Wall Street Unplugged
Episode: 720May 6, 2020

The booming industry nobody is talking about

Amir Adnani

Uranium has been in an awful bear market for years… but times are changing. In fact, it’s the best-performing commodity this year.

Amir Adnani, founder, president, and CEO of Uranium Energy Corp., returns to the podcast to discuss the future of the industry—including an historic announcement by the U.S. government and how it will impact U.S. uranium producers. [22:43]

One of my favorite new ideas is in one of the most hated sectors right now… but nearly all risk is priced in at current levels… [1:04:40]

Inside this episode:
  • Guest: Amir Adnani, founder and CEO of Uranium Energy Corp. [22:43]
  • Education: My favorite idea is in a hated sector [1:04:40]

Wall Street Unplugged | 720

The booming industry nobody is talking about

Announcer: Wall Street Unplugged looks beyond the regular headlines, heard on mainstream financial media, to bring you unscripted interviews and breaking commentary, direct from Wall Street, right to you on main street.

Frank Curzio: How’s it going out there? It’s May 6th, I’m Frank Curzio, host of the Wall Street Unplugged Podcast, where I break down the headlines and tell you what’s really moving these markets. I want to start off by saying thank you.

Frank Curzio: We’ve got our first town hall event live webinar, it was on Thursday, I answered questions for over an hour live, so it was really cool, and lots of cool questions. Wind up getting home around 11 o’clock, after 11:00 PM.

Frank Curzio: I mean, the event ended a little bit after 10:00 PM, so it was two hours, and maybe, 40, 45-minute presentation and then answering questions for a very long time, and it was pretty cool.

Frank Curzio: But I did get home late, and my wife and I, whenever I get home, sometimes it’s really that late, sometimes a little bit early, so we have our favorite shows taped, and one of our favorite shows is Jeopardy. Right? We like Jeopardy a lot.

Frank Curzio: And we watch it almost every night when I come home. So when I got home that night, totally exhausted, and she’s like, “Hey, you want to relax or watch Jeopardy?” I’m like, “Babes, no offense, but I can’t answer any more questions today. I’m done. I’ve just answered over 100.” So, I feel like I was going to die. But we have to watch Jeopardy next day. I said, “Let’s take it easy with the questions!”

Frank Curzio: But, I’m here for you, and thank you for attending. It meant a lot. Friday, replay of the event to subscribers. If you want to get the replay, just go to our site, curzioresearch.com. We have a link on our homepage on the left hand side.

Frank Curzio: I covered a lot, a lot, in the presentation guys. It was really cool. No script, just right off the cuff, a couple of bullets, here, just read topics I could hit and everything. But it was really awesome. So, no prompter, no nothing. I know you’re used to seeing that, but, no, this was just from the heart.

Frank Curzio: Why this market is over-valued. Why it’s going to go, probably, a little bit higher before it goes lower. Why it’s likely, when it does go low, we’ll see a meaningful pullback. I mean, it’s not going to be the V-shape recovery everyone expects.

Frank Curzio: I had Sam Zell come out yesterday, a real estate kajillionaire, right, he’s important. But the guy’s in real estate, he said that, “The pandemic will leave the same kind of impact as the Great Depression, 80 years ago.” I know he’s an old guy, but I don’t think he was there in the Great Depression.

Frank Curzio: But he said, “Too many people are anticipating a kind of V-like recovery, but we’re all going to be permanently scarred by having lived through this.” I get, one man’s opinion, but someone who’s really dialed in to consumer trends, owning real estate, malls.

Frank Curzio: I mean, this is a guy that knows the consumer almost better than anybody. I’m not just cherry picking here. I mean, the Fed governors are back and forth, “Yeah, it’s going to be quick. Maybe not? Maybe yes?” Yelling things, “You should take equity stakes.” I mean, they’re all over the place here.

Frank Curzio: But when I look at things, when I see what’s going on, right now, I mean, we’re factoring in that there’s not going to be another outbreak of the coronavirus at all. We’re factoring in, everyone’s going to be okay going back to malls at a 100%, not at a 100% capacity.

Frank Curzio: I mean, look, I’m optimistic. You guys know I’m always an optimistic person. I try to see the best in everybody. I know we’re going to get through this. Things will get better. I just don’t think they’re going to get better over the next 12 to 24 months. And people think they’re going to get better in the next six.

Frank Curzio: Because at 24 times forward earnings guys, it’ll be 500. That’s what we’re trading today, right? These are forward earnings. I’m not taking the pass, I’m looking at the past here. I mean, these companies are reporting terrible numbers and people don’t care right now. Okay, well that’s the past. We’re expecting that.

Frank Curzio: This is a forward earnings estimate, guys, where it’s probably super optimistic, because most of these companies are removing guidance because they don’t even know. So if they don’t know what they’re going to earn by the end of the year, what makes you think that you know more than these CEOs and these companies?

Frank Curzio: But, at 25 times forward earnings, which we were trading at 19 and a half times forward earnings, pre-coronavirus. And we’re not just factoring in, “Hey, V-shape recovery. Things are going to go back to normal.” This suggests that 12 months from now, our economy will be the strongest in the history of our nation.

Frank Curzio: Forget about going back to normal, we’re past there. This is way, way, much, much better than the best conditions we’ve ever seen. Remember how great they were, pre-coronavirus? Now, let’s say it’s going to get even better. It’s going to get even bet… Everyone’s going to go out.

Frank Curzio: Old people aren’t going to care if they’re getting sick. They’re going to go to the restaurants, going to go to the theaters. That’s what they are anticipating right now. I just don’t see it. I just don’t see it. Especially, since many economic indicators…

Frank Curzio: I’ve followed this stuff for 25 years, they were showing signs the US economy was starting to slow before the coronavirus hit. The President was talking about more tax cuts, remember that? That was pre-coronavirus. They try to keep this economy chugging along, as you head into the election year, or into… We are in the election year, into November.

Frank Curzio: During that presentation I broke down Apple. I just said, hey it’s puzzling that the company’s trading its most expensive valuation in close to 20 years, at a time when sales and earnings are declining, year over year, from 2018, 2019. Yes, I know it’s the past.

Frank Curzio: And that’s hit the billions of buybacks, and they still weren’t able to grow earnings. And they were trading at a high multiple, because everything was supposed to… 5G sales revenue coming from… services were supposed to be amazing. Higher margins in 2020, 2021. Now in 2020, from 1990 to 2019/2020, we’re going to see earnings decline, again, most likely.

Frank Curzio: I mean, looking at companies like Cirrus Logic, 80% of their sales derive from Apple and the iPhone. They lower their sales by 10% next quarter to account for potential delays and coronavirus risks. Everybody thinks Apple’s going do fine.

Frank Curzio: Broadcom, another major supplier to Apple, they just announced another capital race, a debt offering. And when you do that you have to file SEC and you list all the risk scenario thing. And they put it, as clear as day. That some of its supply chain is still not online. It’s going to experience delays.

Frank Curzio: It’s experiencing delays right now, related to the coronavirus. “We may have to move our supply chain to different areas. And yes, we did well, because people stacked up on inventory before this, but right now…” This coming from one of the, if not one of the, the largest chip supplier in the world. It supplies all of Apple products, basically. Broadcom is every laptop computer, every mobile phone.

Frank Curzio: But Apple is, “Hey, everything is great. It’s all just V-shaped recovery.” But Tim Cook’s, like, “Hey, you know what? I’m not going to give guidance though. But we’re going to see a V-shaped recovery, I’m just not going to give guidance.” It could be a mine. I mean, uncertainty is horrible for stocks. In this market, it’s great.

Frank Curzio: The more uncertain you are, the more your stocks are going to go up. But with Apple, even if you look at the numbers, they’re saying, “We’re, sales blow…” Sales didn’t blow out the numbers. The sales blow out the consensus numbers. Sales, year over year, grew 0.5%. Pretty crazy. But, hey, no guidance, no growth, massive premium, who cares? That’s fine.

Frank Curzio: I broke down Disney. Disney just reported yesterday, last night, after the close. Man, I don’t know if you saw the numbers? It may have been one of the worst disasters I’ve seen, in a quarter, in a long time. I don’t know if you listened to it? New CEO, Bailey, got on, because he’s in charge of park and recreation, and it’s all closed.

Frank Curzio: The guy should have just went golfing during the conference call, he wasn’t even on it. He barely made any statements. Because he can’t talk about streaming and everything else, that’s not what he does. It’s all about parks and recreation, that’s their CEO. Well, very interesting.

