Cameco Corp has reported lower-than-expected fourth-quarter earnings after the price of the raw material in nuclear fuel fell. Cameco reported a net loss of CAD10m ($7.2m) compare with a profit of C$72.7m the previous year.
The company reported a writedown of C$210m related to its Rabbit Lake operation. "The impairment was due to increased uncertainty around future production sources for the Rabbit Lake mill as a result of the ongoing economic conditions," a company statement said.
Cameco also reported resource figures for its Fox Lake uranium deposit for the first time. A management's discussion and analysis (MD&A) document filed alongside the financial results show inferred resources of 68.1m pounds U3O8 (26,194 tU) for Fox Lake, at a grade of 7.99% U3O8. Cameco's share is equivalent to 53.3m pounds U3O8. Fox Lake is located at the Read Lake property adjacent to McArthur River in Saskatchewan. Cameco plans to spend CAD7m on exploration at Read Lake in 2016 out of a total of CAD36m allocated for exploration projects in Canada and Australia this year.
Despite the disappointing results, Grant Isaac, Cameco's senior vice-president and chief financial officer told an investor conference that growth in uranium demand is happening "at a rate we haven't seen in the last 35 years" and is creating "a certain and predictable view to future uranium requirements". He added that the growth is quite resilient because it is occurring in regions that are still in the business of installing 24-hour baseload power.
"We're not talking about incremental additions to a mature power grid," he said. "These are jurisdictions that are building the 24-hour baseload power that is the backbone of a healthcare system, a transportation system, an education and communication system, and in jurisdictions where local clean air has become a major, major priority as well. So nuclear, not surprisingly, is holding its own... and we're seeing very robust demand and 65 reactors under construction around the world today. You can track them. You can go see them. They're very exciting construction projects.
Cameco supplies about 18% of the world's uranium production from mines in Canada, the US and Kazakhstan.
Photo: McArthur River (Credit: Cameco)