Good afternoon, everybody. Nice to see you, and thanks for coming out this afternoon. We're always delighted to be in Florida at this time of the year. I think in Saskatoon this morning it was like minus 20 and there's a blizzard. And a lot of you, if you follow us, will know Dr. Grant Isaac. Grant Isaac, my good partner. He's supposed to be here tonight and tomorrow for, I think, a yellow cake café, but so far they haven't been able to get a plane into Saskatoon, so we'll see if we can get him here for tomorrow. But that's the world we live in. So you're going to be familiar with our story, I'm sure, and I'm going to put up our usual warning, Cory, that you can put up.
So we will probably give you a little bit of forward-looking information today, and so just ask that you consult our MD&A and AIF when it comes out for further information. Okay, so obviously if you followed us, you've heard us talking for years now about positive market momentum and our optimistic outlook. This is something you're going to really continue to hear from us in 2024. In fact, you've heard us talk about positive long-term fundamentals in uranium and the nuclear fuel industry for probably quite a few years now. We've been talking about that, a nd when we talked about that over the past number of years and nothing was happening, nothing was happening, we always believed, but we didn't know when, or we couldn't predict when the transition would happen.
We watched for years as producers, undisciplined, we thought, put primary supply into an illiquid spot market, which resulted in some very healthy inventories that were built up. But I can tell you we never didn't believe that at some point that excess inventory would at some point clear the market, that supply would continue to grow, or supply would continue to be outstripped by growing demand in the market, and that we at Cameco would emerge out of this looking better and stronger than ever. And if history was any indication, we know that when this starts to happen, it can happen really fast. And so today, as we see the uranium contracting cycle shift now to what we call a replacement rate level, I can say we're clearly now in the early days of a positive long-term window.
The fundamentals in our business are even more positive than we thought, and the transition has happened faster than we thought. On the demand side, positive is definitely an accurate description of today's sentiment, but I would add, and you've heard us probably on our calls, use the word durable as well. Compared to previous cycles, today's fundamental demand picture is shaping up to be more durable and resilient than ever. Our previous peaks that you saw in our business were typically driven by one-off events that added speculative, short-term, momentary pressure to supply and demand. And I'm thinking, of course, of 2010. The Chinese came in and bought 52 million pounds in one month, the Cigar Lake flooding, items like that. But today the environment is more than just having a moment, as we say, and it's certainly more than being marked by a one-off event.
Today we're seeing full-cycle growth not only in the near term but also in the mid-term and long-term markets with, I would say, broad interest in nuclear power like we've never seen before, and I've been doing this for about four decades. This isn't limited by any geography. There's global-scale factors now in our business that we expect to persist for many, many years to come. Decarbonization, electrification was the early driver in our business. Climate change, electron accountability, also in our business. But that's really been surpassed in the last two years, almost to the day now, by geopolitical tensions. You know I'm talking about the Russia-Ukraine situation that really drove our business to another level and really required countries and companies to reevaluate their energy security in their country and to eliminate reliance on really unstable jurisdictions while still taking carbon emissions into consideration.
We're seeing today in the nuclear business life extensions, reactor refurbishments, a renewed call for new builds like we've never seen before. We're seeing it everywhere. We have new technology that's also introduced into our business. I'm thinking of SMRs and advanced reactors that take nuclear power beyond just generating electricity but also being used for things like transportation, heating, desalination, and hydrogen production, just to name a few. Grant Isaac, Grant and I were just recently in Dubai at COP28, which we'd never been invited to before because we're nuclear guys. This time, for the first time, we were invited, and nuclear was clearly front and center on the table at Dubai. First day, there were 28 countries that signed on to an international declaration that called for a tripling, tripling of nuclear power. 400 reactors today. You think about that, 800 new reactors by 2050.
We said, "Well, that's maybe a little bit aggressive. How about doubling? How about just 400 new reactors by 2050?" We'd probably be happy with that. But that's the enthusiasm that you're seeing, and you're seeing it around the world, country after country saying that there's no net zero without nuclear, and we at Cameco saying there's no nuclear without Cameco and Westinghouse given the leading role we're playing now in the Western world nuclear department. So if we use the word durable in the demand picture, then I would say on the supply side we'd be using the words fragile or even shaky to describe supply, mine depletion, declining in finite secondary supplies.
A decade that we lived through of underinvestment when the prices were low have led to a very, very tight market on the supply side, something that we think is going to last for a long time. Add to that the supply chain challenges related to geopolitical tensions, and there's impact really across the entire supply cycle. So given increasing demand, tight supply, our decade-old message now of strong long-term fundamentals still stands. We at Cameco, through all of this, through the last 10, 15 years, have tried to maintain our disciplined approach of managing the financial, contracting, and operational aspects of our strategy. We've had to make some very, very difficult decisions. If you followed us, you know what they were. We cut the company in about half.
