OrestWowkodaw
Great. I don’t know if I have ever seen a 5 million-pound average by year jump in your book ever. Just the magnitude of that move is pretty impressive.
Grant Isaac
Yes. It reflects what we have been talking about, which is the transition in the market to security of supply-driven contracting. So for us, there is a couple of dimensions to think about. One, obviously, is that fundamental story. I always want to point people to the growing uncovered requirements and then reference the fact that the market is not yet even replacing what it consumes on an annual basis.
Then we add to that new market opportunities we haven’t seen before. You have seen our press releases about Central and Eastern Europe, a market, a region, if you will, looking to pivot away from historic sources, historic dependence on Russia.
Cameco is in an incredible position in order to satisfy the USVI demand in that market. So tie that to our vertical integration. It is our conversion space that allows us to generate that kind of uranium business as well that is very advantageous for us.
And so we are just seeing that incumbent advantage play out. The good news is, like I said, we are not even at replacement rate yet. So if you look at it from historical terms, we have never been at this stage of a contracting cycle at this high of a uranium price before. We have seen the enrichment price recover, we have seen the conversion historic levels.
We haven’t seen that kind of demand that is gone through those two parts of the fuel cycle, fully hit the uranium side yet. And so we are obviously pretty excited about it, tie that back to my earlier comment. It is why we want to remain leveraged in both our portfolio and our pipeline.
OrestWowkodaw
Thanks Grant. And just as a quick follow-up, can you give us a flavor of contracting behavior right now with respect to how the floors and ceilings in these market-related contracts are developing, like I assume they are both moving up with the market pricing.
Grant Isaac
Yes. No question. Our preference right now at this point in the cycle is to be market related because of the demand that we can see that has to come to the market and because we know that the market isn’t even at replacement rate contracting yet.
Market-related contracts are very often called - utilities will often, for example, ask for a ceiling. They live through price bikes before and if they do, we will want to insert a floor. It is the coloring that has improved markedly on the market-related contracts over the last year.
Not uncommon to see $45, $50 escalated floors, $75, $80 escalated ceiling. So inflation linked callers that gives you a lot of upside participation, incredible downside protection as well, that is very much an improving scenario.
I just want to tie it back to the term price, because what we see often is a misunderstanding where people don’t sort of remember that the term price that is posted is only influenced by base escalated prices in the market. So actually, as we sign market-related contracts, we are having less price formation influence than, say, another producer willing to base escalate their contracts.
So what we obviously want to see over time is perhaps improvement to the price reporting in our industry, whereby the price reporters we will look at their own price forecast and maybe even take their own base price forecast and say if you sign a market-related contract, you are really pricing it at these levels, bring that forward to today, what does that mean for the term price.
So think of that term price at 53-ish today really has the bottom of the market, the absolute floor from which the leverage is possible on top of that. Again, pretty exciting position to be in given the growing uncovered requirements and the fact we haven’t even hit replacement rate contracting. That is a pretty good level to be at this stage of the cycle in.
OrestWowkodaw
Thanks Grant. I appreciate the color.
Tim Gitzel
Thanks for your question, Orest.
Operator
The next question is from Lawson Winder with Bank of America Securities. Please go ahead.
Lawson Winder
Thank you, operator, and good morning team and Grant - today. Just a couple of questions for me. I wanted to ask if you could help us think about the contract with Ukraine and Bulgaria and how that sets up in terms of your targeted 60/40 split market versus fixed price contracting. And generally, directionally, where the pricing - if there is any fixed price component where that pricing sits for that contract? Thank you very much.
Sean Quinn
Yes. Thanks, Lawson, for the question. First, I would just say we are delighted on both those fronts, both with the Ukraine. We have been working hard with them. We saw all the details of our contract with them. It is a big ticket item for them and for us.
And it, of course, carries a bit of risk with it, but risk that we were prepared to take. There is more than just the commercial side to that one, we wanted to stand with Ukraine and their efforts on turning away from the Russians and so that was an important one.
Bulgaria was just there last week and signed that up. That is another new market for us. I have never been there before, never dealt with them before and there is more of those countries to come for us.
So Grant, do you want to talk about how those two contracts fit into our portfolio.