Frank Curzio: So, I noticed that Disney sales barely beat expectations, came in at around 18 billion. But earnings, supposed to be 0.90 cents a share, which is consensus, they reported 0.60 cents a share. A 35% decline from consensus estimates. Right there, alone, you would get destroyed. But it gets even better, because these are direct to consumer international revenues for the quarter, increase 1.1 billion to 4.1 billion.

Frank Curzio: Yet, segment operating loss increased from 385 million to over $800 million. And he said the increase in operating loss was due to the costs associated with the launch of Disney+, and a consolidation of Hulu. So, basically, the more subscribers these guys add to Disney+ platform, the more money they lose. Right? Just like I told you.

Frank Curzio: Everyone wants to get into streaming, it’s one of the worst businesses ever. You want to look? Look at Netflix. At Netflix, their stock is through the roof, pure play… guess who figured it out? Generating $21 billion in revenue, spending $17 billion this year for new content.

Frank Curzio: Disney has up to 55 million subscribers, even at 150 million, they think they’re going to be able to spend, $2-3 billion a year for new content. How could they compete with everybody else out there? They’re not expanding Hulu, internationally, because they don’t have any money. They’re full of debt.

Frank Curzio: On the call, an analyst will say, “Hey, when do you think streaming is going to be profitable?” They said, “We don’t know.” How do you say you don’t know? When we get to 150 million subscribers, 3 years from now, 10 years from now. How do you say, I don’t know? How is that good?

Frank Curzio: “But you know what we’re going to do, we’re going to suspend our dividend for the next six months.” “Hey, what’s the plan to open your parks?” “Well, we’re not sure because we’re going to come back, probably, at 20, 30% capacity.” “Well, how do you know about the people you’re going to let in? Because you’re going to see a lot of people, maybe, that want to go, which is going to be good for demand. You’re not going to get back to 100% for a very, very long time. But you got to open the parks up at 30%, hoping that we don’t see the coronavirus spread, again.” But, who’s the 30% of people that get to go?

Frank Curzio: And they tried to explain this. “Well, we have these tickets, and maybe the timestamps, or dated…” If I want to go to Disney on vacation with my kids, I have to make sure that time slot’s available. Again, the uncertainty, just uncertainty. They’re not making money on streaming, parks, theaters, live sport still completely offline.

Frank Curzio: Okay, maybe this stuff gets to 50% capacity by the end of the year, maybe. And that’s assuming, once again, we don’t have another outbreak of coronavirus, which every major infectious doctor is predicting is going to happen. It’s pretty obvious, right? Everyone’s in their cages, and if you let people out, you’re going to see a spread again. Which we need to happen, it’s not a bad thing. But to think it’s not going to happen is crazy.

Frank Curzio: And why is it a good thing? Because you get the herd immunity, and that’s basically what you have with the flu. You’re going to get a certain amount of people that get it. Yes, there’s going to be fatalities. But we got to get to the point we’re okay with the coronavirus, or someone catches it. It’s not like the plague, and “Oh my god, we’ve got to shut down the world again.” And we’re not even close to there.

Frank Curzio: So, I covered a lot of these numbers in that presentation. I mean, you look at it, year over year earnings are down 37%, net profit margins are down 44%, operating income’s down 17%. Suspended at dividend, your stock’s trading at 45 times forward earnings, the highest valuation in the history of the company. And the stock is up today.

Frank Curzio: It doesn’t get better than this. It’s just crazy times. I mean, you’re looking at, 45 times forward earnings it’s probably the highest valuation I’ve seen in 15 years for a company that’s not expected to grow earnings over the next 24 months.

Frank Curzio: I mean, you could argue, Tesla, Tesla’s expensive, but growing. Amazon, expensive, but growing. Salesforce, super expensive, but growing, that’s fine. Microsoft, growing. Disney is super expensive, not growing this year, not expected to grow next year. And not even not grow, I mean, seeing major declines across all business segments except Disney+, which the company’s not going to make money on any time soon.

Frank Curzio: So, the way I look at Disney, is these are stocks I can call for 50%, and still be one of the most expensive stocks in the Dow, outside of Boeing, which is pretty crazy. I’m not saying it’s going to fall that much. And based on this, suspending the dividend for six months, everything, the stock’s up today.

Frank Curzio: Look, it’s not personal, it’s not emotions, it’s just everything you learn about stocks just doesn’t make sense right now. I’m not going to fight it. I can tell you the short Disney here, even though I think it’s an incredible short. Because for the stock to be up today, it’s just the way it is.

Frank Curzio: And this is some of the things I’ve covered, where, maybe Disney goes up for another month or two. Maybe, Apple goes up for another month or two. But in the end, at the end of the day, guys, numbers are going to matter. They are. And growth is slowing across the board, across the board, it’s slowing tremendously. We should be trading at, 17 time forward earnings, not 24 times forward earnings, it’s a big difference. A lot of uncertainty out there.

Frank Curzio: But I broke this down, during that town hall. I also brought in Genia Turanova, our options guru, where I interviewed her on video during the webinar. Really cool, she talked about Moneyflow Trader, and yeah, the conservative option strategy she uses to make money on the downside individual stocks.

Frank Curzio: To the point where, at 20%, 30% decline, almost any time over a 12-month period, I mean of course, stock goes up tremendously and then comes down. But almost any time during that 12-month period could generate 2X, 3X, 5X returns. Which Genia already locked in, bet against Starbucks, during the early stages of coronavirus. She locked in a secondhand position for over a 500% return. It was less than 60 days. Teva Pharmaceuticals, big winners.

Frank Curzio: But just going over ways of how do you protect yourself? Not shorting the market, where you can get murdered, like in Tesla. It’s taking 10% of your money and learning how to hedge yourself. This way, you have your portfolio stocks. If the markets continue to go higher, you’re doing okay.

Frank Curzio: If they go lower, you’re protecting yourself from the downside, and making these types of gains, which hedge yourself and protect yourself against a market that, man, I don’t care what metric, what formula, methodology you use, this is one of the most expensive markets we’ve seen in close to 20 years. It’s very, very dangerous.

Frank Curzio: We can go higher guys, we’ve got tons of stimulus out there, I’m aware of that. Trillions and trillions more coming. We’re over three trillion, with another two trillion coming. But, this is a very dangerous market, you have to be careful. I mean, you tell a retiree, “Go all in here, buy the S&P 500?”

Frank Curzio: If this thing falls, as a money manager, you’d lose your job. Why are you buying at 24 times forward earnings, the most expensive valuation, with no growth? So it’s a dangerous market, it’s scary. Maybe we see the market stay at these levels, because we have the Fang stocks, and throw in Microsoft, which count close to 25% of the total S&P 500. So if they continue to go higher, gradually, it’s going to keep the market higher.

Frank Curzio: But, yet, if you’re looking at the underlying numbers, so if you take it by equal weight, and you’re looking at the S&P 500, which was down 11%, and this was a week ago. Where you take an equal weight, and so you give equal weight to every single stock, it was down, 21%.

Frank Curzio: It’s a big difference. Meaning that, most of the stocks in the S&P 500 are not performing that well. It just looks like the S&P 500 are performing well, because those big names with the massive large market caps, some of them over $1 trillion now. Apple, Microsoft, Amazon, over $1 trillion market caps, they’re keeping this index really, really high.

Frank Curzio: You just provided a way that, hey, you can hedge your portfolio. A really good presentation. Again, if you want the replay, just go to our site, curzioresearch.com. We have a link on our home page.

Frank Curzio: And real quick, I’m going to do something special for you guys, because we got close to 500 questions during the town hall event. A lot of good ones, 500 questions. I may have answered… it felt like 100. It was probably a little bit less than that. In over an hour, during the live stream on Thursday.

Frank Curzio: So, I’m going to do a special Wall Street Unplugged Podcast for you, which I’m going to publish on Sunday, so keep a look out for it. Just a Q&A, where I’m going to answer a lot more of your questions. I mean, the least I could do, since so many of you watched the event, took the time to ask questions, live, and typed them in.

Frank Curzio: Yeah, I just love giving back, so just keep a look out for a new, special edition of Wall Street Unplugged, which I will publish on Sunday. If you’re on our email list, which you can do by going to curzioresearch.com, I’ll send you an email the second it goes live. If not, if you’re on iTunes, it usually alerts you, if you’re a subscriber on iTunes, or our other platforms. But I’m going to take a lot of those questions, okay? I’m going to start answering a lot more of those. They were just so many that I just couldn’t get to.

