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Future supply of uranium less predictable, says Cameco

Dual-listed Cameco remains on track to achieve its guidance for the full-year and has increased its revenue target for the year.

According to CEO and president Tim Gitzel, the uranium company continues to demonstrate its resilience.

During the third quarter, ended September 30, Cameco continued to deliver on its strategy, and further strengthened its balance sheet through reducing its outstanding debt by one-third – it retired $500-million in debt during the quarter.

The company also extended the maturity date of its revolving credit facility (RCF) to November 2023, while reducing it by $250-million to $1-billion, as the company “does not have a history” of drawing on excess capacity and, with $864-million in cash and short-term investments on the balance sheet, the company does not anticipate needing the excess capacity on the RCF.

Gitzel on Monday commented that Cameco remained optimistic about “the long-term fundamentals driven by the increasing recognition of the role that nuclear must play in ensuring safe, reliable and affordable low-carbon electricity generation”.

“[The company] recognises that today’s low price is creating tomorrow’s opportunity for us,” he noted in a statement, adding that the one-tier production shutdown highlights the need for the uranium market to transition to ensure availability for growing fuel demand.

Gitzel further explained that the price needed to transition to one where price was set by the production cost curve. “When we look at utilities’ uncovered requirements, and the success we are having on the long-term contracting front, we know there is acceptable business to be done.”

This activity has been a leading indicator in past uranium cycles, which he said gave Cameco the confidence that the uranium market will undergo the same transition as seen in the conversion market.

For 2019, Cameco declared a yearly dividend of $0.08 per common share.

Looking ahead, the fourth quarter is expected to be Cameco’s largest delivery quarter this year, with the company already having begun buying some of the material needed to meet its commitments.

In addition, with the company’s McArthur River/Key Lake operation, in Canada, still on care and maintenance, Cameco said it would need to buy material to meet its 2020 sales commitments.

As a result, Cameco is expected to make significant purchases of material on the spot market.

However, the company continues being discretionary and warned that the activity seen has largely been churn in the market, with the same material changing hands many times.

It added that there was a lack of fundamental demand in the spot market, which was primarily owing to the delay of buying decisions caused by uncertainty owing to the changing market dynamics, including ongoing market access and trade policy issues.

If there are sellers that want to sell material into a market that lacks fundamental demand, Cameco intends to plan its purchasing activity to pick up material as cheaply as possible with the intent of maximising gross profit.

In addition, in light of the market access and trade policy issues affecting the uranium market, Cameco said that it recognizes the potential for trade policy distortions to regionalise supply, and ultimately, along with low prices, make the availability of future supply less certain and less predictable.


Revenue for Cameco’s third quarter decreased by 38% to $303-million, down from R488-million in the third quarter of 2018, while gross profit turned towards a loss of $2-million, a 67% change compared with the $6-million profit in the third quarter of 2018.

Net loss of $0.03 a share was also reported, as well as an adjusted net loss of $2 a share for the period.

Cash provided by operations, after working capital changes was $232-million. 

Source: Mining Weekly