Chris Frostad, President & CEO,

Purepoint Uranium Group

“As long as the price stays in the US$45-US$55 range, the world is going to desperately need cheaper uranium, which few places in the world can provide.”

Could you start with a short overview of Purepoint and its main projects? Purepoint Uranium Group has been exploring for uranium in the Northern Saskatchewan region for the past 15 years. We have six advanced projects across the basin, four of which we own 100%, and the other two are joint ventures with Cameco Corp and Orano Canada. The Hook Lake project is our current focus thanks to its prime location in the Patterson uranium district, a geological trend where 300 to 400 million pounds of uranium has been identified in the past decade. This includes Fission’s Triple-R deposit and NexGen’s Arrow deposit. The same geological structures continue across our property for over eight kilometres, and we have made several discoveries along the way. Cameco and Orano finance nearly 80% of the exploration work on this project, which is a testament to its significant potential. Could you give us more details on the main activities and the progress made at Hook Lake? Initially, we endeavored to better understand the model and size of our first discovery at Spitfire. The deposit sits right at our southernmost claim line adjacent to NexGen Energy. Since then, we have moved to the north, systematically testing drill targets. In our most recent drill program to the north, we continued to identify what we now recognize as a typical setting, mirroring the geologic model we see in the southernmost deposits. Next season we have a large section that will require significant drilling. Our 2020 budget was C$2 million, and the budget for our next program will be set this fall with our joint venture partners. What is your perspective on the current market dynamics, considering the additional production shutdowns in the uranium mining industry due to the pandemic? The price of uranium is certainly more sensitive to supply than to demand. There is a clear pipeline of nuclear reactors operating and being built, which gives us visibility on the demand side. On the supply side, however, even before the coronavirus, Cameco and others had been closing operations and were purchasing a lot of their product on the open market to fulfill contracts, bringing down excess inventory significantly. It is estimated that with the mine closures resulting from the Coronavirus, 2020 supply could approximate only 60% of the total required for reactors. This already appears to be an optimistic estimate. What is not visible to investors, however, is the fuel processing cycle between uranium production and its delivery to a nuclear reactor. This is where excess inventory lives and, because it is not readily visible, uranium price predictions are often inaccurate.

Taking this large amount of product offline in the last few months has been dramatic, sending the spot price to outperform the long-term price for the first time in 13 years. This is a huge indication that supply is drying up and the higher uranium prices may be returning. However, while the market watches the spot price carefully, a variation in long-term prices and contract prices is a better indication. Only when we see utilities committing to long-term contracts rather than buying on the open spot market will we know we are coming out of the bottom of the cycle. The down cycle has significantly reduced exploration budgets. Has there been enough uranium exploration to feed future demand with new deposits? On the whole, there have been adequate resources discovered over the last 20 years, but what we are now running short on are the lower cost uranium reserves. The cost-effective sources of uranium that can be mined at under US$30 per pound (US$/lb) and less, such as the ones being mined in Kazakhstan and Canada, are quickly depleting. As long as the price stays in the US$45-US$55 range the world is going to desperately need cheaper uranium, which few places in the world can provide. How difficult is it for juniors in the uranium space to raise funds in the current market? The argument for uranium is solid, but the underlying economic story has changed little in recent years. Many believed 2013 and then 2015 would be comeback years, and they were disappointed when the anticipated rise did not take place. At this point the uranium market is suffering from investor fatigue and as a result financing can be difficult. Over the past few months, though, we have seen more indications that uranium supply levels are reaching the tipping point. This will be evident and bring significant funding back to the sector when long-term prices start to move in earnest. Back to Purepoint, what will be the main highlights for the company over H2 2020 and 2021? As I mentioned, we believe that tipping point is near and expect to see significant movement in equity prices before the end of the year. We are looking to raise equity in the fall to finance our portion of the Hook Lake project. Our other five projects are well advanced and in good standing. Depending on the industry’s strength this year, we also hope to raise the funding necessary to resume the advancement of those projects a well. The uranium market is poised to move, and when things do start to turn, there will be a huge pop, not just in the price of uranium, but also in the value of those resource companies purely focused on this commodity.