Cameco Corporation (CCJ) Q4 2025 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Cameco Corporation Fourth Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Cory Kos, Vice President, Investor Relations and Communications. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Cameco's Fourth Quarter and Annual 2025 Conference Call. I would like to acknowledge that we are speaking from our corporate office in Saskatoon, Saskatchewan, Canada, which is on Treaty 6 territory, the traditional territory of the Cree people and the homeland of the Metis. With us today are Tim Gitzel, Chief Executive Officer; Grant Isaac, President and Chief Operating Officer; Heidi Shockey, Senior Vice President and Chief Financial Officer; and Rachelle Girard, Senior Vice President and Chief Corporate Officer. Tim will provide some commentary to start the call, and we will open it up for your questions. Today's call will be approximately 1 hour, concluding at 9:00 a.m. Eastern Time. Our goal is to be open and transparent with our communications. So if we do not have time to get to your questions during this call or if you would like to get into detailed financial modeling questions about our quarterly and annual results, we'd be happy to respond to any follow-up inquiries. There are a few ways to contact us with additional questions. You can reach out to the contacts provided in our news release. You can submit a question through the send us a message link in the Investors section of our website or you can use the Ask a Question form at the bottom of the webcast screen, and we'll be happy to follow up with you after this call. If you join the conference call through our website event page, there are slides available, which will be displayed during the call. For your reference, our quarterly investor handout is also available for download in a PDF on our website at cameco.com. Today's conference call is open to all members of the investment community, including the media. During the Q&A session, please limit yourself to 2 questions and return to the queue. Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today, except as required by law. As required by securities laws, we also need to make you aware that during today's discussion, the company will make references to non-IFRS and other financial measures. Cameco believes these measures provide investors with useful perspective on underlying business trends and a full reconciliation of non-IFRS measures is available at www.cameco.com/invest. Please refer to our most recent annual information form and MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I will turn it over to Tim.

