Inkai

Production on a 100% basis was 1.9 million pounds for the quarter compared to 1.7 million pounds in the same period last year.

Based on an adjustment to the production purchase entitlement under the 2016 JV Inkai restructuring agreement, we are entitled to purchase 4.2 million pounds, or 50% of JV Inkai’s planned 2023 production of 8.3 million pounds.

Due to equity accounting, our share of production is shown as a purchase at a discount to the spot price and included in inventory at this value at the time of delivery. Our share of the profits earned by JV Inkai on the sale of its production is included in “share of earnings from equity-accounted investee” on our consolidated statement of earnings. Excess cash, net of working capital requirements is distributed to the partners as dividends.

JV Inkai has made significant progress in managing its wellfield development challenges. However, achievement of its 2023 production forecast requires it to continue to successfully manage several ongoing risks, including the potential impact of procurement and supply chain issues, and inflationary pressures on its production materials and reagents. If there is a significant disruption to JV Inkai’s operations for any reason, it may not achieve its production plans, there may be a delay in production, and it may experience increased costs to produce uranium.

The geopolitical situation continues to cause transportation risks in the region. In 2022, we experienced transportation delays for our share of Inkai’s production. In April, the second shipment containing 1.3 million pounds, representing the majority of our share of Inkai’s remaining 2022 production, arrived at a Canadian port. We could continue to experience delays in our expected Inkai deliveries for 2023. To mitigate this risk, we have inventory, long-term purchase agreements and loan arrangements in place we can draw on. Depending on when we receive shipments of our share of Inkai’s production, our share of earnings from this equity-accounted investee and the timing of the receipt of our share of dividends from the joint venture may be impacted.