May 5, 2020

Ep 260: Canon Bryan - CFO, Terrestrial Energy (CAN)

Terrestrial Energy
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Show notes

The Financial Side of Exploration and Mining (0:00-8:45)
(Canon Bryan explores his introduction to the natural resources industry and how it led him to a
finance career in mining)
Q: Tell me about your background coming from the financial perspective.
A: Canon Bryan’s career started in the finance industry in Canada, a largely natural resource
driven economy when he first entered the sector twenty-five years ago. Canon hails from
Vancouver, British Columbia, where he attended business school at the University of British
Columbia. Nuclear power is banned in the province of B.C., but not in the country of Canada. In
the mid-1990’s, Canon started out as a floor trader, then got into the financial sector focused on
natural resources, specifically mining. At this time, there were about four publicly traded
companies in the world related to nuclear power. The sector was typically government-owned or
privately owned. Canon’s father, who was a stock broker at the time, bought nuclear stocks and
put them in his client’s portfolios. There was no such thing as trading uranium; all contracts were
done by appointment and the details were never disclosed publicly, making it a very private
industry. Canon started working for a gold mining company who operated an intermediate size
mine and was asked to come up for acquisition target ideas. During this time, Canon identified
his interest of choice and went back to school to pursue his business degree part-time while he
continued to work. He had a job opportunity waiting for him after graduation to become a
principal in a newly-founded company which would be financed and be taken public. This
company happened to be a uranium mining company. The price of uranium at this time, in 2004,
was $16 per pound and less than 20 publicly traded companies were involved in uranium
exploration or mining.
A Big Break in Uranium Mining (8:45-18:16)
(How global industrialization led to a financial boom in the uranium mining sector)
Q: Are uranium companies typically involved in either exploration or mining, or both?
A: The tiered system of the uranium mining industry starts out with basic exploration. Once
something is found, a deposit is developed and a feasibility analysis completed. If it is a feasible
source, a mine can be built and go into operations. Sometimes a single company can do the

entire continuum of the process, but oftentimes a smaller exploration company will make a
discovery and a larger company might scoop them up. The company that Canon Bryan built,
Uranium Energy Corp (UEC), started from zero and started acquiring great projects and great
people. A project could be anything from a piece of land that has never been looked at up to
and including an operating mine. Sometimes a radiometric analysis performed by government
fly-overs is used to see where the radioactive signatures are concentrated. These records are
publicly available for anyone to look at and sometimes geologists start researching. In Canon’s
case, a lot of work was done by the oil industry in the 1960’s and 1970’s. At this time, oil
companies were investing millions of dollars into uranium exploration. After Three Mile Island,
the oil industry lost a lot of money, got out of uranium, and has never gone back. UEC’s
signature project was a mine in Texas that was a Brownsfields project. It had a lot of
infrastructure and a deposit that was very well defined. UEC raised $100 million, listed on the
New York Stock Exchange in 2004, and in the 27 months from becoming incorporated, the price
of uranium went up from $16 per pound to $136 per pound. This rise was primarily driven by
Asian industrialization in the early 2000’s, with the nuclear industry lagging behind other
industries. UEC’s investors did very well, but shortly after the global economic crisis happened,
followed by Fukushima, bringing the uranium industry to a halt. The level of capital influx into
this sector has been very low since 2011 and there is no strong signal that it will improve in the
foreseeable future. If the world builds thousands of new reactors around the world, that demand
pressure could cause the price of uranium to increase. However, there is a lot of stockpile
material sitting around and new reactor systems designs are more fuel efficient and bring the
promise of fuel recycling. Sometime in the next decade, it could become economical to
realistically mine uranium from the ocean, a focus of the Department of Energy.
Financial Opportunity in the Nuclear Industry (18:16-28:51)
(Canon maps out his five year path to discovering a new economical nuclear technology: molten
salt reactors)
Q: What came next for you after your endeavor into uranium mining?
A: Uranium was an opportunity for Canon Bryan to get a foot in the energy sector, which was a
new area for Canon. He found himself doing a top-down analysis of all global industry and had
an opportunity to invest in whatever looked good after his success with Uranium Energy Corp.
Three industries made sense to Canon for investment: energy, food, and water. He was very
interested in nuclear and got excited about the infinite journey into knowledge about the
industry. Canon felt that the challenges surrounding nuclear power were solvable and
surmountable, yet unwarranted. After Fukushima, nuclear power was very unfairly viewed in the
world, representing a market anomaly or arbitrage opportunity. Making money in the stock
market is about finding a delay in information, the gap between what is and what it should be.
Canon felt the nuclear industry held a massive opportunity from an economic point of view.
What is known about nuclear has to catch up with what is nuclear power. When the gap closes,
the economic rewards will be distributed accordingly. Canon spent a lot of years investing his
own capital and conducting a five-year, global investigation seeking out technologies that could
possibly be commercial and could be a non-incremental innovation in nuclear. This exercise
took place between 2007 and 2012. During this time, Canon learned about the industry and

taught himself some nuclear science utilizing the entire MIT curriculum which was available
online for free. After his investigation, Canon felt discouraged that he was not going to be
successful in his quest. Following Fukushima, he considered leaving the industry forever since
he could not find an investment that was meeting his criteria. The thing that caused him to
ultimately find the technology that eventually became Terrestrial Energy was a nuclear
technology conference, the Thorium Energy Alliance Conference. Canon met David LeBlanc,
the inventor of Integral Molten Salt Reactors, and Simon Irish, the CEO of Terrestrial Energy,
during this conference in Chicago and both are now central to Canon’s professional life.
Economical Impact of Molten Salt Reactors (28:51-38:45)
(A look at the economic viability of molten salt reactors as a competitor to natural gas power
plants across the globe)
Q: What was it about the Integral Molten Salt Reactors that was so compelling it made you
change your mind?
A: At the time, the design for molten salt reactors was conceptual and was nowhere near the
level of engineering it is at now. Canon Bryan saw elegance in the simplicity of the reactor
design with so few parts. The obviation of so much clutter in a traditional nuclear power plant hit
Canon so hard that the cost base must absolutely be lower. When the company was started, the
first thing completed was the preconceptual design, which was vetted by Oak Ridge National
Labs. After a conceptual design was finished, basic engineering followed and now the company
is coming to the conclusion of the pre-licensing process in Canada with the first major
engineering package. Canon is more and more certain every day that the technology will enjoy
commercialization. Natural gas is a tough opponent in North America because the Terrestrial
Energy power plant envisages one or more 200 MW reactors. This liquid fuel system operates
naturally at high temperatures in a natural convection system inside the reactor. The
commercial aspiration of the company is to deliver a product to the global energy industry which
is a nuclear power plant that can be built and licensed for under $1 billion. This value is
psychologically important for the world of energy and the world of finance, specifically the
investment community that will fund the projects. China and Korea can build plants cheaper
relative to the rest of the energy industry. This design could provide life cycle costs competitive
with natural gas as well, with the toughest competition being in North America. If the technology
could be cost competitive with gas, it could be the killer app of energy globally, which is very
enticing for investors. The opportunity for clean energy deployment in the next 20 to 30 years is
almost inconceivable, but there are a lot of people in the world that don’t understand the scope
of the problem or the opportunity. The level of clean energy needed to be deployed is immense.
There need to be a lot of different, economic, and cost-competitive solutions. Terrestrial Energy
is well-positioned to participate in that deployment with a product that is economically or
superior to the fossil fuel alternatives.

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