Well, thank you, Cory, and good morning, everyone. Thank you for joining us to discuss Cameco's fourth quarter and full year 2025 results. Earlier this week, the U.S. Government Department of Energy requested a meeting in Washington, D.C., which turned out to be overlapping with our earnings call this quarter. So due to the exceptional circumstances, I'm recording these introductory comments just before we release, and then I'm catching a plane to Washington. Needless to say, continuing to advance our landmark partnership agreement signed last fall with the U.S. government to build Westinghouse reactors remains a priority. So I'll lead in with my remarks and hand off to Grant, Heidi and Rachelle for the Q&A portion of today's call. We're into the second week of February now, but I'll start by wishing everyone a belated Happy New Year. As I reflect on this past year, on one side of the coin, we saw ongoing geopolitical turmoil, incredible volatility and general uncertainty seemingly at every turn. But on the other side of that same coin, we also saw resilience, people, institutions and industries adapting, refocusing on the fundamentals and continuing to make meaningful progress on long-term decisions despite the noise. I'm reminded that progress like this doesn't happen overnight. It's built through consistency, strong communities, great people and a lot of discipline. If I were to summarize the past year in the context of our business and our strategy, I would say that 2025 reflects disciplined execution across the organization. Disciplined because we remain anchored to our long-term strategy, we've learned to look past the distractions of near-term volatility and shifting market themes. And I believe the execution shows up clearly in our business today. Cameco has invested across the fuel cycle, and we are delivering meaningful value to our owners, customers, partners and communities. We operate world-class uranium mines in what we call Tier 1 because they're proven to be Tier 1, not only in terms of the quality of the deposits, but the established economics of the operations. Beyond our flagship mining assets, we also maintain proven Tier 2 operations that are currently in care and maintenance, providing future flexibility. Our long-term production plans are further supported by our advanced exploration projects and by some of the best uranium exploration properties on the planet. We operate refining, conversion and fuel fabrication businesses with the decades of expertise required to be a long-term partner that customers can rely on. We continue to explore our way into next-generation enrichment through our investment in global laser enrichment, where tangible progress is advancing the technology for use in tails re-enrichment. And through our investment in Westinghouse, not only have we added more fuel cycle and reactor lifecycle expertise, we have insight into the future of nuclear fuel demand like never before. Through that investment, we are continuing to advance deployment of the industry-leading Gen III plus AP1000 reactor in Western markets. It's a proven construction-ready design and not unproven concepts, so it aligns with our focus on disciplined execution. Turning to our results. The quarter and the year reflect a strong finish to 2025, supported by robust contributions from all segments of the business, improved realized pricing and continued value creation from our investment in Westinghouse. As anticipated, the fourth quarter was an important contributor to full year performance, reinforcing the benefits of our long-term contracting strategy and our measured approach to production and supply. Looking more broadly at the market, 2025 marked another year of accelerating momentum across the nuclear fuel cycle. On the demand side, we saw an inflection not because of a single data point, but because policy, fundamentals and contracting behavior increasingly moved from rhetoric to action. Governments, utilities, industrial energy users and the public have recognized nuclear's essential role in delivering secure, reliable and carbon-free baseload power. On supply, however, we're not yet seeing a comparable inflection. Long-term contracting volumes in 2025 remain below replacement rate levels, reinforcing the need for continued discipline. Utilities are focused on securing dependable supply in an environment where secondary supplies are thinning and potential new production faces long lead times, inflationary pressures and geopolitical uncertainty. While long-term contracting activity increased late in the year, we are simply not prepared to satisfy that demand at today's economics, which do not support sustainable supply. Our discipline is intentional. History tells us that real price discovery occurs when contracting levels reach or exceed replacement rates. We continue to negotiate contracts and unlock value by selectively adding to our long-term portfolio while preserving significant uncommitted volumes to be priced when more demand comes to the market. The pounds we are adding have pricing terms that provide downside protection, but allowing us to retain exposure to improving demand. To start 2026, we have commitments to deliver an average of about 28 million pounds of uranium annually over the next 5 years. Average realized prices continue to improve, reflecting the strengthening long-term market environment. We ended the year with approximately 230 million pounds committed under long-term contracts. Considering the reserves and resources we have in the ground, we are preserving significant uncommitted productive capacity to deploy as fundamentals continue to strengthen. That alignment between long-term contracting and our supply sourcing remains a cornerstone of our strategy. Touching briefly on the results we released this morning. We reported -- our annual revenue increased to about $3.5 billion in 2025, up 11% compared to 2024. Adjusted EBITDA was about $1.9 billion, which was up 26% from the previous year and adjusted net earnings of just under $630 million represent a 115% improvement compared to 2024. Needless to say, we are very pleased with the outcome. The theme of disciplined execution can be seen in our financials with discipline, providing us with the flexibility to manage risk, support operations and respond to opportunities as markets evolve. Our balance sheet remains a core strength, ending the year with approximately $1.2 billion in cash and short-term investments, $1 billion in total debt and strong liquidity supported by consistent cash flow generation. Operationally, in our uranium segment, we produced 21 million pounds on a consolidated basis in 2025, exceeding our revised annual guidance. Cigar Lake once again demonstrated its world-class performance producing above expectations, while McArthur River and Key Lake delivered in line with our revised plans following the development delays earlier in the year. Importantly, while production volumes from our Canadian mines were lower than initially planned, our supply flexibility and long-term planning of our supply sources allowed us to meet delivery commitments and continue to capture value. Our supply levers include inventory, loans, spot purchases when appropriate and committed long-term purchases like the production we buy from our JV Inkai asset in Kazakhstan. In 2025, despite a rocky start to the year and a pause in production in January last year, JV Inkai met its annual production target. We took delivery of 3.7 million pounds, representing our share of 2025 production as well as 900,000 pounds that remained in Kazakhstan from our share of 2024 production. Our Fuel Services segment delivered another strong year as well, including a record UF6 production at Port Hope. Pricing in the conversion market remains at historically high levels. supported by tight supply, growing demand and a renewed focus on security of supply. With the tension stemming from a supply deficit and conversion, we continue to add long-term contracts with pricing that underpins the sustainability and the value of our operations. Our investment in Westinghouse continues to exceed the acquisition case expectations. In 2025, Westinghouse delivered strong underlying performance, including a significant increase in adjusted EBITDA. We received cash distributions related to both the strong results as well as an additional distribution in 2025, tied in part to its participation in the Korean nuclear project in Czech Republic. While we do not expect comparable distributions in 2026, the Korean consortium continues to advance the Dukovany project, which Westinghouse will be involved in along with work on another 2 reactor project at the Temelin site in Czechia. Westinghouse's outlook remains strong and reinforces the long-term value of our investment. During the fourth quarter, we announced a strategic partnership between Cameco, Brookfield, Westinghouse and the U.S. government aimed at accelerating the deployment of Westinghouse reactor technology. Backed by at least USD 80 billion in planned investment from the U.S. government, this initiative underscores the growing alignment between policy, energy security and the only proven nuclear technology that is ready to deploy today. Following the term sheet signed in October, constructive discussions are continuing in support of reaching a definitive agreement. As I said, I'm on my way to Washington for the ongoing discussions literally as you listen to this call today. For Cameco, this partnership also supports long-term demand across the fuel cycle, and enhances our insight and ability to meaningfully participate in the global nuclear build-out. Looking ahead, we expect growth across the nuclear fuel cycle to continue, driven by electrification, decarbonization and energy and national security priorities. These are all themes you've heard us repeat call after call. But it's important to reinforce them because they reflect the durability we have not seen before in nuclear. And as the focus on the sector grows, commitments will increasingly be measured by delivery. Plans for future uranium supply, along with headline grabbing narratives, promising greenfield conversion and novel enrichment technologies continue to attract attention. But the next phase will be defined by execution. Execution is the proof behind commitments and the foundation of trust. And this is where Cameco's experience, assets and discipline matter. In 2026, we expect to produce between 19.5 million and 21.5 million pounds of uranium and between 13 million to 14 million kilograms of uranium product in our Fuel Services division. JV Inkai is planning to ramp up to its full capacity of 10.4 million pounds this year, our share of which is 4.2 million pounds. That's accounted for as a committed purchase along with other long-term purchase commitments. We plan to buy up to 3 million pounds, keeping in mind that we expect to use our various supply levers efficiently, so we're not forced to buy in the spot market if it doesn't make sense. We expect to deliver between 29 million and 32 million pounds of uranium in 2026 with an average realized price between CAD 85 and CAD 89. Fuel Services deliveries are expected to match production at 13 million to 14 million kgU. And our outlook for our share of adjusted EBITDA from Westinghouse is approximately USD 370 million to USD 430 million, representing continued strong performance, albeit lower than in 2025. Remember that back in the second quarter of 2025, we accounted for the significant payment related to the Korean reactor built in the Czech Republic, which was USD 170 million for our share related to that specific project. It's a good reminder that as new build activity gains momentum, you can expect some degree of lumpiness in the results from Westinghouse with these big reactor projects pushing forward. So to conclude, we believe the risk to supply continue to be greater than the risk to demand, we believe that Cameco as a disciplined operator with proven Tier 1 assets, integrated capabilities across the nuclear industry and a strong balance sheet, is well positioned to deliver long-term value. So thank you for your continued interest and support. And operator, the team is now ready to take questions.