Frank Curzio: I answered them, for an hour and 15 minutes, until, probably, 10:15, 10:20 at night. I think it was, 35, 37% of our audience were still online then, that’s why. Because we can see the statistics. If they’re, 5%, I’m like, “Okay, I’ll be done after 10 minutes,” but since there was so many people that stayed to the end.

Frank Curzio: Statistically, that’s a huge, huge number when you look at webinar, to stay to the actual end. The least I could do is just answer a lot more of those questions. Because there were a lot of good ones that I just couldn’t get to because it was so busy. So, expect that Wall Street Unplugged special version to go out on Sunday. Again, I’ll alert you to that. And I just appreciate all of you attending.

Frank Curzio: Now, over the past two months, I brought out names like, Kuppy, who talked about Shippers, Cactus Schroeder, said oil was going to single digits. Tom Lee spoke about Bitcoin, lots of others. But, my goal, especially during these crazy times, is to put people in front of you to help you make money on things that are working.

Frank Curzio: Or even on things that are not working, like oil, where you can buy an inverse CTF. I know Long Oil ETFs have been crazy, but we did that Dollar Stock Club, bought an inverse CTF after we spoke to Cactus Schroeder, made 20% a week at the closing of the position. I know a lot of you did well on your positions in Shippers, and oil due to Kuppy’s recommendations. I mean, Tom Lee, with Bitcoin, I had that interview last week.

Frank Curzio: So, really good stuff in trying to put the right people in front of you to make money. We’ve done a good job so far. Now there’s one area of the market that’s been on fire. It’s actually been the best performing commodity this year. Not oil, not copper, not natural gas, but a sector, that’s been horrible. Terrible for nine years.

Frank Curzio: I’m sure you guessed it. That sector is, uranium. Uranium prices are close to 40% this year. Started the year around $25 a pound, now at 34. It’s trading close to a five-year high. Not too many people are talking about it.

Frank Curzio: A lot of these names have doubled off their high, still tremendous upside. It is well, well, well off of their all-time highs or even two, three year highs, they’ve come down so much. But the last time uranium hit these levels. To put in perspective, yes, it’s five years. It is late 2015, early 2016 and this is a sector where money is starting to flow into right now. Like, we’re seeing with Fang names, banks, they don’t care about valuation. Google trade 30 times forward earnings and growing search by 8% slowest rate ever.

Frank Curzio: Advertising, I heard everyone was cutting to advertising, it doesn’t matter, right? Fang stocks are safe, they’re good, good balance sheets. Let’s go in them, it doesn’t matter. You’re starting to see money pour into uranium right now from institutions and it’s going to get bigger and bigger. There are numerous tailwinds.

Frank Curzio: It’s been a lot of head fakes in this industry over the past nine years, but numerous tailwinds right now. The massive supply coming off the market, which is now creating a major supply demand imbalance. We just had a favorable regulation that was passed last week.

Frank Curzio: It’s great news for US-based producers. Now, I’m going to bring in the smartest person I know in the uranium industry and that’s co-founder and CEO, Uranium Energy, Amir Adnani. So, Amir and I have had a podcast, he’s talked about gold mining. I know Amir very, very well. He has been running this company for 15 years.

Frank Curzio: During that stretch where nine years have been a disaster. I visited their Hobson Plant in Texas right about six years ago, seven years ago. He showed me everything. It was fantastic. Just how everything is run. It really felt like back then that uranium was going to make a comeback and it just never did.

Frank Curzio: He’s run this company incredibly during one of the worst downturns you’ll ever see in any cyclical industry ever, ever. This isn’t a secular decline of, “Hey, this is going to get worse, worse, worse, worse, worse.” No, this is a cyclical industry that’s gotten decimate, there’s huge demand.

Frank Curzio: Well, uranium plants are going up all over the world. Is in a great position to benefit, which the stock is already up 100% from its March loss. Again, meaningless because it fell down tremendously in March, but when I look at this industry, it’s an incredible opportunity. Now you’re looking at companies that are in very, very good position to benefit, just cutting their cost, being lean as possible over the past four, five, six years and Amir has done that with UEC.

Frank Curzio: But there’s going to be a great interview guys for anyone that has exposure to uranium, which is likely 70% of my audience based on your emails, there’s going to be really in depth, easy to understand and I want to put you in a position like we do with oil and the shippers to make big money on this industry.

Frank Curzio: Just to show you, I’m not talking shit here. I said, “Oh yeah, you got to get into that.” 15% of my wealth is in uranium, I’ve held these positions for over four years. I maybe adding a little bit more to my exposure in the short term as this industry is just so dirt cheap and the tailwinds are that great, and we’re going to see this industry grow.

Frank Curzio: I mean the potential to grow incredibly over the next few years. So here’s my interview with Amir, which by the way is also on video. So we did a video as well as audio, but you’re hearing the audio now. You can be able to find that on our Curzio Research YouTube page. I’m going to start doing videos of all these interviews going forward. But let’s get to the audio version of Amir Adnani right now.

Frank Curzio: Amir Adnani, thanks so much for joining us at Wall Street Unplugged.

Amir Adnani: Frank, is this the first time I’m connecting with you on video?

Frank Curzio: I know. I don’t know if that’s a good thing. It’s good for you, people get to see you. You’re a better looking guy than me. Unfortunately, they got to see me. So…

Amir Adnani: It’s amazing, I think people… interesting. One of the benefits of COVID-19 is I guess we’ve all become a lot more crafty with making videos and making… Look at this, look at us connecting this way instead of the good old fashioned way of audio only. So here’s to getting stronger despite adversity.

Frank Curzio: I hear you. I hear you. So if all you guys listening on iTunes right now, be sure to go to YouTube and you’ll be able to see this. Because they’re only going to get the audio version. I want them to have you on because you’re one of the smartest guys that I know, when it comes to uranium.

Frank Curzio: Founder, present CEO, co-founder of UEC, Uranium Energy, and getting tons of questions, right? We’ve seen uranium prices come up, a lot of production cuts, and it’s exciting a lot of people, especially my subscribers, my listeners, because a lot of them are in uranium, have uranium exposure. Why don’t we talk about the industry, because we’ve seen a couple of head fakes before. Is this the head fake or is this for real now?

Amir Adnani: It’s a good question and it’s been a long bear market since 2011 with Fukushima, we have had a number of head fakes as you point out. Look it does feel like this time around there are at least some different elements. Okay? So, let’s talk about the elements that work. Honestly, the most important element, it’s a question of whether you’re going to look at the tree or the forest.

Amir Adnani: If you just zoom in, you might conclude that the big issue here is what has happened with COVID-19 in terms of a black swan event a supply side disruption that no one projected, no one saw coming. Now due to COVID-19 mine shutdowns because of health and safety reasons, especially mines that are in remote areas or fly in fly out operations like Cameco, Cigar Lake or some of the operations in Kazakhstan, almost just over 50% of global production is offline right now on.

Amir Adnani: On a monthly basis that works out to be, just about 12 million pounds of production. That’s a lot when you consider annual production which is supposed to be about 140 million pounds. So you have this catalyst near term that’s caused the uranium price to go up 35%. Making it the best performing commodity so far this year.

Amir Adnani: But if you step back and consider the picture that we had coming into this year, I think it’s very important production of uranium topped at around, in 2016 is where it topped out in retrospect. From there is when we started to see more determined supply side discipline from producers by shutting down mines, curtailing production. Again, big names like Cameco, Orano, Kazatomprom, starting in 2017.

Amir Adnani: In 2018, you had the world’s biggest uranium mine, McArthur river, which was shut down. I’ve been on your show talking about all of this. You’ve had a very focused and determined supply side discipline set in for three years now. So the market was already rebalancing, and I think that was that the catalyst, was this rebalancing, that was taking a number of years to take shape.

Amir Adnani: It feels like this has now become the tipping point with COVID that’s pushed it into, finally some upward momentum. I mean, we haven’t seen a uranium price with a three in front of it, at 34 in four years. So it’s a four year high for the uranium price.

Amir Adnani: But, look, nothing changes sentiment better than price. I think right now, this time around, we have some really important fundamental underpinning to the whole equation. Demand for uranium is expected to be just over 180 million pounds this year.

Amir Adnani: Supply from production was expected to be just over 140 million pounds this year. But every month that goes by where 12 million pounds is offline, that’s going to start to create a structural deficit potentially. Sorry, the 12 million pounds is a global production on a monthly basis.

