Cameco’s president and CEO says with the recent uranium price increase the company is beginning to enjoy the benefits of the strategic and deliberate decisions they have made.
The Saskatoon based uranium giant reported its first quarter results this morning. Tim Gitzel says demand is being driven by countries trying to meet net-zero carbon targets but still having baseload electricity that is affordable. He says that’s why, since the start of 2022, there have been announcements from countries like the United States, the United Kingdom, France, South Korea and Belgium focused on preserving and expanding the life of their existing reactor fleets as well as building new reactors. He says demand is also being augmented by interest in non-traditional commercial uses of nuclear power like small modular reactors and advanced reactors.
In terms of supply Gitzel says with Russia’s invasion of Ukraine, whether because of sanctions or because of conflict with company values, the industry now faces the challenge of disentangling its supply chain from dependence on Russian nuclear fuel supplies.
Despite what Tim Gitzel describes as considerable pricing pressure resulting from geopolitical uncertainty, Cameco will not front run demand with supply and will not change production plans. So as announced in February, starting in 2024, with McArthur River/Key Lake and Cigar Lake operating at less than licensed capacity, the company plans to be operating at about 40% below productive capacity. This will remain the production plan until further improvements are seen in the uranium market and in addition to having made further progress in securing the appropriate homes for its unencumbered, in-ground inventory under long-term contracts.
During the first quarter, at the McArthur River mine and Key Lake mill the focus was on recruitment and training activities. There are now approximately 600 employees and long-term contractors employed at the mine and mill. When Cameco resumes operations later this year, it expects to have approximately 850 employees and long-term contractors. In addition, work advanced to complete critical projects and the maintenance readiness checks at both the mine and mill with the expectation the company could produce up to 5 million pounds this year on a 100 per cent basis depending on its success in completing operational readiness activities and managing the potential risks of the COVID-19 pandemic as well as supply chain challenges.
Cameco reported net earnings of $40 million; adjusted net earnings of $17 million in the first quarter and a net income of $31.6 million. The company reported that uranium prices have increased significantly with the spot price up 38% and the long-term price up 15% since the start of the year. The conversion spot price is up 65% and the long-term price is up 25%. The uranium producer posted revenue of $314.2 million in the period.