[Operator Instructions] The first question today comes from Brian Lee with Goldman Sachs.

Maybe first off, just around this new guidance framework for the Westinghouse business. I think that makes a lot of sense given all the activity that's happening and how it's not going to be linear. But can you maybe give us some sense of the framework or ballpark range of what kind of the financial impact of each project is? And presumably, you're talking about 2 packs because it does seem like the Westinghouse guidance for 2026 is including -- it says in the MD&A, one project going forward in the U.S. this year. So maybe just thoughts around how we should think about the sizing of the financial impact from each of these projects? And then maybe any color around potential projects in Bulgaria, Poland, maybe even Canada as well? I have a follow-up.

Yes. Thanks, Brian. It's Grant. I'm going to maybe start with your second question, and then we'll work backwards into the specific guidance. I mean, Westinghouse continues to be a very exciting space for us. We see nothing but enormous upside for the leading gigawatt scale Gen III reactor. We think the opportunities continue to grow. So we remain very disciplined as Cameco. We don't put stuff into the forward guidance until it is at FID. But let's just think about what's on the docket. When we look at the U.S., I think everybody knows about the $80 billion project to build 8 to 10 reactors in the United States. But don't forget, there were a number of conversations in flight with utilities who had been working with the Department of Energy's Energy dominance financing group. So we're not talking 8 to 10. We're talking about a bigger number in the United States that are under consideration, perhaps another 10 in addition to the U.S. government program. We know that Canada wants to build 4 gigawatt scale reactors at Bruce Site C, but we also know that they're talking about another 10 at the Wesleyville site, so potentially 14 there, added to 10 plus 10 perhaps in the United States. We know Poland wants to build AP1000s. They picked it for a 6-reactor program. We know Bulgaria wants to build AP1000s. We know Slovenia is having a very good look. We know Slovakia is having a very good look. And of course, we participate in every Korean new build, and Tim in his comments flagged that not only have the Koreans advanced the Dukovany site in Czechia, but are also looking to advance the Temelin site with another 2 reactors. And then we could even expand it a little bit further and talk about new builds in other jurisdictions, parts of the Middle East, Saudi Arabia, United Arab Emirates. The point being the upside case for energy systems is very, very significant. And we're seeing a lot of activity in that area. But many of those are not at FID yet, and so they're not in our guidance. What we wanted to do was very prudently say, look, Westinghouse is a mature investment for us now. We guide the Cameco core on an annual basis. We're going to guide the Westinghouse core on an annual basis and then kind of provide a framework for how each of these reactors plug in. And that framework that we've shown in the past on a per reactor basis, and good of you to note that you generally build them in 2 packs, you don't build them as 1, so multiply by 2. But on a per reactor basis, you're looking at something around $400 million to $600 million EBITDA for every reactor that gets built. That's through the engineering and procurement part of the Westinghouse scope. So we almost invite folks, you choose how many reactors you think are going to go forward in that framework and the years. And you can see the big lumpiness that comes from it. So we're just going to guide on a more systematic core-related basis. And then when you look at the Westinghouse guidance in 2026 and you compare it to 2025, it's actually up over our initial 2025 guidance with, of course, the swing factor in 2025 being the royalty payment on the Dukovany units in Czechia. But the Westinghouse core continues to perform as expected, reactors being saved, reactors being restarted, reactors going through subsequent license renewal plus the nearly 70 reactors under construction right now, let alone those that are on the drawing board, I guess our point, Brian, is Westinghouse just continues to be extraordinarily well positioned for the tailwinds in the nuclear space.