Amir Adnani: So, if we lose half of that, so say 6 million pounds per month, and again, every month that goes by, that’s production that we’re not getting back. That’s production, that’s not going to be made up at some point in the future.

Amir Adnani: Frank coming back to your question, is this a head fake? I really feel like it’s different this time around. I really do believe fundamentally it’s being driven by issues that give it more leg and make it very different than any of the previous rallies we’ve seen or attempted rallies we’ve seen in the uranium market.

Frank Curzio: So, Amir talk about the consumption end because when it comes to electricity, you’re seeing supply come off the market. But what about consumption or have you seen the latest figures when it comes to electricity?

Frank Curzio: Because when I look at my personal expense for electricity, it’s up 30, 40% because we’re home all the time. So, but yet businesses are closed, are we still seeing that? Because that’s going to be a big factor, I think.

Frank Curzio: Again, I think we all believe this is going to come back online. It could take the end of this year before everything’s back online or maybe a little bit longer. But I’m just curious, have you seen the consumption numbers? Because if they’re still that strong and you’ve seen that much demand come online. It seems like, this move in prices is going to continue this momentum higher.

Amir Adnani: Again, let’s address what you just said, which is important. Clearly, there’s going to be less demand for electricity globally. Just because we need less of it. Everyone’s sitting at home there’s less industrial activity, so on and so forth. However, I think what we’ve seen so far is that utilities have managed to cut down or reduce electricity generation from other sources than nuclear power.

Amir Adnani: When you think about the way that nuclear energy generates electricity, which is baseload, and the cost associated with shutting down a nuclear power plant. And the fact that the transportation of uranium, it takes very little uranium to generate the kind of energy that a nuclear power plant needs. So you might actually have difficulty in a COVID-19 world to move a lot of coal around.

Amir Adnani: You’ve seen reports out of Japan that coal fired power plant might be shut down. Either easier to bring down and turn on, especially gas fired plants as well. With nuclear power, this is your baseload. It’s frankly too costly to shut them down. We haven’t really seen a shutdown.

Amir Adnani: Once a nuclear power plant does a reload, it means new fuel is inserted in. It can run continuously without interruption for 12 to 15 months. Depending on where any reactors reload was… So far we’ve seen demand be pretty steady.

Amir Adnani: To come back to your question, while there is going to be a drop in global electricity consumption, there hasn’t yet been a decline or drop in nuclear power generation to generate electricity. Hence demand for uranium we can assume has more or less remained unchanged.

Amir Adnani: Now let’s not lose sight of the fact that 47 new reactors have been added to the grid globally in the last seven years. There’s 54 reactors under construction globally, there also is this element of growth with the demand side of the equation.

Amir Adnani: But again, if we discount all of that and just look at the steady rate of what is online and consuming over 400 reactors globally, the demand side looks more stable than the supply side with a lot of the mine disruptions.

Amir Adnani: Mine disruptions again, are also not unique to uranium mining only. Since COVID-19, really took hold of safety issues for mining operators, all commodities from gold and copper down to uranium have been impacted by this. I think as of latest calendar was over 350 mines effected roughly 25 have come back online.

Amir Adnani: But more or less you’re talking about a few hundred mines that are still impacted by this. Where for safety reasons or again, the fact that these mines typically happen to be in remote areas, where you’re going to have less infrastructure available in terms of health, hospitals, ability to look after people.

Amir Adnani: Mines typically aren’t situated in the middle of a downtown of a major city, right? So the remote nature of mining I think also makes it more of a concern when it comes to managing a pandemic, where the virus at hand is one that spreads very easily.

Frank Curzio: Well, really quick. I know this is an easy question for you and me, but we have a lot of investors maybe getting into uranium for the first time. Talk about what baseload power means really quick because it’s a big factor. Because I could see people who would never invest in uranium saying, “Well, alternative energy wind, solar where everything is going on.” Just really quick to bring everyone involved because sometimes we just take things for granted that everybody knows what that means.

Amir Adnani: Basically, it’s about capacity factor, which is about what percentage of a 24 hour day does that source of energy work. So for example, we all understand there’s 24 hours in a day, right? And in the 24 hours, nuclear power has the capability to generate power continuously without interruption.

Amir Adnani: Almost 95% of the 24 hours, renewables are somewhere between 20-30% of the 24 hour cycle. Coal and gas end up somewhere in the middle in there. So it’s the capacity factor the nuclear power… Has the ability to work, almost all the time that makes it baseload.

Amir Adnani: Whether the wind blows, whether the sun shines or not, whether you’ve got coal that can arrive safely at your plant or gas that can arrive. Nuclear can just keep going and basically be the backbone. That’s another way of thinking about what basically it means.

Amir Adnani: So, ultimately, and the amount of fuel that it takes. If you think about all the uranium that is needed, in the whole world to run all the reactors that are working in the world. It can fit inside of one coal vessel. So the amount of uranium that is needed is very little compared to how much energy it can generate.

Amir Adnani: So, it really is the most energy dense of all commodities. It really is a powerful element, uranium, that can generate the energy that it does. All those, again, contribute back to the baseload quality that it has.

Amir Adnani: Finally, let’s not forget, it can generate electricity around the clock without any CO2 emissions. So one of the reasons it’s definitely gaining some pointers and scores with climate scientist and organizations that are concerned about climate change related issues is that they recognize, here’s the source of power, that has the ability to generate enormous amounts of energy, but without emitting any CO2.

Amir Adnani: That’s actually one of the reasons, Frank, we’ve noticed in the last couple of years, nuclear energy has become a bipartisan issue in Washington DC, which is quite remarkable because you think about how polarized American politics has become, how polarized it is. Disagreements between the Democrats and Republicans on anything.

Amir Adnani: On nuclear energy there’s growing bipartisan support. In fact, one of the only bills that Trump has signed during his presidency that really got no fanfare because it had bipartisan support, was something called the Nuclear Energy Innovation and Modernization Act to help streamline the permitting and licensing for new nuclear power plants. Quite amazing, it didn’t get any press.

Amir Adnani: I guess it doesn’t get media coverage if it’s not hotly debated and people don’t want to rip each other’s heads off. But it’s quite interesting in that sense.

Frank Curzio: No, and thanks so much for explaining that. I know people who are invested in uranium, they understand this. But again, this is a great industry. This is one of the sectors that’s really working right now.

Frank Curzio: Yes, the market has come back, but, no one’s really talking about uranium in this bull market and prices going up so much. Now let’s get into, you mentioned regulation, the Department of Energy, recent decision domestic supply where the government’s going to bite. Talk about that and its impact to your company, UEC. Because, I know it’s very, very good news on your front.

Amir Adnani: Well, one of the things that this news represents, so we’re talking about an announcement that came out of the Department of Energy just recently. Which is a set of recommendations, basically being made after a very extensive period of reviewing the nuclear energy and uranium mining capabilities in America.

Amir Adnani: This was reviewed by a number of different departments of government, cabinet level secretaries. You were talking about Department of Energy, Department of Commerce, Department of Interior, the Pentagon and the recommendations basically draw a number of conclusions and recommendations.

Amir Adnani: The conclusion it draws is that, hey, we lost the leadership role that we had in America globally when it comes to nuclear energy and we’ve lost our capability to produce uranium domestically to meet our own needs, both for power generation and that to power aircraft carriers and submarines, the Nuclear Navy.

Amir Adnani: Part of this now becomes a national security issue, it becomes an energy security issue because the nuclear business, nuclear energy, uranium mining has become almost dominated globally by state owned companies. The report basically says, we got to regain this lost leadership. We got to get it back. So let’s make a number of recommendations to get about doing this.

Amir Adnani: Frank, I’ve been involved in the uranium business as an entrepreneur who founded Uranium Energy 15 years ago. As the CEO running this company for 15 years, I can tell you in my 15 years, I’ve never seen such a policy document from not just the US government, from any government. The individuals that work with me at my company, the chairman of our company, Spencer Abraham, was a former US Energy Secretary. Scott Melbye, who’s a 35 year veteran of the uranium mining business.

Amir Adnani: They haven’t seen something this forceful in their careers, which spends a couple of decades more than mine. You could almost go back and say that the last time you’ve seen a comprehensive policy in the US, you got to go back to the Eisenhower administration in the 50s.

Amir Adnani: So, this is truly historic and it’s exciting. What it ultimately concludes is the following, and I think this actually represents a number of areas for your audience to pay attention to. Is that number one, the first area it focuses on is uranium mining. It says that the US is the world’s largest consumer of uranium.