We put about 3,000 people out during those tough times, shut down the largest high-grade uranium mine in the world because that's what we had to do at the time. Today, those decisions are coming back to really position us to capture full-cycle value in the chain with the supply pipeline of assets that we have. We're in a very, very leading position. We also have significant brownfield leverage in the form of idle capacity that we can ramp up as the market returns and as we have contracts to back it. And we can look at our expansion capacity that we're eventually going to need to bring on to meet the commitments in our portfolio.
So we think we have an advantage with brownfield assets that we currently can increase or ramp up or bring on and that don't have to take on. Our customers won't have to take on the risks that a greenfield single asset might bring. So just during the period 2016 - 2021, we left about 130 million pounds of uranium in the ground. We shut the mines down, just said left it in the ground. We said it's $17. We're not taking those pounds out of the ground. Today, we're bringing those pounds back into contracts and selling them into contracts that we have in front of us that are at significantly different prices than they were back then. So what about today? What's going on today in the market? Well, you undoubtedly saw the uranium price drop. I think it was about two weeks ago.
It went down by $4 in a day. It's extremely volatile. The spot market's extremely volatile. That was a transaction, I think, Cory, of about 200,000 pounds that moved the market. And it can go up and down in those numbers on a weekly basis very easily in a market that, on an annual basis, consumes about 170 or 180 million pounds. So you can see how thin the spot market is. So what should we take from that? Well, we've said ad nauseam that the spot market is not the fundamental market. It's not where nuclear utilities buy their fuel. Second, it's thin. I'd say it's extremely thin, and small quantities can cause large variations in price. And we know that utilities will not depend on the spot market for their fuel needs going forward.
We know that because we have a sales team that's constantly out in the market talking to customers about uranium sales and selling into 10- and 15-year contracts, not for next year delivery. So another thing that I just wanted to point out is that we believe that an unhedged spot exposed production strategy destroys value. We've seen that in the past. We've seen where utilities or producers have said that they won't look at a long-term strategy. They prefer instead to sell on the spot market, and they would just produce into that. That won't be Cameco's position. I can assure you of that. We will not be responsible for any return of the market today's significant excess spot supply. That would be a flawed strategy in our view and not a smart thing to do.
So while we at Cameco are starting to study the costs and timelines for bringing on more supply, we, as of yet, have not made decisions to bring that supply on, and we certainly won't advance any new supply on spec. When we do bring on more pounds, whether they be from McArthur River or elsewhere, we will have a home in our contract book. So in today's contracting cycle, we're linking pounds that we left in the ground as well as our fuel services capacity to our long-term commitments that are being negotiated today. And those contracts, as you can imagine, are being executed in a significantly improved market environment, generating value now and in the years to come. Now, there's been some interest in our average realized price, which was just under $50 in 2023.
That's because we use a method of layering in contracts over time, and some of those contracts would have been layered in 3, 4, 5 years ago and would be part of our portfolio today. So that means like a market-related contract that might have hit a $50 ceiling in 2023 would probably have been negotiated some time back in the early 2020s and at a time when the spot price was probably in the $30 range. That also means today we're able to use the current positive market environment to gain exposure to the improving market conditions for deliveries that will extend well into the future. It's a very deliberate strategy that applies to all of our fuel cycle activities. Today, we can source uranium from our facilities at McArthur River Key Lake, at Cigar Lake, and with our colleagues at Inkai in Kazakhstan.
In addition, we can draw material from our inventory, our product loans, long-term purchase arrangements, and if needed, from market purchases. So we have a wide variety of sources, and we don't match supply sources to specific contracts. This year, for example, you might have seen in our Q4 reporting that we might buy up to about 2 million pounds in the market based on our sourcing plans. But you have to remember that's 2 million pounds from expected deliveries of 32-34 million pounds in 2024. We'll see how things go. We always want to have options. And we've got some untapped firepower. Beyond the current near- to mid-term sources, if we took advantage of all the tier one growth opportunities, our annual share from tier one uranium supply could be about 32 million pounds. And we're in good shape for the future.
We have licensed and permitted tier two assets on care and maintenance. I'm talking about Rabbit Lake in Canada and, of course, our Wyoming and Nebraska facilities in the United States. We also have some advanced projects including Millennium, Yeelirrie, and Kintyre, the last two being in Australia. We have, and we don't talk about it very much, but we have probably the best exploration land position in the most prospective trends in Northern Saskatchewan where, of course, we already have established mining and milling facilities. So we have a lot of options now and into the future. And we go farther down the food chain. We're obviously involved and looking to grow and enhance the value of our fuel cycle assets and our other investments.