That's great. I appreciate all that color, Grant. And then maybe just my second question around kind of the modeling assumptions here. When I look at the average realized pricing outlook for 2026 in uranium, it appears pretty flattish at the midpoint year-over-year. Can you maybe speak to why there isn't a bit more appreciation happening there? Maybe just it's the timing of contracts, but I would have thought that you'd see some movement on that line given how pricing has generally been on an uptrend in recent years.

Yes, Brian. So let's shift to the other end of the spectrum and talk about uranium a little bit. This is what discipline looks like. You've heard us say for the better part of 2 years now that as we're in a market that is beginning to understand that more uranium is required and needs to be -- needs to come to the market. And you can just see that from the uncovered requirements wedge. If you look at that wedge of uranium that the fuel buyers have not yet bought, that wedge is as big as it's ever been. There is a significant amount of demand that has to come to the market. And that says to an incumbent producer that now is the time to be disciplined. Now is the time to let that demand form and let it come to the market. And those who have been watching the market know that we have not achieved replacement rate across the industry yet. In fact, we're well below replacement rate. And we, as Cameco, have been in every cycle, and we know that when you're at replacement rate or above, that's when real price appreciation comes. I provide that as context because we've been saying we're being very fussy in the amount of volume that we're willing to place and we're being very fussy with the terms and conditions that we're willing to part with future materials. So no surprise. We just haven't been layering in the big volumes because while we're being fussy, not every utility is prepared to agree to our terms and conditions. So you're not seeing that pickup in the near term because we're preserving those pounds for when more demand is coming to the market. That's our disciplined marketing strategy, and it's also reflected in the disciplined pace at which we then produce into that demand. So this is what discipline looks like. This is how you capture long-term value. This is not the moment to be locking in huge volumes because we think more demand has to come. And as that demand comes, it's going to probably price stronger uranium, and that's when we want to do more contracting. And then that's when you'll see a lot more exposure to rising prices.

The next question comes from Alexander Pearce with BMO Capital Markets.

So an easy question to start with, Grant. Given [indiscernible] absence from the call, do you think you're getting close to finalizing the agreement? Or would you expect maybe we could see something in the next kind of quarter? Or could it be a bit later in the year?

Yes. Just a bit of context around the agreement with Cameco, Brookfield, Westinghouse and the U.S. government. Obviously, we announced a definitive term sheet at the time of announcement. And then there was work to do on the definitive agreement, and that continues. What the conversation is really about is these 3 projects underneath that are advancing. There's a lot of momentum behind them. The first one is identifying where the 2 packs are going to go and the model that they're going to be built under. And that's work being done by the Department of Commerce and the Department of Energy. And we're only sort of involved around the edges and figuring that piece out. The second big project is identifying what the order of the long lead items would look like. So there's been a separation, if you will, between the normal process of identifying a site and figuring out the model it's going to be built under and then ordering long lead items. Those 2 have been separated because everybody is working backwards from the Trump executive order that says 10 large nuclear power plants have to be under construction by 2030. So if you wait and do step 1 first, identify all of the sites and identify the model and then you order long lead items, you won't achieve the executive order. We're obviously heavily involved in the conversation about ordering the kit for 10 reactors right now upfront. And then the third project, of course, is just securing the financing to come from Japanese as part of the foreign direct investment commitment. So this isn't about negotiating the definitive agreement. This is about fulfilling all of these next steps, very exciting conversations about what the order for long lead items would look like. I think if we allowed ourselves to be optimistic, we do believe there's a good chance that we will see a long lead item order as part of this program in 2026. And in fact, that will probably coincide with long lead item orders on other programs as well. So 2026 is set to be a pretty transformative year where announcements turn into action on the gigawatt scale new build section.