Grant Isaac
You referenced, Lawson, our 60/40 market-related, base-escalated balance. And I just would remind everybody that, that is not a target per contract, it is not a target per year. It is something we think about full cycle.
So you think about an entire commercial cycle of uranium prices. There are times where we want actually a lot more market-related exposure, and we would want less space escalating. That time is right now.
And the reason we would want more market-related exposure right now is because, again, uncovered requirements wedge is growing. That is demand that has to come to the market. That is demand that utilities can defer and they can delay, but they ultimately cannot avoid and that wedge is growing. It is growing because utilities have not even been contracting at a replacement rate yet.
They have not even been coming to the market to buy forward what they consume in a given year. So for us, that suggests this market still has upward price momentum and we want to be market exposed to that.
Now there are times where our market hits replacement rate and goes above. And when we start to get into that to, we are inclined to think more about the base escalated prices in order to lock those moments in for a long tail of cash flow and earnings.
But that is not where we are today. So don’t think about 60/40 with respect to any one contract or any one year. So right now, we want to be market related. So I would just say on a framework level, no surprise, those contracts are very consistent with the type of preference we have in this market today, which is market-related references for the uranium portion of those UF6 contracts.
For the conversion portion of those contracts will conversions at historic pricing. So we are happy to see some of that locked in and escalated over the life of the deliveries. Again, taking those moments where you have unique demand points that are pushing one part of our segment above replacement rate and capturing that. But never think about 60/40 is pertaining to any one single contract or even one single year.
Lawson Winder
Okay. Thanks for those comments. Can I maybe ask one follow-up then. Just with the market purchasing that you have guided to of nine million pound to 11 pound. Can you kind of help us think about how active chemical might be in the spot market this year. First of all, have you been active in the spot market and to what extent year-to-date 2023 and then what proportion of that GBP nine million to 11 million pounds would be pre-contracted purchase commitments from yourselves and obviously, what proportion do you expect will be presenting from or Inkai. Sorry.
Grant Isaac
Yes. So great set of questions. Let me just unpack it a little bit. So nine million pounds to 11 million pounds is what we guided for purchases in here in 2023. Remember, our planned production or our share from JV Inkai is 4.2%.
So that means we need somewhere between nearly five million and nearly seven million pounds of purchasing. Remember, our purchasing comes from a couple of different sources. We can buy in the spot market today for delivery right away. We could do that. That is at our discretion. We have also entered into contracts to buy in the past when the price was a lot lower.
We like to operate like a utility when we see a low price of uranium, if somebody wants to fix that price we are willing to enter into a long-term commitment. We have some of those available that we could bring forward in today’s market to source from.
And then we always put our purchase requirements against our inventory and against material that, for example, we could borrow. So in other words, we have a bunch of different factors that go into those sourcing decisions.
But make no mistake, we are still in supply discipline, we still have a requirement to purchase. We will be buying in the market. To-date, we have only bought about 400,000 pounds. You can see that in our quarterly uranium table. So we do have a need to buy.
And we are watching really closely as we see additional interest in physical funds build as we see some utility step into the spot market to support it even in the absence of the very familiar spot vehicle that everybody keeps an eye on that really hasn’t done a lot in the last couple of weeks a little bit over a month.
There has been a real resistance to the uranium price. So for us, we are just going to be very opportunistic. We don’t telegraph what our purchases are or when we are going to make them, but we will be a buyer in the market for sure.
Lawson Winder
Thank you, both very much.
Tim Gitzel
Thank you, Lawson.
Operator
[Operator Instructions] Our next question is from Grace Symes with Energy Intelligence. Please go ahead.
Grace Symes
It is Energy Intelligence. I have two questions. One is about the expanding investor hope. How many tonnes did Port Hope produced in 2022 and do any steps need to be taken or have already been taken to get to 12,000 tonnes by 2024. And then I know that at the end of 2022, there were potentially some issues with ramping up the fees mill. And I want to know there is a ceiling results by now.
Tim Gitzel
So thanks for the question. So just there is a few pieces in there. Production at Port Hope in 2022 was just over 10,000, 10,600 tonnes. And I believe, and we are in the process of ramping up to 12,000 by 2024. So that is on track, nothing really new to report there.