We have conversion capacity in Canada, which we can expand at a time when we are expanding, at a time when customers are avoiding Russian supplies and services, and the market has identified a need for more conversion. We also have a 49% interest in GLE, Global Laser Enrichment, which we're hoping will be the next enrichment facility in the United States. We're excited to have added a 49% share along with Brookfield, our partner, in Westinghouse to our investment portfolio in 2023. You've probably heard of Westinghouse, well-established business in the nuclear fuel area that really adds onto where Cameco leaves off. Cameco in, of course, exploration, mining, conversion. We make fuel for the CANDU units, but then Westinghouse takes over, will build reactors if you need them, will service reactors, and make fuel for reactors.
So we think that with Westinghouse, we're well-positioned for long-term growth in the nuclear industry. Over the next five years, we reported that we think Westinghouse's adjusted EBITDA will grow at a compound annual growth rate of 6%-10%. And so that was a big acquisition for us, and we're very happy to have Westinghouse in the portfolio today. So even with Westinghouse, we still maintain some firepower. We have a strong balance sheet, and we expect it only to strengthen as we return to our tier one cost structure. Cameco, we're always going to do what we said we would do. We're going to pursue growth in the same manner. We'll be strategic. We'll be deliberate. We'll be disciplined, and we'll focus on generating full-cycle value. And we'll do it with a great eye and a great concern for ESG pieces as well.
Maybe I'll stop there. I'd be delighted to take any questions you might have. Thank you.
All right. Thank you, Tim. So I think maybe I'll ask the first question, which is to do with Westinghouse. You mentioned the EBITDA growth target, which was absolutely a surprise relative to the initial number that you gave during the transaction. I think it was 3.6%.
Yes, 3.6%.
So obviously, you're only a few months into owning the assets, and you've already really pushed up your potential target growth rate. So what has changed? What have you identified as being opportunities?
Well, once we closed the deal, which was in November last year, we had a chance to look under the hood a little closer and see what was there. Clearly, from the time we first started looking at Westinghouse to a year later, things have changed. And certainly, Westinghouse's core business, which is kind of being the OEM of reactors, the servicing, the fuel, engineering, outages, is looking as good or better than ever. They've moved now into the VVER fuel business. So the Russians had about 35 reactors that they were exclusive suppliers to in Eastern Europe. And those, if you've been watching, obviously, the Ukraine's the big one. You've got Bulgaria. You've got Czechia. You've got other places that are now giving their fuel supply needs to Westinghouse. So it's just improved. We've got many, many options for new build of reactors, whether it be the eVinci.
I think of the home province of Saskatchewan that's committed to build. It's about a 5-megawatt eVinci. The AP300 is another option, and the AP1000s some orders for those around the piece. So it's just getting better with time. And I think we were maybe a bit fortunate, but the timing of our acquisition of Westinghouse couldn't have been better. It's at a time when nuclear is hopefully taking off.
You mentioned your trip to Dubai where those extraordinary targets were spoken about in terms of nuclear. As you mentioned, it does seem like a bit of a stretched target. Now, you've got some very strong relationships with the utilities. What's your view in terms of how do the utilities view those targets? How possible is it to get to those new reactor numbers?
Well, I guess we'll see. I mean, the world doesn't seem to want to build any more coal-fired facilities. In our home province of Saskatchewan, we're about 80% coal and natural gas. We're supposed to have phased out all fossil fuel electricity generation by 2035. We say, "Well, what are we going to do? We don't really have any dams we can put up." And so they're looking at nuclear. Darlington in Ontario is going to build the first GE Hitachi reactor, we think. So I mean, there's 58 reactors under construction now. But there's a massive industrial buildout of nuclear that's going to have to happen. That's equivalent to what we saw probably in the 1970s and 1980s when we had the oil shocks of 1973 in countries like France and Sweden and Canada and the U.S. They did it. They built reactors.
That's how we've got 100 in the U.S. That's how you've got 10 in Sweden. That's how you've got 54 in France. Excuse me. You did it. The first one stopped. First of a kind is a you never want to be first. You always want to be second when you're building. And let somebody else take that risk on the first one. But I think it's going to happen, and I don't think countries have a whole lot of choices going forward.
That brings me to a question in the app. Can you discuss the outlook for SMRs, the small modular reactors?
Well, I mean, that's something we put in the storefront. I say we, the collective nuclear industry, put in the storefront window probably five or six years ago and said, "Well, if you don't like the big ones, how about these ones? They're smaller. They're modular." And everybody looked at them and said, "Wow, yeah, we really like that." A normal coal-fired facility is probably about 300 megawatts. And so if you look at in Wyoming, for instance, they said, "Well, we're shutting down coal, but you can replace it with a 300-megawatt nuclear reactor. Use the same infrastructure, same transmission lines." And so they've really become popular. Now, somebody's got to start building them. We've talked a big game. Now, somebody's got to start building them. And I think OPG in Ontario has got the first one that they're breaking ground now for.
