power will play a central role in a low-carbon, stable electrical grid, and are reviewing and updating nuclear power policies to support the nuclear power sector. We are forecasting a uranium price of $53.57/lb in 2023 and $58/lb in 2024. Our long-term price is $65/lb.