Thanks Grant. So would you suggest that there could actually be some upside to the '26 guide then if everything comes into place and you get the 2 units, et cetera, et cetera?

Yes, perhaps there could be. I mean we built a little bit of that into the guidance for Westinghouse, but that's sort of on a small order basis. This concept of separating long lead items from figuring out where each 2-pack is going to be built in the model actually kind of reverses the framework that we put out for thinking about how every AP1000 flows revenue and margin and cash flow. And that is normally, you would start to do the engineering work. You would sign the FEED 1, which is tens of millions of dollars and then the FEED 2 contract, which is hundreds of millions of dollars, all leading to a final investment decision, which would then trigger the procurement side of the business, the ordering of the long lead items, that really important procurement process that Westinghouse provides oversight and guidance and quality assurance and all of that on. With the separation of the long lead items from identifying where the reactors are going to be built, we actually could see the procurement revenues and margins beginning to flow first. And so that will be something that we'll watch for in 2026. And obviously, we'll be very vocal about what that means to the Westinghouse business should we find ourselves in a position of securing orders for -- substantial orders for lots of reactors and their long lead items.

The next question comes from Orest Wowkodaw with Scotiabank.

Could we spend a few moments just talking about the production outlook at specifically McArthur River. I'm surprised to see the potential impact here in '26. It looks like your guide would suggest that output could be as much as 4 million pounds below the 18 million pounds design. What -- I guess, can you give us more color what's going on there and whether this issue is expected to be resolved this year? Or could this continue into future years?

Yes, Orest, great question, and we'll spend a little bit of time on it, of course. So if you think about McArthur River, even with the guidance we put out for 2026, it makes McArthur the second largest uranium mine in the world by quite a margin. So between Cigar and McArthur, this is a lot of uranium production that Cameco is responsible for. And it really reflects just how strong the production team is there. So we announced in September of 2025 that we were seeing delays at McArthur River. And we also said at the time that you can't divorce our plans to produce from where the market is at. And so when we look at today's market that's not at replacement rate, a market where we think a lot more demand has to come. That's a market where we're not yet placing growth pounds or expansion pounds or extension pounds because the demand just simply hasn't been there. Pricing has been getting stronger and stronger on very limited demand, but ultimately, that demand hasn't been very strong. So that then informs how we think about our production plan. So we look at McArthur River. We look at those delays that we announced in September 2025. And the 2025 production just hit the top end of that revised guidance in 2025, which was good. But ultimately, we just stick to the plan that we put in place in September 2025. We have no incentive right now to accelerate it in any way. So that's not what we're trying to do. We're not trying to take any heroic action at McArthur River. We're just systematically working on the mine development that's required as we move into new zones. And we're not being incented by the market. We're not being told by the market with volumes of demand that it's time to do anything different than systematically go ahead and do that. So we are seeing a bit of a tail on the 2026 guidance. But ultimately, McArthur has produced at 18 million pounds before. It's produced at 20 million pounds before. It has a license to go to 25 million pounds. McArthur is an extraordinary asset. We are just timing it and pacing it as part of our demand strategy and our disciplined strategy, and that's all that this reflects.

And could that -- based on that incentive, could that then potentially continue into '27 and beyond if you don't see the market improve?

Well, the market is improving, and we don't guide 2027 and 2026. But -- but our confidence that the team is working on a path to ensure that the development is there for the production when we want it, that confidence is there. It's just in 2026 as we're looking at a market, and I'd just remind everybody on the call, term contracting in 2025 ended up being 116 million pounds, well, well short of replacement rate. That tells us more demand has to come to the market. And so we just -- we watch that very carefully. We never front-run demand with supply. And then that is reflected in our -- in the decisions we make about the pace at which we develop our assets. And to the extent that you believe more demand is coming, which means a stronger pricing environment is coming, these pounds are worth more in the future than they are today, which encourages us to remain very disciplined on that plan.

Okay. And does that also mean that the expansion to 25 million pounds likely comes later rather than sooner?

Well, not necessarily. We're doing the work and continue to do the work to fully understand what's required at both the mine as well as the Key Lake mill for when we make the decision to go to a higher level of production. Remember, when we sign long-term contracts, we typically don't start delivery for until 2 years and beyond. It always gives us a built-in runway to respond with our production. And what we're doing ahead of that in a market that we feel is getting stronger and stronger and more demand has to come, but hasn't quite hit replacement rate yet, what we're doing is making sure we understand everything that needs to be done at the mine and mill in order to achieve that higher level of production once it's priced accordingly. So I would just delink the two. One is just the plan of mine development from the plan for mine expansion, but we have not made that decision yet and we don't have any time frame for making that decision. That decision is ultimately up to the fuel buyers collectively. And it's ultimately up to them bringing more demand to the market in order to signal that it's time to expand.

