Fox Lake debuts in Cameco quarterly report

08 February 2016

This story has been updated to include information from a conference call held by Cameco on 8 February. 

Cameco has reported resource figures for the Fox Lake uranium deposit for the first time, at the end of a quarter which also saw the company write down CAD 210 million ($151 million) related to its Rabbit Lake operation.

A management's discussion and analysis (MD&A) document filed alongside Cameco's fourth quarter and 2015 financial results show inferred resources of 68.1 million pounds U3O8 (26,194 tU) for Fox Lake, at a grade of 7.99% U3O8. Cameco's share is equivalent to 53.3 million pounds U3O8 (20,386 tU).

Fox Lake is located at the Read Lake property adjacent to McArthur River in Saskatchewan. The company plans to spend CAD 7 million ($5 million) on exploration at Read Lake in 2016 out of a total of CAD 36 million it expects to spend on exploration projects in Canada and Australia this year.

Port Hope release

Cameco's Port Hope uranium conversion facility was shut down as a precautionary measure following a small unplanned release of fluorine gas on 4 February. The release was quickly detected and stopped, and the plant was later restarted. The Canadian Nuclear Safety Commission confirmed that the non-radiological event had no measurable impact on the local environment.

In a conference call, Cameco senior vice president Sean Quinn said that Fox Lake would continue to be evaluated, but that there were no plans to take it any further forward towards development at present. "It's in our longer-term plans," president and CEO Tim Gitzel confirmed.

Cameco's total share of uranium production for 2015, at 28.4 million pounds U3O8 (10,924 tU) was up on 2014's 23.3 million pounds U3O8 (8962 tU). Gitzel highlighted the outstanding performance of Cigar Lake, where production of 11.3 million packaged pounds of uranium far exceeded initial expectations of between six and eight million pounds.

The CAD 210 million impairment charge related to the Rabbit Lake operation contributed to an overall loss of CAD 10 million ($7 million) for the quarter. Cameco said that the impairment was due to "increased uncertainty around future production sources for the Rabbit Lake mill as a result of the ongoing economic conditions".

Cameco chief financial officer Grant Isaac acknowledged that resources were available at Rabbit Lake but said that the company's so-called Tier 1 strategy meant that its attention was currently focused on its assets at McArthur River, Cigar Lake and in Kazakshtan. The company also made a CAD 126 million ($101 million) write-down related to operations at Rabbit Lake in the fourth quarter of 2014.

Over the course of the full year, Cameco's net earnings were CAD 65 million ($47 million) compared to CAD 185 million in 2014. The company said that this was mainly due to greater losses on foreign exchange derivatives on the weakening of the Canadian dollar and lower tax recoveries, partially offset by lower impairment charges over the year as a whole and higher earnings in some segments. Furthermore, 2014's earnings had been supplemented by a number of "one-off" items including the sale of Cameco's interest in Bruce Power.

Gitzel said the company had performed well in 2015 in the context of global challenges. "We are still waiting on a market recovery that was expected to come sooner, but we've learned to put those expectations aside and prepare for whatever comes our way," he said. Cameco will continue to focus its capital on its "world-class, low-cost mines" to enable it to respond quickly to market demands for more production, he said. "And we believe that the question is not 'if' the market will make that call, but 'when'."

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by World Nuclear News