Strong results for Cameco in weak market
10 February 2014
Canadian uranium company Cameco has scrapped its production target for 2018 due to continued uncertainty in the uranium market, despite record production and strong financial results for 2013.
The company reported revenue of C$2439 million ($2210 million) in 2013, up 29% from C$1891 million ($1712 million) in 2012. Meanwhile, gross profit grew 12% to C$607 million ($550 million).
Cameco produced 23.6 million pounds U3O8 (9078 tU) in 2013, compared with 21.9 million pounds (8424 tU) the previous year. Most of this came from the McArthur River/Key Lake project in which Cameco's share came to 14.1 million pounds (5424 tU), up from 13.6 million pounds (5231 tU) in 2012. However, Cameco's total sales volume remained steady in 2013 at about 32.8 million pounds (12,616 tU).
"Market conditions deteriorated in 2013 and we believe the uncertainty could continue, depending on how events unfold," Cameco said. "In particular, the slower than expected pace of Japanese reactor restarts, unexpected reactor shutdowns in the United States and temporary shutdowns in South Korea led to demand erosion. Compounding the issue, the supply side performed well."
For 2014, the company forecasts uranium production of between 23.8 and 24.3 million pounds (9155 to 9347 tU). Cameco has commitments under long-term contracts to purchase some 2 million pounds (769 tU). The company's sales volume will be between 31 and 33 million pounds (11,924 to 12,693 tU). However, exploration costs in 2014 are likely to be 35-40% lower than in 2013.
Cameco said that a fixed production target for the mid-term is "no longer appropriate" and has "decided the prudent action is to eliminate our previous 2018 supply target of 36 million pounds."
However, the company said that the long-term outlook for the uranium industry "continues to be very positive, despite the uncertainty that exists today." Cameco added, "The challenge for the industry is the pathway and timing of the transition from today's stagnant, over-supplied short-term market to the promise of nuclear growth and positive uranium market conditions in the long term."
Cameco president and CEO Tim Gitzel noted that the continued uncertainty in the uranium market "has lasted for longer than had been expected." He added, "Although we have an extensive portfolio of assets from which we can increase our production, the market incentive must be there."
Researched and written
by World Nuclear News