And then maybe I will ask Brian Reilly, just to give an update on the Key Lake McArthur ramp-up and the work that is going on there, and we are excited about that project coming back. So Brian.
Brian Reilly
Thanks, Tim, and thanks, Grace, for the question. Look, a good quarter for McArthur River mine and Key Lake mill. And our objective was and is very clear, ramp up our production, safe, orderly fashion to achieve our production targets.
So today, we have over 800 workers at the sites that includes our comment going forward on long-term contractors. The mine is in good shape, there are over 100 million pounds three wells available for mining, and we have five active headings.
I would share that we commenced underground mine development and freeze drilling in the quarter as well, preparing new mining areas for future production. Specific to your question about the Key Lake Mill, look, production is ramping up as planned. We made significant changes to the side, and I think you referenced that.
And I can tell you, the new operating system and the various digital and automation projects are all working well. Our normal commissioning challenges, they are pure and fewer number. So we expect to achieve our target of 15 million pounds in 2023.
Tim Gitzel
Thanks, Brian.
Grace Symes
Thank you.
Operator
Our next question is from Orest Wowkodaw with Scotiabank. Please go ahead.
OrestWowkodaw
Thanks for taking the follow-up. Just curious if you continue to see good demand in terms of filling up the contract book, should we assume that the expansion of Ricardo River is likely the next source of your supply growth? I mean taking it up to the 25 million pound license capacity. And then I was also wondering on when we could anticipate getting the market to get details on what is entailed with respect to the Cigar Lake extension project.
Tim Gitzel
Yes. Clearly, McArthur is a Tier 1 asset that we are just delighted with our partners to have and so our first move is to 15 this year and then to 18 next year. And then we will see what the contract book looks like after that, we do have room to grow up to 25. We have got approval licensing approval. So yes, that would be our first and best source of additional production. I mean, it is unbelievable that we have got that capacity.
Cigar, we are looking at that going forward. And Brian, do you want to give an update on Cigar.
Brian Reilly
Yes, sure. So just in terms of extension beyond the current life of mine at Cigar, we have reserves in the ground that will carry us to 2031. But look, first and foremost, no decision has been made yet, but we know there are additional measured and indicated mineral resources located to the west of the existing costs. just define the port Cigar Lake ore body.
But we would have to do some work, we would have to do surface delineation drilling. We would have to do underground geotechnical drilling and that would be required to convert those resources to reserves. So that work has not been completed and the final investment decision hasn’t been made. But that is the optionality that would extend production beyond 2031.
OrestWowkodaw
Just as a follow-up, when would that decision have to be made in order to secure sort of continuous production at Cigar?
Brian Reilly
Yes. Look, we have got a runway up to 2031. We have time. But given the feasibility studies required a long-lead procurement, I mean, that is a decision we would have to take sooner than later. But we have time at the moment because the runway is out until 2031.
Grant Isaac
Sorry to jump. I would just tie to our contracting as well because remember, the decisions on the production side follow the procurement, follow the success we have in building the contract portfolio. And just as we have said in the past, we entered into a new term contract today, well we typically don’t start delivering into that term contract for two years.
So that actually gives us an enormous amount of time to plan the production and to line up the studies and line up the work that Brian was talking about. It is a very advantageous position for us. We don’t have to try to turn on production rapidly to jam it into a spot market. We get this long lead signal so that we can very responsibly rationally develop up the production.
So as you mentioned in the outset, as the procurement starts to build as we layer in more contract, we then have a runway to plan these decisions and then that obviously means lots of time to signal to you and others about where our thinking is with that.
But at the moment, while there is contracting cycle underweight, it is not at a level that would justify those types of decisions. We remain in supply discipline. We remain very deliberate and strategic.
OrestWowkodaw
Okay. And just a quick follow-up, if I could, Grant. Is there much capital required to take McArthur from 18 to 25?
Grant Isaac
Yes. The really exciting part of our story is the ability to benefit from an improving market with those points of leverage that you asked about earlier. So we have leverage to rising prices. against the falling cost structure.
