During the third quarter of fiscal 2017, the spot price of uranium fell to approximately US$18.00 per pound U3O8, representing a 13-year low and an approximately 75% drop from the spot price in March 2011 (US$70.00 per pound U3O8). During the third quarter of fiscal 2018, the spot price increased to US$22.00 per pound U3O8, following several significant developments related to both the future supply and demand of uranium. The increase in the spot price has continued into the fourth quarter of fiscal 2018, with uranium prices trading over US$26.00 per pound during December 2017. As of December 31, 2017, the spot price of uranium was at US$23.75 per pound U3O8 - representing a nearly $6.00 per pound U3O8 increase (or a greater than 30% increase) from the US$18.00 per pound U3O8 level from approximately a year earlier.

The supply-side catalyst for this price recovery appears to have been the cumulative effects of several uranium production cuts announced during calendar 2017. Despite declining uranium prices in recent years, 2017 was the first year where uranium producers made notable efforts to curtail production to address an oversupply in the uranium market. The production response to low prices has been slow, largely as a result of the large number of long-term supply contracts entered into during a contracting cycle in the mid to late 2000s, when uranium prices were much higher. These legacy contracts served as downside protection for sources of production that would not otherwise have been supported by low uranium spot prices. As per UxC and other industry data, many of these long-term contracts have been expiring and this trend is expected to accelerate over the next couple years. Coincident with the expiration of these higher-priced contracts, uranium producers have begun to announce production cut-backs. According to UxC's Uranium Market Outlook for Q4 2017, released December 1, 2017, uranium output for calendar 2018 is forecasted to be approximately 139 million pounds U3O8 - which represents a roughly 14% reduction from 2016 production levels. This compares to current forecasted global uranium demand for calendar 2018 of approximately 188 million pounds U3O8, leading to a primary deficit in 2018 of nearly 50 million pounds U3O8 - which will have to be made up by a combination of secondary supplies and the drawdown of inventories. Without a meaningful price increase in future years incentivizing new sources of production, this story is expected to continue into the future, while demand continues to increase to as much as 270 million pounds U3O8 by 2030.

The most notable production cutbacks have been in Canada and Kazakhstan. In November 2017, Cameco Corporation announced that it will shut down the McArthur River Mine and Key Lake Mill complex in Northern Saskatchewan from January 2018 through to at least October 2018. This reduction is expected, by various measures, to remove approximately 15 million pounds U3O8 from the uranium market in 2018. In December 2017, subsequent to the release of the Q4 2017 Outlook, National Atomic Company Kazatomprom, announced that it would reduce its previously planned production for the next three years (2018 to 2020) by 20%. Kazatomprom, the largest uranium producer in Kazakhstan (the source of approximately 40% of the world's uranium production), had previously cut production for calendar year 2017 by 10%. These announcements build on top of other reductions announced by uranium producers - including depressed U.S. mine production, declines in uranium production output from Niger, and unplanned shortfalls from Namibian uranium mining operations.

On the demand side, a number of high profile events in 2017 have illustrated continued global support for nuclear energy and, ultimately, the uranium industry. Amongst the most notable developments were politically motivated calls to reduce reliance on nuclear energy in South Korea and France. In both cases, the situation has proved complex for politicians. In South Korea, a public consultation process provided decisive support for the continuation of construction, which had been halted, for two nuclear power plants. In France, President Macron deferred the decision to reduce that country's 75% reliance on nuclear energy, given the lack of viable alternatives to nuclear and the potential increase in carbon emissions that could occur as a result of the decision to curtail nuclear capacity.

In the United States of America, the advancement of two nuclear construction projects experienced significant setbacks when their constructor, Westinghouse Electric Company LLC, entered into Chapter 11 bankruptcy protection and a subsequent restructuring during calendar 2017. While the future of one of the projects remains in doubt, in December 2017 it was announced that the twin Vogtle units in Georgia have resumed construction under new project management and a renewed Public Utility Commission mandate, and are expected to be completed. On January 4, 2018, Brookfield Business Partners L.P. announced that it will acquire 100% of Westinghouse. The transaction is expected to close in the third quarter of calendar 2018 and is subject to Bankruptcy Court approval and customary closing conditions.

Also in the United States, the Department of Energy has highlighted the need to enhance the reliability and resiliency of the American electricity grid and a number of state legislatures have passed laws to properly value and preserve their critical nuclear generating capacity, with other states considering similar legislation.

Finally, in Japan, where the slow recovery of the nuclear industry has advanced in fits and starts following the Fukushima nuclear incident in 2011, 5 nuclear reactors have been brought back online and a further 4 units are expected to come online in calendar 2018. While at times slow, the path to recovery in Japan remains generally on track, particularly with the re-election of pro-nuclear Prime Minister Abe in late calendar 2017.

Globally, the use of nuclear power continues to grow at a healthy rate, with calendar years 2015 and 2016 representing the best years in the past 25 years for new nuclear capacity additions to the global electricity grid. Currently, according to the World Nuclear Association, nuclear power is utilized in 30 countries through 447 operable reactors (392.04 gigawatts of installed capacity) with an additional 57 reactors under construction and another 158 reactors ordered or planned. When translated into uranium demand, UxC projects that uranium requirements will increase from approximately 189 million pounds U3O8 in 2017 to over 202 million pounds U3O8 per year by 2027 (UxC base case), representing a 7% increase, and as much as 270 million pounds U3O8 per year by 2030 (UxC high case), representing a 42% increase.