Because the uranium market has turned around, Cameco has announced the McArthur River mine and Key Lake mill in northern Saskatchewan will be ramping up production. President and CEO, Tim Gitzel, explains that because of the low uranium prices they had been put in care and maintenance mode in January of 2018, but the prices are much higher now.
He also feels that 2021 was a year of change for the nuclear industry, with countries committing to net zero carbon emissions. Gitzel believes nuclear energy is an integral part of the clean energy mix. He notes that U.S. President Joe Biden committed to nuclear energy last year, signing the Paris Agreement, and committing to keeping that country’s nuclear reactors going, while focusing on new technology and Small Nuclear Reactors or SMRs. The return to production at the mine and mill will take the total workforce to around 900 employees and contractors by 2025, from around 470 at the end of 2021.
Gitzel considers the ramping up of production good news for the province, employing people including northern staff and contractors, and paying taxes and royalties to the province. Cameco, with its headquarters based in Saskatoon, is presently one of Canada’s largest employers of Indigenous people, and over 80 per cent of the services the uranium mining company uses at its northern operations are purchases from northern and Indigenous-owned companies.
Saskatchewan’s Premier was on hand when the President and CEO of Cameco spoke with reporters. Scott Moe says the direct impact is more jobs, especially in northern Saskatchewan, but there is will also be indirect jobs created for contractors and businesses in the north. As well, Cameco’s President and CEO noted that when the provincial government presented its mid-year budget update in November of 2018, Finance officials referred to the suspension of production at the mine and mill as the biggest issue affecting Saskatchewan’s GDP at the time.
Cameco’s fourth quarter results were released today. The Cameco Board of Directors approved a 50 per cent increase to the company’s annual dividend for 2022. In December 2022 it will pay an annual dividend of $0.12 per common share, up from $0.08 per common share. Revenue for the quarter was $465-million, down from $550-million in the fourth quarter of 2020.
They will however, continue to operate under-capacity in order to maintain their supply discipline. So McArthur River/Key Lake and Cigar Lake are slated to operate at less than licensed capacity starting in 2024. Last year the company was operating around 75 per cent below productive capacity. By 2024 they plan to be operating at about 40 per cent below productive capacity and will maintain that plan until further improvements are seen in the uranium market.
The Saskatoon-based uranium company is estimating that this year, it could produce up to 5 million pounds depending on their success in completing operational readiness of Key Lake and McArthur River and managing the potential risks of the COVID-19 pandemic and related supply chain challenges. Cameco expects to see a significant improvement in its earnings and cash flow as it ramps up to the 2024 planned production capacity.