Again, it's going to be expensive, I'm sure. But waiting behind they want to build four altogether. They're working with TVA who wants to build four. Saskatchewan wants to build four or more. So the ball's got to get rolling, and we've got to start building and get them going.
Turning back to the mining assets, obviously, you mentioned, well, McArthur River was offline for some time, and you've brought it back, and you're nearing full capacity now. How do you see that asset developing? You had a slide there about contracts versus reserves and resources. What optionality do you have at the asset, and also do the resource reserve support?
Kazakhstan aside, they've got great assets, so I can't say anything about it. And they're great partners too. But Kazakhstan's got great assets. Outside of Kazakhstan, that McArthur River mine is probably the jewel. It's got significant reserves and resources. It's a good producer. We've been producing since 2000 there with a break, obviously, when we were shut down. But we have regulatory approval to go to 25 million pounds per year. Today, we're producing this year, our plan is to produce 18. And then we've got that 7 million pounds of firepower, as I call it. So we're going to take this year to take a look at it, see what we need to do to debottleneck the Key Lake Mill, get it ready. And when the time comes and when we have contracts and demand for that production, we'll put it on, not before.
I can tell you we're not going to just produce on spec and put it into the spot market. We will have homes for that product. But we like that one. That'll be our first move, and then we'll see where we go after that.
I guess a similar question for Cigar Lake and what the potential for extension?
So we are moving forward with an extension. We always knew there was another pod off to the west. We had planned to under the current plan, we'll run it to 2030, and then it would be finished. We think we can run it for another six years at about the same rate, 18 million pounds a year. So we're starting the work this year. You need regulatory approval, and you need all of the engineering work done, and then you need to advance in the mine. But again, when you have a brownfield site with existing infrastructure that your mill's already built, your miners are there, you have permits, that's the best place to go. That doesn't add production. That just extends production to Cigar Lake, which the world's going to need.
If we're going to go anywhere near these build plans that the world's talking about, that's not the only one we're going to need. We're going to need a whole lot more.
This is another question in the app about production. So any recent thoughts regarding Wyoming assets?
Well, we've had it on standby since 2016, care and maintenance. The U.S. is interesting because they still have 94 reactors. They consume about 45 million pounds of uranium per year, and they produce zero. That's not ever really a good plan, but that's just the way it's turned out. You're seeing some of the other potential producers bringing on some production in the U.S. We're looking at it. I would say, again, we would go to McArthur River every day before we'd go to Wyoming just on a cost basis. But if there's some desire, some appetite, and we're getting a lot of support from senators and the governor to restart production in the U.S., we'd look at it. We were producing somewhere between 3-4 million pounds there.
So it's a great asset for us at the right price point, and it's something I think we will bring on. I just don't know when, but we'll bring back at some point.
So there's a few questions here along the similar lines. But is there a risk basically, recent delayed capacity comes back on quickly in your view, and is there a price that reduces demand? So I guess two sides of the same coin. Can production come on too quickly and impact prices?
In 40 years, I've never seen production come on too quickly. It just doesn't happen. Honestly, it doesn't happen. I know that coming out of our quarter, there was some fear that we thought we were showing off our firepower should the market require the pounds. And some took it as, "Oh my goodness, now there's way too much uranium. Cameco's going to bring all this uranium out of there." I wish that was the case. But we're just getting those assets ready. Things never come on too fast. It's hard work. It takes a long time. So no, I don't think that's the case. I think this market's going to stay really tight. We're seeing lots of long-term contracting. Utilities now are coming, extending the tenors. Instead of 5 years, they want 10 years. Some want 15 years. We have contracts out to 2040.
I'm sure our colleagues have some of the same. So yeah, bringing on too fast, it's hard. Ask our friends in Kazakhstan. It's hard in Canada. It's hard in Kazakhstan. It's not easy either. There's lots of issues. You've got human issues. You've got supply chain issues. You might have reagent-type issues. It's not easy business.
The second question was, if it doesn't come on quickly enough, could we see the demand?
Well, we're hearing that, and I don't want that to be the case either. I was over at the IEA last week. I'm going to the IAEA next week. There's some talk about, well, if we're going to triple, if we're going to triple like all these countries and companies sign, where's the fuel coming from? Have we got enough uranium? Because we're talking, like I say, today, it's 400 reactors. They consume about 180 million pounds. What if it's 1,200, and they consume 500 million? Where's that coming from? Cigar Lake, we're extending it, but not forever, for six years to 2036. McArthur River, same thing. I mean, it'll go for a while. Kazakhstan, it'll go. But we're going to need another Kazakhstan, probably another Cameco or Canada. Lots of work to be done if we're going to follow that path.
Great. Well, I think we're approaching the end of time. So thank you again. Pleasure.
Pleasure. Thanks, everybody. Thank you.