The next question comes from Ralph Profiti with Stifel.

Grant, the MD&A, and just going back to the last question, did bring up some technical risk highlights around McArthur River Zone 1 and Zone 4. And as you talk about this slow proactive managing of these risks, I just want to get a little bit of sense on the technical risks around sort of production capability limits in the short term and whether or not you would still characterize some of the technical limits as being transient and temporary? Or is this more of a mine development risk that could take sort of multiyears to figure out versus production capability irrespective of what the market is telling you?

Yes. Ralph, I think I understand your question to be, are we flagging risks that would prevent us from, say, being on a disciplined production strategy? So in the MD&A, we are identifying the factors that led to that announcement in September of 2025 that we weren't going to meet our plan at McArthur River. So that was things like encountering a clay zone that was proving to slow down the rate at which we install freeze capacity and therefore, build up a frozen ore inventory, and that was slowing down the rate at which we were developing into that zone. Once we fell behind that plan, our strategy doesn't encourage us to try to catch up. So we're just working systematically at the development that has been, I would say, rephased or repaced as a result of those risks. So those risks have not changed, and they've not gone up. They're not suddenly -- it's not suddenly a riskier environment. It's just our response to it is measured with the market. And should we see a market that starts to bring more demand and more demand bring stronger and stronger price discovery, like it is right now, we're continuing to see strengthening floors and strengthening ceilings in market-related contracts. We're continuing to see that long-term price go up. If we see an acceleration of that process, that's what would encourage us. to accelerate the mining plans at McArthur River. But these are linked. The pace at which we bring production on also sends a signal to the market. And right now, the signal we prefer to send is that production is matched to the demand that's in the market as opposed to trying to front run it.

Thanks Grant. And kind of my follow-up is along the same lines because you and Tim talked about discipline and the balancing act of contract layering, existing 230 million pounds and the reserve base that backfills that. At what point are we going to see potential chemical run into sort of stresses on being able to production backfill the next, say, 10 or 15 years of that contract book and the growing demand. At what point does that become stressed?

Well, Ralph, the way we look at this market with a historic wedge of uncovered requirements in front of us and which is, I think, one important part of the macro story. The second important part of the macro story is the ability of the global uranium supply stack to respond. And I mean both the primary production stack and the secondary stack, both are declining significantly while demand is strengthening, while there's a big wedge of demand still to come to the market. Ralph, this just sounds like an incredible opportunity for an incumbent producer. It sounds to me like a very constructive pricing environment. And so when you say stress, it really is sequencing the plants to match the demand that's going to come to the market. We're very confident, the demand needs to come. We've seen it can be delayed, it can be deferred, but it ultimately can't be avoided. As that demand comes, as utilities bring demand into the early 20s, mid -- or early 30s, into the mid-30s into the market, and we capture that demand, Ralph, that gives us lots of time to prepare our assets, to prepare our existing Tier 1 asset. And remember, our Tier 1 asset base is not running at full capacity. It gives us lots of time to prepare our Tier 2s in care and maintenance, which aren't even running today. It gives us lots of opportunity to consider where do we have brownfield expansion from those Tier 1s and Tier 2s -- and it gives us a lot of time to consider what the development needs to be for additional new production. But ultimately, it's about being disciplined and not trying to front run that because as we've seen time and time again, those who build up productive capacity and don't have a home for it end up jamming it into the spot market where it's absolutely value destructive for investors in uranium. So for us, it is about staying disciplined. When we see that sort of tightness in the market, Ralph, it gets reflected in higher prices of uranium. That's the dynamic that gets us very excited.

The next question comes from Lawson Winder with Bank of America.

Grant, thank you for your comments today and the update. If I could, I'd like to come back to the Westinghouse EBITDA guide. And then if there's time, just follow up on your fuel services guidance. But just on the Westinghouse guide, kind of a basic question here. But I mean, if you look at the midpoint of this guidance versus the midpoint of the 2025 guidance, it's up 5%. And while I respect that you have changed the way that you're guiding, I mean, the prior guide was for 6% to 10%. Is there just one thing you can point to that you would say attributed to that roughly 1% below the prior range?

