Inkai

Production on a 100% basis was 2.0 million pounds for the quarter and 6.3 million pounds for the first nine months of the year, compared to 2.3 million pounds and 5.8 million pounds in the same periods 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 to the JV partners 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.

Achievement of JV Inkai’s 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. The first shipment containing approximately two thirds of our share of Inkai's 2023 production is currently in transit. We expect the shipment to arrive before the end of 2023. The second shipment with remaining volume of our share of 2023 production is expected to depart before the end of the year and arrive in early 2024. We continue to work closely with JV Inkai and our joint venture partner, Kazatomprom, to receive our share of production via the Trans-Caspian International Transport Route, which does not rely on Russian rail lines or ports. We could experience further delays to our expected Inkai deliveries this year if transportation using this shipping route takes longer than anticipated.

To mitigate the risk of delays, 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.