Amir Adnani: We need uranium for 20% of our power generation and we don’t produce any of it, it’s all imported. All the uranium needed to power 98 reactors is imported. Now, more than ever especially because of COVID-19 we have a heightened sense of supply chain vulnerabilities, right?

Amir Adnani: Whether it’s uranium, masks, ventilators, you name it. There is really this growing sense of urgency that it’s important to have domestic capabilities. While uranium is absolutely vital for energy generation, for 20% of our power and 100% of it is imported, people then say, “Hold on, hold on, hold on. We’re getting it from Canada.”

Amir Adnani: No, the Canadians had one mine operating, Cigar Lake, was just shut down recently because of COVID-19 as well. Currently there is no uranium mining in North America. By the way, this is the first time in the history of nuclear energy that there’s no uranium mining in North America.

Frank Curzio: Incredible.

Amir Adnani: The market is dominated by Russian and Chinese state owned companies, Russia in particular and former Soviet Union countries like Kazakhstan, Uzbekistan, used to import and provide 40% of US market, that’s when the Canadians were still operating. Obviously, now they are importing even more with Canadian mines shut down.

Amir Adnani: The size of the market opportunity is pretty massive as well. The Department of Commerce has estimated that in the next 10 years, the size of the market to build reactors globally because the world wants baseload clean electricity from nuclear power. That market, Frank is $500-750 billion in the next 10 years. This is according to the Department of Commerce.

Amir Adnani: How much of that business are US companies getting right now? Zero. What’s the order book that Russia has, their state owned company, Rosatom, to build reactors globally. It’s almost $150 billion, is the size of their order book to build reactors globally. It could be in Turkey, could be in Iran, could be in South Africa.

Amir Adnani: So, there’s a tremendous global opportunity that US companies are losing out on. Frank, it’s not that long ago that names like Westinghouse, GE were the ones building reactors globally and the US led the world in uranium mining.

Amir Adnani: Now you got to go back to 1980 for that. Depending on your view of time, you can say, “Well, that was not that long ago.” Or maybe it was a while ago, I don’t know. But the reality is that what this report and these recommendations are set to do is to say, we got to regain all of that.

Amir Adnani: The very first one about uranium mining starts with establishing a national uranium reserve. Similar to the strategic petroleum reserve. There’s now a proposal to spend up to $1.5 billion to buy uranium for government stockpiles. In case someone is wondering about this issue as well, the US government under international treaties can’t use Canadian mined uranium or Russian mined uranium for aircraft carriers and submarines.

Amir Adnani: The entire Nuclear Navy runs on nuclear power. Nuclear Navy is basically the over 100 aircraft carriers and submarines that are patrolling the waters globally at all times. They need US origin uranium based on international treaties.

Amir Adnani: This issue of domestic capabilities, the national reserve introduces another element I want to come back to on supply and demand, Frank, which is interesting. In previous points in the last 15 years that I’ve been doing this and even prior to that, the US government was selling uranium from government stockpiles.

Amir Adnani: The Department of Energy had a barter program where they would sell, anywhere between 4-5 million pounds per year into the market to raise funds, to pay for cleanup jobs that were part of old sites that they were maintaining, reclamation projects. There was a Gaseous Diffusion Plant in Portsmouth, Ohio, et cetera. In a sense, you had that source of secondary supply in the market, was bullish today. Is that as a result of this new policy position that the US has.

Amir Adnani: They said, “We’re going to start to buy uranium. We’re going to set up a national uranium reserve.” So now you have a new source of demand on top of what was already there in terms of utility demand. This new source of demand, it wants to come to the party with a $1.5 billion budget to buy uranium.

Amir Adnani: But that same source of demand is also saying, we’re no longer going to sell uranium from our supplies inventories that we were doing all this time. It really affects the supply demand from both sides. Less inventory’s available to the market from Department of Energy stockpiles.

Amir Adnani: The Department of Energy basically goes from being on the supply side to being on the bid side or the buy side. Look, there’s a tremendous amount of credit I think that you got to give here to Trump, his administration, the energy secretary, the commerce secretary, Wilbur Ross, Dan Brouillette, Rick Perry, prior to them. They get a lot of credit because they had been pushing this and recognizing this.

Amir Adnani: However, it does really have bipartisan support and it’s impossible to think that if you have another administration at the end of this year, they’re going to show up and say, “Yeah, no, we’re totally fine with importing 100% of our uranium, and getting it from Russia.” I think the numbers and the facts are so startling.

Amir Adnani: This idea that we’re getting 100%, all of our uranium, the fact that we don’t produce any of it domestically is so compelling that it really doesn’t become an argument. And really even up until now we’ve seen bipartisan support for it both for nuclear energy and for this idea that this is a national and energy security threat and should be addressed and it’s going to take many years to address it. But you got to start somewhere.

Frank Curzio: I’m glad you said that, you mentioned the administration because in these days if you say Trump did a good job, half the audience is going to hate you. If you say Democrats did a good job, half the audience is probably going to hate you. But this is bipartisan, and they passed this.

Frank Curzio: Now, I wrote down some numbers from that recent legislation, which maybe you could help me with because what I’m looking at is pretty amazing. Where it says, US consumes 47 million pounds of uranium annually, just the US. And this is going to result in the US strategic reserves purchasing anywhere from 17-19 million pounds annually.

Frank Curzio: Are those numbers accurate? Because that amounts to 40% of the production. So, that’s a massive, massive number. That’s a game changer. Am I right on those numbers or…?

Amir Adnani: Yeah, I know those numbers are straight out of the report and you’re correct about them. Those numbers could end up being part of the $1.5 billion that I’ve been referring to. So one way to look at it is just the dollar amount. The other way to look at it is how many pounds will it buy?

Amir Adnani: But one thing that is a bit unclear, Frank, and you’ve touched on it again by reading that is, there’s a bit of a look back provision that the Department of Energy is going to have on this. So what they’re saying is, we’ll reserve the right to see if… whatever policy or whatever amount of buying we do now we’ll look back and see if it was enough, and we may do more.

Amir Adnani: We may buy more, there may be more here as they see how the issue… basically how this gets unfolded, how it gets done and so I think it’s not going to be so black and white. I think ultimately the idea here is that you’ve got incredible historic recognition from the government that this is an area, an industry that is vital and it needs to be addressed.

Amir Adnani: They’re going to get on with it, part of this, Frank, is going to have to be a competitive process for them to recognize who are the companies, who are the players that can competitively and reliably be supplying uranium to this program, to the national reserve.

Amir Adnani: Ultimately, the amount of time it’s going to take, the number of years it’s going to take to see a ramp-up of the industry. Remember, currently the US uranium mining industry is at zero. There’s no uranium mines operating, there’s no production. Again, demand is at over 45 million pounds per year. So even if the DOE came in and bought 19 million pounds or 20 million pounds, those are numbers that the industry has to really ramp-up to get to.

Amir Adnani: So that’s exciting because it’s going to create thousands of jobs, it’s going to create a lot of economic activity. But even if you get there, it still won’t be enough to meet all the demand. Eventually you’ll get there, but that’s what’s so exciting about this to me is, this is one of those markets where you’ve got a massive domestic market and consumer.

Amir Adnani: You’ve got, again, lots of room to build, to grow domestic capabilities. Frank, I think it’s politically important as well because look, right now we want to be able to create jobs in rural areas, right? I think uranium mines are going to be in rural areas. They’re going to be in places like South Texas, Powder River Basin in Wyoming, Colorado, Arizona, all the Southwestern US States. The Western US States where the uranium deposits are and where the historical operations are.

Amir Adnani: I’ll give you an interesting stat, in 1980 when the US led the world in uranium mining, was the global leader in uranium mining. There were over 20,000 jobs in the US exploration uranium mining industry, and that’s just direct jobs. Indirectly in terms of labs, contractors, you name it, and the numbers would be even more than that.

Amir Adnani: Over 20,000 jobs and today we’re down to less than 400 and so you even think about the job creating machine or an engine that this can become. And it’s not one that was just lost recently to COVID-19 it’s one that can really become a new source because this industry has really struggled competing with state owned companies in Russia and China over the last 10-15 years.

Frank Curzio: Yeah, I know, that’s a great stuff. I can tell you it’s better. I mean, it would be in this industry, any industry that it’s much better on the demand side when you have massive demand and you have to create that supply compared to having tons of supply and trying to find the demand.

Frank Curzio: So, it’s a good problem to have. Let’s finish up with this because UEC, is a domestic producer. How long is it going to take you to start producing uranium because maybe people look at this as the overall mining industry where, well, if you shut off something or what? Gold or whatever, it takes a long time to bring it back online.

