Contrarian Codex — Newsletter #121: Volatility Is Back

Cameco owns a share of Cigar Lake in northern Saskatchewan, one of the highest-grade uranium mines on the planet. TEPCO — the uranium arm of Tokyo Electric Power — wanted to sell its small 5% slice, and Cameco stepped up for roughly C$116 million. That lifts Cameco's ownership by a touch under 3 percentage points, which works out to about half a million extra pounds of uranium a year they now get to sell.

Half a million pounds sounds modest against Cameco's total book, and on its own it isn't dramatic. The interesting part is what it signals: Cameco chose to spend real cash buying more of one of the world's best deposits rather than sit on it. That reads as a company confident it can place every pound it produces — and then some — at prices well above what the term market is currently showing. Cigar Lake is planned to run until at least 2036, so even at half a million pounds a year that's another five million pounds over a decade that can go into new long-term contracts at increasingly attractive pricing as the global contracting cycle tightens. Stretch the mine life and the math only improves. Small move, clear signal from management about where they think uranium prices are heading.

Energy Fuels runs the White Mesa Mill in Utah — the only operating conventional uranium mill in the United States. By June 30 they expect to have produced roughly 1.6 million pounds of finished uranium in six months, which puts them inside their full-year guidance range already. That sounds unremarkable, but it is actually unusual: almost every other producer below the very top tier is running late or over budget right now. White Mesa is hitting its targets at historic-low milling costs of $9–$12 per pound.

The second story is rare earths. Starting in July, Energy Fuels is modifying the mill circuits to add the ability to process "heavy" rare earth elements — samarium, europium, gadolinium, terbium, and dysprosium — the ones that go into permanent magnets, motors, wind turbines, and defence applications. Those circuits are expected to be operational by late 2027 or early 2028. This is a company quietly becoming a dual-commodity processor (uranium plus rare earths) at a single licensed facility in the United States, in a sector where building new processing capacity from scratch takes a decade and hundreds of millions of dollars. The price action hasn't caught up yet, but the operational execution keeps quietly ticking forward.

enCore mines uranium in south Texas using in-situ recovery (ISR) — you dissolve the uranium underground and pump it up as a solution, no digging required. They own a very large land package called Alta Mesa, and they just started drilling a newly acquired 5,900-acre extension directly to the east called Alta Mesa East. The first 17 drill holes came back encouraging: 10 of 17 hit uranium mineralization, and most came in at grades above the economic threshold enCore needs for a productive wellfield, with the mineralization sitting in the same geological sands the existing plant already processes.

At the same time they completed Phase 1 of their largest-ever satellite ion exchange plant at Upper Spring Creek — it's now running at 1,600 gallons per minute, with a doubling to 3,200 gpm targeted by the end of July. This satellite plant feeds processed resin to the Rosita processing facility. Put it together: they are drilling to extend the ore body to the east while simultaneously building the infrastructure needed to process it. The gating factors are drilling results and permitting, but on both fronts enCore is making measurable progress this issue.

Cosa Resources is exploring for uranium in the Athabasca Basin in Saskatchewan — the region that hosts the world's highest-grade uranium deposits. Their main target, Murphy Lake North, sits 2.7 kilometres east of IsoEnergy's Hurricane deposit on the Larocque Lake trend, one of the Basin's most productive exploration corridors. The winter drill hole that got everyone's attention hit 5.0 metres averaging 0.55% U3O8 at about 265 metres deep, which is meaningful at Basin standards, and the trend remains open for 600 metres in both directions.

The big news this issue is the financing: Cosa launched a bought deal at C$5 million and within 24 hours the underwriters doubled it to C$12 million. That kind of institutional demand in 24 hours is a real signal that the market believes in the story. The C$12m funds the biggest drill program in Cosa's history — 6,000 metres, 15 holes. Their largest shareholder, Denison Mines, is participating through its pre-emptive rights to avoid getting diluted down. The discovery question is still open (this is exploration, and holes come back empty as well as full), but a funded treasury, a major backer leaning in, and the Basin's best address make for a constructive setup going into the summer drilling season.

Outcrop Silver is exploring for high-grade silver at the Santa Ana project in Colombia. The deposit style — epithermal veins — means narrow but extraordinarily rich ribbons of mineralization. The latest drill results from a newly recognized structure called Aguilar NEW are genuinely impressive: one hole (DH604) came back at 1,405 grams of silver-equivalent per tonne over 0.80 metres, with a 0.23-metre core running 2,820 g/t. For context, typical open-pit silver mines run at roughly 50–100 g/t. The widths are thin — mostly sub-metre — which is the honest caveat that comes with most Colombian vein systems, but the grades are bonanza by any standard.

The key context this issue is two-fold. First, Outcrop calculates its silver-equivalent grades using a silver price of $32/oz. Silver is trading around $60/oz right now — nearly double. So those already-striking numbers are conservative against the metal's actual market price today. Second, the company says an updated mineral resource estimate is now underway, building from the 2023 maiden resource of 24.2 million ounces of silver-equivalent indicated across seven vein systems. More confirmed vein structures, traced over 1.6 kilometres of strike, feeding a resource update while silver spot sits near multi-year highs. That is a constructive backdrop for whatever the resource update prints.

Comstock (ticker LODE) is building a facility to convert organic material — woody biomass and similar feedstocks — into renewable fuels and other products. The company has been in construction and commissioning mode for some time, and the stock has been frustrating to hold. But this issue flagged something Mart views as significant: for the first time in nearly two years, company insiders — including board members — started buying shares in the open market to the tune of over $3 million since April.

Insiders sell for a long list of reasons — taxes, personal expenses, portfolio diversification. But they almost always buy for one reason: they believe the stock is going higher. A pattern of multiple insiders including board members putting over $3 million of their own money into the shares suggests real conviction in something that is about to happen, whether commissioning of the facility, a sale of mining assets, or another corporate catalyst. Mart's stated view: if they deliver on near-term goals, the stock can easily double by year-end. That is a catalyst call, not a perpetual thesis — the key is watching whether the commissioning milestones actually land.

LibertyStream has developed technology to extract battery-grade lithium carbonate from oilfield wastewater — the briny water that comes up alongside oil and gas production in Texas Permian Basin wells. Their first commercial plant (Facility 1) will operate at a site in Howard County, Texas. This issue they announced a term sheet for a long-term offtake agreement with a leading American industrial customer: 600 tonnes per year starting in 2027, roughly 60% of Facility 1's planned output, with a definitive deal expected within 30 days. This is the moment a technology story starts becoming a producer story.

The economics are what make it interesting at scale. Management pegs all-in operating costs at roughly $6,200 per tonne — well below the $12,000–$20,000 range where Chinese lepidolite producers (who tend to set the marginal price) operate. LibertyStream makes money across almost any realistic lithium price. At 10,000 tonnes per year (ten of these facilities, which their own demand pipeline implies by 2029), Mart's model generates $88–188 million in annual operating cash flow depending on whether lithium sits at $15k or $25k. At a 10–15x cash-flow multiple on that range, the implied value is $900 million to $2.8 billion — against a current market cap of about $170 million. The risks are real: Facility 1 isn't built yet, scaling to 10,000 tonnes requires years of capital, and lithium has just run nearly 2x off its 2025 lows so price risk cuts both ways. But a US, low-cost, infrastructure-light domestic lithium producer with a signed offtake and multiple active negotiations is exactly the kind of story the market will reprice once the execution track record is there.