Cameco (TSX: CCO; NYSE: CCJ) responded to the announcement issued today by JSC National Atomic Company “Kazatomprom” (Kazatomprom) that it is reducing operational activities across all of its uranium mines for an expected period of three months due to the risks posed by the Coronavirus (COVID-19) pandemic. According to Kazatomprom, this decision will result in a lower level of wellfield development activity and, as a result, an estimated reduction of up to 17.5% in total planned uranium production in Kazakhstan for 2020. In 2019, Kazakhstan accounted for more than 42% of the world’s uranium production.
The reduction in activity will impact production from Joint Venture Inkai LLP (JV Inkai), a uranium operation jointly owned by Cameco (40%) and Kazatomprom (60%). Based on information provided by JV Inkai, Cameco’s preliminary assessment of the effects of Kazatomprom’s decision is a reduction in Inkai’s 2020 production of up to 12%, which translates into a reduction in Cameco’s 2020 purchases from JV Inkai of up to 600,000 pounds of U3O8. Prior to this announcement, Cameco had expected to purchase 4.9 million pounds of U3O8 in 2020. Cameco will be in discussions with Kazatomprom and JV Inkai to determine the impact of Kazatomprom’s decision on output from the operation and Cameco’s purchases.
The decision to temporarily decrease operational activity at JV Inkai is an unplanned event that may lead to variability in the 2020 outlook we provided in our Annual MD&A; however, it is too soon to quantify what the impact might be on the market. We will continue to assess the situation and will provide an update when we can better ascertain what the implications of this decision and other impacts on our business related to COVID-19 might be for this year’s outlook.
The Inkai operation is an in-situ recovery uranium mine in southern Kazakhstan that is owned and operated by JV Inkai, which in turn is currently owned by Cameco (40%) and Kazatomprom (60%). As a result of Cameco’s minority ownership interest in the joint venture, we account for JV Inkai on an equity basis.
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Cameco is one of the largest global providers of the uranium fuel needed to energize a clean-air world. Our competitive position is based on our controlling ownership of the world’s largest high-grade reserves and low-cost operations. Utilities around the world rely on our nuclear fuel products to generate power in safe, reliable, carbon-free nuclear reactors. Our shares trade on the Toronto and New York stock exchanges. Our head office is in Saskatoon, Saskatchewan.
Source: Cameco