Frank Curzio: But how quick can you bring this production back online? Do you see, because of this, it seems more of a domestic thing? Maybe we could start with the first question? I was just curious, is this something that’s going to benefit Cameco, which is in Canada, maybe some of the other producers outside the US as much as it benefits you being in the US?

Amir Adnani: Well, first of all, I think this is positive and it would benefit any company that has uranium projects, mines or infrastructure or any capability on US soil or in the US. That’s what this is about. Second, I would really say that uranium mining has come a long way in the last 10-15 years and the US has been behind on this and it really has to do with technology, Frank.

Amir Adnani: Technology to mine uranium in the United States, is going to evolve and it’s going to improve because previous focus in the US was on conventional open pit and underground mines. These are higher cost mines, but we have in the US something that geologically is quite advantageous.

Amir Adnani: We have deposits that are sensed on costed and what that means without getting technical about geology. What that means is that you can use a very low cost and environmentally friendly way of mining uranium called in-situ recovery.

Amir Adnani: This style of mining enjoys lower capital and the operating cost is quite scalable and in fact, this is the main source of production in the world today. Is in-situ recovery mines, are over 50% of global mining today. It’s quite incredible and it’s mainly been in Kazakhstan. In the country of Kazakhstan, they have similar style deposits as what we have in the US in places like Texas and Wyoming.

Amir Adnani: The Kazakhs because for most of their… those operations are state owned operations. They managed to really get behind this thing. Frank, in 1995 for example, Kazakhstan was producing 1 million pounds of uranium annually. From 1995 to today, they’ve ramped-up from 1 million to 50 million pounds per year of production.

Amir Adnani: That’s incredible production growth. People don’t realize that, that, that’s actually been the success story in the uranium mining industry. Is what the Kazakhs have done and that style of mining. That is the lowest cost way of mining uranium. Where we have an advantage in the US is we have the same deposits, we have the same style of deposits that can be mined with the same recovery technology.

Amir Adnani: We have a video animation of this on our website. So, not having enough time to get into it, I’d encourage anyone to take a look at what I’m talking about here. So what we like to talk about and what I think is exciting, Frank, is to say, “Hey, if you can build low cost and environmentally friendly uranium mines using the in-situ recovery method, using the same method that the Kazakhs have used to become the dominant force in uranium mining, then that is what you should focus on.

Amir Adnani: That makes you a low cost supplier to the US government, because one thing I hate is the idea that this Department of Energy thing and we get this pushback, right? People say, “Oh, well you guys are all excited about Department of Energy. Is this a bailout? Is this a bailout or are you guys just getting a bailout? Is this…”

Amir Adnani: No, it’s not a bailout. We’re talking about an industry that has basically been dealing with predatory behavior from other state owned companies that don’t care about profit and bottom line, we’re a market-based company and even if you get a policy boost so that you can get things going, if you focus on low cost deposits, then this isn’t a bailout. This is basically about creating energy dominance.

Amir Adnani: By the way, I’ve done a couple of interviews recently with Steve Bannon on Fox Business. This is the point we talk about is that, America has energy dominance. Energy dominance has been a big part of any administration’s mandate. Frank, there is a big pull in energy dominance for America, it’s nuclear energy and it’s Russia’s dominance of uranium markets.

Amir Adnani: So, this is something that needs to be addressed. My point is that, with UEC you have a company that’s a past producer of uranium, we mined uranium. We did it with low cost that we demonstrated at our South Texas operations using in-situ recovery.

Amir Adnani: We’ve spent the last six years since we shut our mines down and we’ve been a development stage company to build a portfolio through acquisitions and organic growth that today has a foundation of permitted projects that can produce up to 4 million pounds per year in Texas and Wyoming, and that is all using in-situ recovery.

Amir Adnani: In my mind, we want to be both a competitive supplier to the Department of Energy and to US utilities. This isn’t about just trying to grab some government program money. No, you got to be able to sell competitively to both sources. To sell to the Department of Energy, to the national reserve. We’ve got incredible credibility.

Amir Adnani: First of all, the Former Energy Secretary, Spencer Abraham is the Chairman of our company. We’ve been in with the DOE to present our case. We were one of the few companies that were invited to also present this case that I’m making to you and to your audience, to Wilbur Ross at the Department of Commerce. We’re recognized by the US government as a licensed producer due to the licensed uranium processing facility we own in South Texas at Hobson.

Amir Adnani: This plant is already built, this is where we can process uranium from the mines, dry it, package it, and ready for shipment and sales. So I think we’re in a very unique position, but it took us 15 years to be in this position. This didn’t happen overnight. We’ve spent 15 years of being focused on just one thing.

Amir Adnani: US development, US assets, US production, US acquisitions, having a team of individuals that have been doing exactly this uranium mining in the US for their entire professional careers. All the pieces are there. We’ve just been through a really brutal uranium market. It’s just been brutal for nine years where uranium prices took way longer than anyone expected to recover after the Fukushima incident in Japan.

Amir Adnani: But in nine years, a lot of things can happen, and commodity business where it’s all about supply and demand. Nine years is enough time to let the market really rebalance and I think we’re seeing that. Then, this issue with the US really becomes a cherry on top, in my opinion, of a global market that has really sound fundamental underpinning for it.

Amir Adnani: A global uranium price that’s recovering and now you get something positive. In addition to that, in the US which I think really is great for US companies like UEC, that get more than one, a driver of interest and value with what we can talk about and how we can capitalize for advancing our business.

Frank Curzio: Yeah, and I have to tell you, Amir, as someone who has known you through, I would say almost 10 years now, I visited the plant, that Hobson site, which you showed me. It was amazing, I even held the yellow cake and stuff, which is really cool.

Frank Curzio: But to see you right now, and we’ve talked about UEC in the past and we had a lot of head fakes here. But to see you right now, I’ll be honest with you, interviewing you and someone that’s known you for a long time, I’ve never seen you this excited, this positive, this happy on this market.

Frank Curzio: You should be because finally, it’s been a long road, now it’s not like, “Hey, this should happen.” It’s happening. Right? There is a lot of things that are going on, the regulation. It’s just cool to see this. Because you’ve been in an industry that’s been decimated.

Frank Curzio: It’s been terrible, and it’s hard to operate as a CEO in industries like this where it’s just nonstop like, “Okay, how are we going to cut costs? Okay, what are we going to do to save money?” Now it’s, “Hey, we’re ramping-up,” right?

Frank Curzio: It’s got to be different in terms of sentiment for you. I could see it in your face, but I’m really happy anyway to finally see this working out for you and the talent behind this industry.

Amir Adnani: Well, look, I appreciate that. It’s exactly that. It’s not just me as, you know. Because when you visited our Hobson plant, you visited our office in Corpus Christi, you met the individuals that we have… And meet those individuals, Frank. During this recent drop in the market in the month of March, despite the fact that uranium prices have recovered and we’ve announced this.

Amir Adnani: But our company took very proactive measures to reduce our operating expenditures. But, make sure we don’t lay anyone off because we thought we were already down to a very bare minimum team that would give us that advantage to restart. A team that’s been with the company for a very long time.

Amir Adnani: So, we’ve made a lot of difficult decisions as well along the way. But those that maintain a competitive edge for the company, I mean, okay, so, we’ll take major cuts and I’ll be the one that leads the way and takes the biggest cut and we’ve done that.

Amir Adnani: But we’ll do that to ensure that our human capital base is there because you’ve met those people. They’re as excited as I am that you described right now in terms of my enthusiasm, because we’re all dying for action, man. We’re dying to get back to work. We’re dying to get back to, when I say work, I’m talking about restarting operations.

Amir Adnani: We were so proud when we built Palangana in 2010 because at the time, that was the first uranium mine to come into production in the US in a decade. Since then, Fukushima happened, and so again there’s been all these difficulties and challenges, but I don’t think anyone can fault us for being patient. We’ve been patient, we’ve stuck with it, we’ve executed and I think our day is coming. Again, the whole team at UEC feels the same way as I do.

Amir Adnani: We’re excited to show what we can do and it’s in terms of operations and results and performance and all of that. But right now, we’re also playing a bit of defense as well, making sure our operating expenses have been brought down and maintaining a lot of discipline and financial discipline because you got to be financially resilient.