Well, I would say if you look at what was driving the lower end of that range, and you'll remember us talking about this quite a bit, it really was around the core of the business. So what are the drivers around the core? Where do you get pickup in the core from the existing fleet? And it really was things like reactors that were shut down being restarted, reactors that were going to be shut down being extended. And then it was reactors going through subsequent license renewals and therefore, doing the work required to run for another 20 years. And also, we've seen an uptick in reactors that are now interested in uprates or super uprates, all growing that sort of core business of Westinghouse. That interest in reactors being restarted, saved, upgraded, extended has not gone down. It's, in fact, only gone up. But of course, the processes to get there, the time required to get the licenses and the permits to go through the regulatory approvals, maybe has taken a little bit longer than expected so that the orders, the immediate orders and the immediate work to do that hasn't picked up quite as quickly. That just means Lawson, it's still in front of Westinghouse. It doesn't mean it's lost. It doesn't mean it's underperforming our demand expectations. It's just the subsequent license renewals and the uprates are just not happening as fast as maybe we would like, but they're still happening because they need to happen. And in fact, we're seeing more of that interest flow into orders entered going forward. So we just continue to be very excited about Westinghouse's position in the core.

I think I might add to that, Lawson, that the new build business is really lumpy, and that forward guidance over the 5 years, it's going to move from year-to-year. So it was a 5-year guidance. And because of the lumpiness that we're seeing that every year. And I think we'll see -- continue to see that going forward. So it's not necessarily going to be a direct straight line in terms of growth.

Okay. That's super clear. And then if I could just get your thoughts on the conversion markets. Your fuel services guidance is one thing. And then there's your fuel services contract book. And so you noted 83 million -- sorry, 83 million kilograms of conversion under contract versus 85 million last year. And we're looking at a conversion market that is experiencing an obvious global shortage. I'd be curious to get your thoughts on why the lack of contracting and conversion just given the backdrop. And then when we think about Cameco's current capacity, is Cameco now close to achieving run rate for the expanded capacity at Port Hope on fuel services and conversion?

Conversion is a fairly good analog for uranium. So I'm going to spend a little bit of time on it when we think about its contracting. Totally agree, the conversion market is tight. Totally agree that, that tightness is likely to sustain for a while and totally agree that this should be signaling more conversion capacity coming into the market from the West. So all of that makes perfect sense, Lawson. Remember, when you think about contracting in the nuclear fuel cycle, price matters, and it's easy to point to a historic conversion price. But you know what else matters is tenor. What matters is how long can you secure on an escalated basis those historic prices. And the important analog is you actually only get one chance to sell new capacity because once you commit your capacity, it's no longer new and you don't have the kind of opportunity or power in the market. So for us, conversion is about not just it's at historic price, but now it's about capturing that historic price for as long as possible. And so if there's the next step in the conversion market, we want to see the tenor stretch out in conversion contracts. We want to see this historic pricing, not for a 3-year window or a 5-year window, but we want to see it for a 10- or a 15-year window. We want to see that market stretch out. So when you think about this notion that we're being fussy right now, we've got these incomparable set of strategic assets, strategic mining assets, conversion, fuel fabrication. We want to maximize the value of these assets. And we want to maximize them over a longer term. So -- because we know new capacity will come into the market. And when it does, that new capacity, by definition, will actually probably have price downward pressure. So we want to capture new contracts that protect us and our owners from the downward pressure that will come from new capacity. So if we're holding out in the conversion space, it's not holding out on the price side, it's holding out on the tenor side. And the analog to uranium is you only get one chance to sell new capacity in uranium. And so we see those in the -- that are potentially new entrants to the uranium side are saying, "Okay, well, yes, we're going to sell under long-term contract, but we're only going to sell for 3 years, and then we're going to renegotiate a new contract after 3 years at a higher price." And you probably won't. You only get one chance to place that new production. So don't squander it. So when we look at the conversion market, we're in a unique window. We're in a window where price is strong. And now it's a matter of capturing this historic pricing for as long as we can, knowing that the Converdyn plant is going to come back online, knowing that we are going to increase production at Port Hope in order to capture some of this demand and knowing that there's -- there remains pressure on Springfields to restart and pressure on the Orano plant to get to full capacity. When there's more capacity in the market, there's less leverage. We just want to take full advantage of our very unique position with our incomparable suite of strategic assets.

The next question comes from Craig Hutchison with TD Cowen.

Just given the huge push in the U.S. to secure domestic nuclear fuels chain and critical minerals with partners like Canada, I was just wondering beyond your historic partnership with Westinghouse last year, are there other opportunities for you guys to work with the U.S. government across the fuel chain, whether that's your conversion business, global laser re-enrichment or even a potential restart of your Tier 2 assets if there's -- you could establish long-term floors?

