And so I think we’ve got a much smarter supply chain that we’re building out, but we’re going to need to build that thing out. And of course, in a market in which the zeitgeist for nuclear continues to be very bullish, it’s a very competitive market out there. We are incredibly proud of the talented personnel that we’ve got. But if we have the good fortune to build out at the rate that I think people who care about climate change and national security wish, it’s going to be a challenge to continue to recruit, retain that kind of human talent, which is so important to these facilities. So if we’re very, very successful we’re going to be working — and I’m optimistic about it, but you ask where the pinch points could come, we’re going to have to really focus on developing the talent to be there when we need them.
In terms of your other question, on uranium prices, there, of course, is a correlation there and not least of which is the fact that as most of you know, the feedstock for High-Assay Low-Enriched Uranium is Low Enriched Uranium. And what has happened in the last couple of years and the prices of Low Enriched Uranium tells you that that’s all going north, right? And it’s going north in every phase, because the increased demand for enrichment that’s not of Russian origin has driven up separate work unit prices. You have overall bullishness in the uranium market, which has driven up natural uranium prices. And as people are trying to shove more uranium through more centrifuge machines, they need to turn more of that into uranium hexafluoride gas.
So you have a big spike in the conversion market. So all those inputs are going higher. And so there is a sort of a rationing effect that you see. And that’s why you’ve seen, I think, bullishness in these prices. And I think you’ll continue to see some general correlation. There’s always a toggling factor, last thing I’ll say, between the various costs of the inputs. And so when SEU prices got to be very, very low, you tried to use as much SEU as possible, it went to a lot of under-feeding. Now, and there’s concern going in the other direction, they’re going into overfeeding, but when you go into overfeeding, that puts pressure on conversion. So it’s a big kind of daily change. So you’re going to always see some toggling between the values of the natural uranium fee, the conversion price, enrichment prices and the input prices to that such as electricity rates.
Operator: Our next question comes from the line of Alex Rygiel with B. Riley Securities.
Alexander Rygiel: Dan, a lot of great information there, and a very nice quarter. So thank you. Just to better understand the transition to Phase 2, can you talk about, number one, what approvals or direction you need from the DOE to transition into Phase 2 and when that might start?
Daniel Poneman: Yes. We finished Phase 1, we made the delivery just yesterday, and we are expecting to move very smoothly in communications with DOE into Phase 2. But I don’t know if Kevin wants to offer anything more technical than that?
Kevin Harrill: I don’t think I would add anything outside of the fact that with our completion of Phase 1, we’re moving into Phase 2. And from a regulatory perspective, we’re evaluating what the possession limits are to ensure that we’re in compliance with those and we’ll continue to work with the relevant organizations to make sure that we’re aligned.
Alexander Rygiel: That’s super helpful. And then as it relates to SEU, what’s your visibility on the fourth quarter here now that we’re 5 or 6 weeks into the fourth quarter? And how do you see delivery of SEU units developing in this fourth quarter and into 2024?
Daniel Poneman: Kevin?
Kevin Harrill: Yes, I’ll probably feel that. So Alex, like a lot of companies, we don’t provide forward guidance. I know we’re into the quarter, but as we’ve noted in recent years, our revenues can vary significantly from quarter-to-quarter, depending on timing. So we’re working diligently to ensure that we’re delivering for the fourth quarter and think we will continue the process of ensuring that we have strong results for the annual cycle.
Alexander Rygiel: Excellent. And then, Dan, maybe you could just touch upon the pipeline of additional opportunities or MOUs, like TerraPower and Oklo?
Daniel Poneman: Yes. Well, again, a lot of these are still under confidentiality. But I would just say, basically, if you look at the terrain out there, Alex, 9 of the 10 advanced reactor development program winners in the DOE program require High-Assay Low-Enriched Uranium fuel. We — obviously, our desire is to supply everyone, right? And there are those who are not in that program, who are also candidates as well, and that, for example, includes Oklo, which has done a lot of exciting work and back on the NRC regulatory process. And I think you can’t forget the fact there’s a quite robust set of activities going over in the Department of Defense with the Project Pele and so forth and increasing interest for energy resilience requirements of our military bases and so forth that will need reliable power that you do not want to be vulnerable to disruption and so forth.