Amir Adnani: I don’t know how you feel about the markets, but it’s all been, it was way down, way too fast, way up, way too fast. Even with good, strong uranium price performance, we want to make sure we’re in good shape with the company. Even though the share price has recovered here from where it dropped to in March, I’m not happy about it. If you look at where the stock was even a year ago or where it was seven years ago, we got a lot of ground to catch up with here.

Amir Adnani: Frank, the thing people don’t realize is before the COVID-19 selloff in March, the broader market was at an all-time high. So it came from the base of all-time high and it dropped and now is recovering. Uranium was at a nine year low and then it went even lower. And now it’s trying to recover.

Amir Adnani: It’s actually, I think, a bit frustrating if you’ve been in it for a long time. If you were a holder, I think you’d know that. But, it’s really great to see some positive developments because it really reinforces hope and positive energy that we’re on the right track and that inflection point is there.

Amir Adnani: Funny enough, in the 15 years I’ve been doing this, Frank, three things have moved the market the most. None of them were predicted and they were all black swan events, the flooding of Cigar Lake in 2006, Fukushima in 2011, and now with COVID-19 in 2020. It’s always like that.

Amir Adnani: This is a slow moving industry that it really feels either on the way up or down. It does need something to wake it up and get it going. We’re seeing that now and I see a lot of similarities actually between this time and what has happened here and the 2006 market or 2005/2006 before we start to see the uranium bull market of 06 and 07.

Frank Curzio: No, that’s great stuff. Great stuff. I’m happy for you, again, you could see the excitement Amir and thanks so much for joining me on video. You have a nice background, the other Vancouver skyline a little bit and I’m not going to ask you to do this on video, but I know whenever I see Amir, if I see him in Vancouver at conferences, the first thing he goes is, “How’s it going out there?”

Frank Curzio: I won’t tell you to do it on video, but I know that you listen to the podcast. I appreciate it. And this setup is really good and it’s about time for you. I mean, the work that you’ve put in, I know you’ve worked harder over and I think that builds character, Amir. Seriously for me being in the business 25 years character is built not when things are good, when things are bad.

Frank Curzio: Because when things are good, everybody’s okay. When things are bad and you’re still, visiting sites, you’re going into Washington talking politics, meeting the top people in the industry and constantly where, it’s even hard to talk to you. I know how busy you are and you’ve done a fantastic job of that. I think people know that.

Frank Curzio: So, these tailwinds I think are going to continue and I know UEC is well-positioned. So, thank you so much for joining us Amir, and explaining everything in detail like you always do. You break it down for everyone to understand and I know my audience especially really, really appreciates that, bud.

Amir Adnani: That’s really great. Thanks Frank, it’s great to be back with you and I look forward to doing this again soon, be well.

Frank Curzio: Great stuff from Amir. I meant that, to me, character is a very, very big thing. When I’m running my business, when I hire people, and I don’t care if you’re arrogant, I don’t care if you’re shy. I don’t care if you’re a pain in the ass. I hate liars, I hate people who don’t back up their talk. I hate bullshitters.

Frank Curzio: Amir has great character, just to see what he’s done in this industry and just remain positive throughout the whole entire thing. And the guy is flying all around the world, meeting tons of big investors, close ties in Washington to do the Spencer Abraham hire.

Frank Curzio: To work this hard in the industry when things have been so terrible for such a long time, what do you think this guy is going to do now that the market is starting to take off? That’s the way I look at it. It’s not just Amir, it’s not just UEC. Zarg is another name that I like. There’s a lot of good names in this space.

Frank Curzio: Even at Cameco’s, I mean, you could buy Cameco here and you just play it safe and I still think you’re going to do well or you could buy the juniors because I think prices are going to go a lot higher from here. That momentum is behind them. The supply, demand imbalance, people have been talking about this for the last two years and when it comes to uranium, it’s a sector that I think you should have exposure to.

Frank Curzio: Not tons of exposure. I have a lot, but, I would have probably, 5% exposure to this industry at least. Buy a couple of stocks, whatever stock you feel fit. It could be UEC, it could be Cameco, it could be lots of others. Zarg is another name I could just mentioned.

Frank Curzio: But I really appreciate him coming on and how he explains everything in detail because I know all of you…. Not all of you, but a good 70% of you, even based on emails, I know a lot of you have uranium exposure. I even have die-hards who all their possessions are in uranium, but I just wanted to have someone on that knows this industry better than everybody else, and that’s Amir.

Frank Curzio: So, I’m glad he came on and told you the fundamentals and told you what he thinks about the industry. And you can tell just from that and his excitement of, it’s a lot different now than it was over the past few years. I think, yeah, this is an industry that is ready to take off. Now let’s get to the educational segment real quick and it’s on the airlines.

Frank Curzio: So, I recommended an airline on Thursday during my webinar and I also recommended one in my newsletter and this was days before Buffett came out and said, “I sold the airlines.” A lot of these things fell 13, 14, 15% at first, and then more than cut back on those losses by half, by the end of Monday.

Frank Curzio: I thought Buffett selling out of the airlines was a complete non-factor. I tweeted about this saying that, he brought his positions down below 10%. The only reason why you would do that is if you’re going to sell a position, most likely. I assumed he was selling almost all of it, if not all of his positions in the airlines. The reason why you bring it down below 10%, because if you’re a 10% owner and you buy or sell, do any transactions as a 10% owner, you have to report it within two days.

Frank Curzio: That’s what he did, when he brought it below 10%. Otherwise, you could wait till the end of the quarter, which in this case would be July or August, and you’ll report that position in your 13F, if you’re under a 10% holder. So when he brought it below 10% he had to alert everybody and everybody knew it and it was big news.

Frank Curzio: This is four weeks ago. But once you bring it below that he could sell his whole… he’s got now until August. So a month ago until August to sell his entire position, that’s what he did. And he mentioned it. So for me, I think that was a non-factor. I don’t think… Buffett’s a guy that I admire very much. He’s one of the greatest investors ever.

Frank Curzio: His position in airlines didn’t do that well. But, the negative emails that I got, and respectfully say, “Frank, man the airlines, you got to be crazy, man. This has been a terrible business, this has been horrible. These guys bought back stock.” I’m not talking about 60%.

Frank Curzio: It’s 95% negative from the emails that I’m getting. I got similar emails when I recommended a human genome and said they were going to get taken over. That was at $8, people were buying the stock $25, that it came down to $8.

Frank Curzio: He said, “Glasgow could buy these guys for $3 billion a year. They already have partnerships with them all over the place.” What happened is, they spent $2.8 billion and three weeks later and bought them at 60% premium.

Frank Curzio: From my experience in this industry, when I have that many overwhelmingly negative emails on anything I recommend, it makes me increase my position dramatically. Because it tells me that everything is really factored in. Because outside of Buffett, which should have been a non-factor, again, this is something that it should have been.

Frank Curzio: It really was because airlines already recouped those losses from Buffett selling. We just had another billionaire say that he’s buying the airlines, and come out on CNBC. But, there’s not anything that you could tell me negatively on the airlines that you already don’t know.

Frank Curzio: Capacity’s down 90%. Do they have liquidity problems? Yes, but they all reported earnings two weeks ago and a lot of these guys raised money. I’m not talking about all the airlines. There’s two in particular that I like. Now, if they continue to have liquidity problems, which the two I recommended are fine to the end of the year and have enough cash, that’s assuming capacity’s going to be down 90%.

Frank Curzio: They’re all going to be operating 10% capacity, which we know it’s not true because economies are starting to open back up now. Even if it goes to 20 or 30, it’s going to be huge for these guys. But even if it doesn’t, if we see another outbreak in the coronavirus, they only took $25 billion so far of the $50 billion from the government. They have another $25 billion coming and if it gets worse, the government’s likely to take an equity stake in these names.

Frank Curzio: Not that I agree with that and I don’t want that. I’m just telling you what’s going to happen because I’d rather the government with taxpayer money take an equity stake than just giving them a loan. Because that’s putting a floor under it and look what it did for taxpayer money, they made money on almost everything in 2008/2009 that they invested in.

Frank Curzio: All the banks, Fannie and Freddie, AIG, GM, they made a fortune. They made a fortune on all that stuff. Fortune, and still making a fortune on Fannie and Freddie, billions. But this is an industry, it’s not going to be allowed to fail. This is an industry where these guys are buying back stock.

Frank Curzio: The amount of criticism, these are the companies that were well-run. These are companies generating huge cash flow. They had dividends. They were buying back stock at under 10 times forward earnings. If you’re pissed at them, you should be pissed at the 95% of the S&P 500 companies who bought back their stock just to meet their earnings estimates, at 18, 19 times forward earnings.