As we bring on assets we already have licensed, already have permitted, already have built and run them at a higher unit cost, we get OpEx improvements. And then on top of that, as Tim mentioned, a lot of Brownfield leverage. That Brownfield leverage means what we are really talking about is replacement and maintenance capital, not Greenfield capital.
So we have a very steady capital profile. It is not the type of capital that you would expect to see if somebody was building a mine in the mill, especially in today’s market of supply chain challenges and inflationary pressures.
So I would say, no, it is not a lot of capital relative to the extra pounds because it is Brownfield expansion. So you see a very steady capital profile in our forward guidance. We are very excited about that. That is margin improvement that is return for our owners.
OrestWowkodaw
Thank you, very much.
Tim Gitzel
Thanks Orest.
Operator
The next question is from Lawson Winder with Bank of America Securities. Please go ahead.
Lawson Winder
Thank you, for taking the follow-up. I wanted to ask about SILEX and whether Cameco is in the running for the several hundred million dollars of money from the DOE for HEU. And also ask, in your conversations with your customers when you are talking contracting on conversion and natural uranium, are they also asking for SILEX enrichment capacity and could there be increased involvement from your customers to sort of help accelerate the rollout?
Tim Gitzel
Yes. Thanks, Lawson, for the question. We are obviously quite excited about the GLE project and its potential going forward. Sean is overseeing that one from our side. So Sean Quinn, let me ask you to answer.
Sean Quinn
Sure. I will take the first question about the IRA funding in the U.S., 700 million that was referenced. Yes, GLE is poised to pursue that money when if the programs formally announced on the DOE, and we are excited about the opportunities to try and capture some of that funding. We have been waiting for the DOE to come out with its request the proposals, and they are still waiting, but it is imminent as we told.
Then on the marketing question, what you are hearing from your customers, maybe I will turn that over to you, Grant.
Grant Isaac
Yes, absolutely. Just like in the uranium segment or the conversion segment, you don’t build productive capacity and then start knocking on people’s doors and saying, you want to buy it because that will be value disruptive.
The support case needs to be made, just like it does for a mining investment in the uranium space. That support case for GLE would include the type of government support that Sean is talking about, but it would also include customer support.
You have seen GLE have success signing some MOUs with some fairly large U.S. utilities who are excited about that as both a supplier diversification and a technology diversification to really important pillars in a world where enrichment is so scarce.
We have experience at Cameco actually contingently contracting production from laser enrichment back prior to the Fukushima cycle. So we would have to build up that support case. The best way to bring on a uranium asset, of course, is to stream it into a well-developed contract portfolio the same would go for enrichment asset.
So we would treat it with the same strategic discipline that we would developing a new mine. But ultimately, we are very excited about that project and the supply source it can be and the solution it can be to global utilities looking for more enrichment.
Lawson Winder
Okay. Thank you, very much.
Tim Gitzel
Have a great day Lawson. Thanks.
Operator
This concludes the question-and-answer session. I would like to turn the conference back over to Tim Gitzel for any closing remarks.
Tim Gitzel
Okay. Well, thank you very much, Operator. With that, I just want to say thanks to everybody who joined us on the call today, as always, we appreciate your interest and your support. Just a couple of comments, our world today is facing some pretty significant challenges, including de-carbonization, electrification, while trying to ensure energy affordability and security without jeopardizing the ambitious net zero targets that have been set.
These are exciting times for Chemical. We are excited about the increasing recognition of the critical role nuclear power is going to play in helping address these challenges. We are excited about the fundamentals in the nuclear fuel market and we are excited about the prospects for Cameco as we continue to build our long-term contract portfolio, which allow us to further expand production from our Brownfield capacity and to invest in opportunities across the fuel cycle.
We as you know, are a responsible commercial supplier with a strong balance sheet, long-lived Tier 1 assets and a proven operating track record and line of sight to return to our Tier 1 cost structure.
We will continue to do what we said we would do, executing on our strategy. And consistent with our values, we will do so in a manner we believe will make our business sustainable over the long-term. And as always, we will continue to make the health and safety of our workers, their families and their communities, our top priority.
Thank you, everybody. Stay safe and stay healthy.