Yes, it's a great question. When you think about Cameco, our long-term relationship with the U.S. government has always been very strong. For many years, we were the largest producer of uranium in the United States. If our mines and mills are running in the U.S., we will again be the largest producer of uranium in the United States. The U.S. government has always been interested in our GLE, Global Laser Enrichment project as reflected in the tails re-enrichment program that we have with the Department of Energy, which is a very exciting opportunity to actually secure a source of U.S. uranium and U.S. conversion for the future by simply re-enriching a stock of depleted UF6 that sits as a liability right now for the Department of Energy. So there's always been a lot of interest. And of course, the U.S. government has a unique demand outside the civilian nuclear space, and that is demand for Navy propulsion fuel, which is demand that's going to find its way into the market right at this time when that gap between demand and supply is very significant. You're going to see national programs looking for naval propulsion fuel. And by the way, folks, that's the same uranium and conversion. It's the same UF6 that needs to go into the civilian program. So we've always had very strong relationships in the U.S. But at the moment, there's a bit of a narrative that U.S. origin uranium, for example, is at a premium. And it just isn't right now. I mean we fail to see evidence that utilities are really willing to pay a premium for U.S. origin. They want Western uranium, but not necessarily U.S. And again, it goes back to my answer previously, you only get one chance to sell new capacity. So when we think about those Tier 2s and we think about restarting them, we think about maximizing the value of bringing that capacity back and the leverage that we have in pricing that capacity because once up and running, you got cash and noncash costs and you've got payroll and all of that stuff, you get one moment to place that capacity. So if we see a U.S. interest in U.S. origin go up, nobody is better positioned than we are to capitalize on that.

Okay. Great. Maybe just a quick follow-up on GLE. Are there any kind of milestones you want to point to this year in terms of just derisking, I guess, the science behind the process?

Science behind the process is derisked, Craig. So when we announced achievement of TRL6, think about it in the context of what that marks is we can confirm that, that technology enriches uranium to that 99.6 Sigma level of nuclear reliability that is critical in order to say that you've got a technology that folks are willing to contract with. So what remains now is TRL 7, 8 and 9, which are where you prove up that this level of reliability can be deployed at a commercial scale for CapEx and OpEx that make it competitive in the Western uranium space. So for us, it is about focusing on these next steps, TRL7 and beyond and focusing, in particular, on the DOE tails re-enrichment project. Others will focus on LEU and high-assay LEU. We will focus on the tails re-enrichment because that's effectively an aboveground mine, producing, what, 4 million to 5 million pounds of uranium a year, 2,000 tons of conversion at a time when uranium and conversion are scarce and getting scarcer. That seems like the best place for us to focus. And nothing I would point to expected in 2027. But of course, we would update on a quarterly basis if there were -- if there was anything notable about it. It just continues to be an exciting tails re-enrichment project.

The last question today comes from Mohamed Sidibe with National Bank.

Just maybe on the Westinghouse guidance and completely understandable on the lumpiness of the new build segment. Just wanted to get a little bit more clarity on the core business segment. I think you noted that you remain excited about that. I know you guided in the past to about 6% to 8% core business revenue growth there. Is this something that we can still think about over the next couple of years as things are getting advanced in that segment?

Yes. The core does continue to be exciting. I'll just -- I'll go back and restate a few of the factors that we watch for. Obviously, that core business is fuel fabrication and it's reactor services; 2 really general ways to think about it. Where does the demand come from? Well, every reactor that was shut down that's being restarted is more demand. Every reactor that is going through a life extension is more demand. Every reactor that not only is going through a life extension, but looking for operating very significant more power out of those reactors is more demand. And then, of course, there is other core elements to think about the Springfields project in the U.K., which we continue to evaluate, we continue to assess. We continue to see what the strongest business case would look like, but that would exist in the core of the business. That would be upside to the core of Westinghouse. And then, of course, you can't forget the AP1000 new builds because every new build becomes 80 to 100 years of core business. So when we look at the core, we see a lot of upside. We're very excited about Westinghouse's position as the leading OEM for light water reactor technology. And we just really like what their position as having the leading Gen III plus light water reactor means for the core going forward. So our enthusiasm has not diminished at all.

That's great. And just on the fuel services, if I could ask maybe on the unit cost of sales there on the year-over-year guidance increase. Is there anything that's in plan to try to get back the cost within the 2025 range within that segment?

What I would say about that is we're just seeing some general inflationary pressures definitely in that segment. And so really, it's going to just kind of be looking at the level of production and the mix there of the various products because there's a number of products that go into that segment.

This concludes our question-and-answer session. I would like to turn the conference back over to Grant Isaac for any closing remarks.

Yes. Thank you to everyone who is able to join us today. We really appreciate it. Obviously, we believe we're exceptionally well placed to support the next chapter of nuclear growth while protecting and extending the value of our assets and shareholders. We continue to see pricing dynamics that are very constructive for an incumbent producer and 2026 will be an exciting year for us. So have a wonderful weekend.

This brings to an end today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.