Frank Curzio: Look what Apple is doing, $50 billion buyback. You really want Apple buying this stock back at 22 times forward earnings? When the last five years, their average PE was 15, I don’t know. Well they need to, if they want to meet their earnings estimates, that’s how they met their earnings estimates over the past two years by buying back loads of stock.

Frank Curzio: Apple’s a great company, it’s awesome. I use this example a lot. If you like a Snickers bar, you’re not going to pay $30 for it, even though you love it. But when I see the negative on airlines in the emails coming in, because for me it’s just common sense here, right? Because the fundamentals, I broke them down, they have a full year cashed up, they’re okay.

Frank Curzio: I’m assuming that capacity is going to go back to 30%, 40% by the end of this year. If it does, these things are going to go up 20, 30, 40% easily from these levels. They’re still down 65% from their highs. Now, what puzzles me is how the hell could people on TV recommend casinos? You’re recommending Disney, you’re recommending all these travel stocks, but you’re not recommended the freaking airlines.

Frank Curzio: How do you get to Vegas? Disney, Orlando. A lot of you will take planes there. Yeah, I’m in Florida, I drive there. But most people take planes. And all the travel industry where people are like, “Oh, things are going to get better. They’re going to get better. They’re going to get…”

Frank Curzio: If they get better, it has to be through the airlines. It has to be, that’s the main travel hub. I have to tell you, even if it doesn’t get better, you’re going to see business travel pickup tremendously. I don’t mind traveling right now, the planes are going to be half empty. That’s fine.

Frank Curzio: It might be 50% capacity. I’m not saying that they’re going to go back to 100% capacity. I’m not saying that the economy is going to be roaring. You guys know how I feel about it. But when I look at the airlines right now and the negative sentiment where, just think about it, if this is the case when I recommended IBM and I got a lot of shit for that and we did well on that. And we also got out before the whole market tanked and then IBM fell. I think IBM is pretty good buy now, when a few stocks raised their dividend, in the quarter.

Frank Curzio: When you look at airlines, what negative is not factored in? The economy is terrible, liquidity problems. These guys need to raise money. Everything that I look at for the airlines and they’re down 65%. Again, if you have that thesis and you have all these negative risks, I think this is one of the biggest mistakes investors make.

Frank Curzio: You have all these risks and that’s what IBM… IBM, it lost revenue for 22 straight quarters. They’re talking about the same things they were talking about the past two years on IBM. What’s the new risk? Because the stock has fallen down because of that risk. So you have to account for price. I’m not saying buy the airlines at all-time highs like Apple and… Disney is not at all-time high, but Disney’s just going higher on news that, it should be down 25% today.

Frank Curzio: So, when I look at these segments or say, “Hey, buy Apple or buy Google at all-time highs, or close to all-time highs,” I’m saying buy the airlines at 65% with all these risks factored in. I could be wrong, and if I’m wrong, I’m going to come in here and I’m going to break it down just like I did with GE when I was wrong in GE.

Frank Curzio: Get them right more times than I’m wrong then most of you wouldn’t even be listening to this podcast. I like covering my lose whenever I win because I’m a perfectionist and I want to be perfect in this industry. And that’s why I love it so much because you can’t, and it’s always a challenge. I’m always learning new things every single day. Talking to brilliant people on my podcast and interviewing them.

Frank Curzio: I love it, just the information. It’s just amazing because it’s like golf, right? The better you get, the more pissed off you get. You can’t conquer it. It’s like basketball, you win the NBA Championship… you’re playing golf, you shoot a 65 you’re like, “Damn, I can’t believe I missed that put, I should have shot at 64.”

Frank Curzio: Yeah, that’s how I feel about this industry where you’re always learning, but when it comes to the airlines, look, if I’m rolling, I’ll come in here. I’ll break it down like I always do. All the things that I’m wrong. But I’m just telling you when I see that many emails coming in, that many people overwhelmingly negative on a particular industry, an industry that’s being backed by the government right now that’s got them providing loans to them. It’s a necessity.

Frank Curzio: These are guys that didn’t do anything wrong. They ran their businesses well, even Buffett said that too. He said, “These are well-run companies before this. These are good CEOs, they did the right thing.” This is an industry, it only has to go back to 30, 35% capacity, which I think is a guarantee by the end of the year.

Frank Curzio: If not, you should be selling everything, especially travel related. Casinos shouldn’t be catching a bid. Looking at Expedias, the Pricelines which is booking. It should be cashing a bit. None of these should be cashing a bit. Because all this is fueled by airlines, by travel. So for me, the airlines at this level of where they’re trading with the government backing, I see little downside risk here and loads of upside potential if things just go back to 30, 35% capacity.

Frank Curzio: So hopefully you got the lesson there because when everyone’s against you, most of the time, it means you’re right. It’s not I’m saying we’re going to be right on this, but, on a flip side of that, when I get so many emails. “Great idea, this is awesome. You’re right Frank on this.” That’s the time when I worry. I’m like, “Oh, shit.”

Frank Curzio: So yeah, it’s when you doubt yourself, it’s when you’re nervous about something, an investment that you’re in. That’s a good feeling guys. For someone who’s been in this for a long time, that’s a really good feeling to have. Because when you’re arrogant about something, “Oh, this is a guarantee, man, I’m making money.”

Frank Curzio: I’m telling you, the market slaps you in the face. Whenever you get an ego, it slaps you down. And that’s what I love about this. That’s why I’m very humble when it comes to this stuff. Because I’ve been through the ups and downs. I’m trying to help you guys learn from my mistakes. As for airlines, I think they’re a fantastic buy right now. It’s a speculative buy, don’t go crazy, but put a little money into them.

Frank Curzio: I see a little downside risk from here, a lot of downside. All those risks of pricing at this level down 65%. But, if these things just go back to 30, 35% capacity. Again, I picked out two names that I like. I don’t like all the airlines, but this is an industry that can catch a bid.

Frank Curzio: I think you could easily make 30, 35% on these names by year-end. So guys, check out the Curzio Research YouTube page. Also Twitter @FrankCurzio, I’m posting these things daily. So that’s all for free. Also, if you’re not on the email list, sign up at curzioresearch.com, we’re sending out lots of essays from different analysts that I read. That are fantastic, really great.

Frank Curzio: So, I’m starting to share a lot of material. I want to give you the access that I have where a lot of these things get posted on sites that no one even heard of, but it’s just really good raw material and I love it. Daniel Creech also writes at Curzio Research once a week, great stories covering tons of topics, ideas, even things that we discuss.

Frank Curzio: We also have a weekly breakdown. Where I highlight my favorite stories of the week. So tons of free stuff that’s relevant. Plus, we notify you when every podcast is published, even though most of you are subscribing to Wall Street Unplugged, so you automatically get it, download your iTunes or other platforms.

Frank Curzio: But you can get all of this just by going to our email list because I get so many questions, “Frank, I didn’t see this I didn’t see that.” We email all this stuff and it’s not overwhelming guys. We’re not sending you 40 emails a day and, we see that a lot from competitors and things like that. So, we just want to keep you up to date things that we’re looking at, different topics.

Frank Curzio: The more emails that go out, we really look at the statistics of what get opened, the headlines and then we know what you want, right? We know what’s interesting to you and that’s what we want to do, right? We want to provide a good base of stories and newsletters and stocks and educate you.

Frank Curzio: But things that you want to learn about. That’s what tells us when we look at our statistics. So, if you want to sign up to our email list, you can do so at curzioresearch.com and Sunday guys on the lookout, I’m giving out a lot of freestyles today.

Frank Curzio: But Sunday be on the lookout for that Q&A, I’m going to answer a lot more of your questions from that Thursday town hall event and I’ll email, I’ll let you know when it is going to go out on Sunday. So guys, thanks so much for listening, as always, I appreciate all your support. I’ll see you guys in seven days. Take care.

Announcer: The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility. Wall Street Unplugged produced by the Choose Yourself Podcast Network, the leader in podcasts produced to help you choose yourself.

Editor’s note: Thanks to all who attended our first Curzio Research townhall event: “Navigating the New World Order.” Hundreds of questions came flooding in… too many to answer in one sitting.

That’s why, this Sunday, Frank’s hosting a follow-up Q&A session. If you still have questions about what’s going on in the markets today… or what you should really be focused on as an investor… stay tuned for details on how to join.

In the meantime, if you didn’t get a chance to attend the “Navigating the New World Order” event, check out the replay right here.

Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His weekly Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 9 million times.

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