https://www.miningweekly.com

Cameco expects lower revenue for 2017 after market headwinds lead to disappointing 2016 results

Cameco expects lower revenue for 2017 after market headwinds lead to disappointing 2016 results

Photo by Bloomberg

10th February 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

Font size: - +

VANCOUVER (miningweekly.com) – Canadian uranium producer Cameco expects 2017 revenue to fall further to between C$1.95-billion and C$2.08-billion, based on currently committed sales volumes being weighed down by a decrease in average realised prices in the uranium segment as a result of lower prices under both fixed and market-related contracts, a major contract dispute and an expected decrease in sales volumes from subsidiary NUKEM.

For the 12 months ended December 31, Cameco, the world’s highest-grade uranium producer, reported a 12% drop in consolidated revenues to C$2.43-billion.

Just last week, Tokyo Electric Power, operator of the Fukushima nuclear plant, scrapped its billion-dollar uranium supply contract with Cameco.

The miner reported a net loss attributable to shareholders of C$62-million, down 195% from the comparable profit of C$65-million in 2015.

Excluding a C$124-million impairment charge for the full carrying value of the mothballed Rabbit Lake mine and the full C$238-million carrying value of its interest in Australian exploration venture Kintyre, the company reported adjusted profit of C$143-million, which was 59% lower year-on-year.

Further, cash generated from operations, after working capital changes, fell 31% over the 12 months to C$312-million.

During 2016, uranium output, which accounts for about 90% of the company’s gross profit, amounted to 27-million pounds, down 5% year-on-year. Realised prices fell 9% to $41.12/lb.

Cameco said it expects contracting, which generally fetches higher prices over the spot price, to remain “somewhat discretionary”. In 2016, the uranium spot price ranged from a high of $35/lb, to a low of about $18/lb, and averaged about $26/lb for the year. Utilities continue to be well covered under existing contracts, and, given the current uncertainties in the market, the company expects they and other market participants will continue to be opportunistic in their buying, Cameco said.

During 2016, Cameco had implemented several strategic initiatives intended to strengthen the core business and enhance financial performance over time. These initiatives include suspending production at the Rabbit Lake operation and curtailing its US mining operations, the signing of a collaboration agreement with the aboriginal communities located near its Saskatchewan operations, restructuring of the NUKEM segment and corporate office departments, and office space consolidation.

This was not enough to sustain profitability in the current environment, prompting Cameco to reduce the workforce at the McArthur River, Key Lake and Cigar Lake operations by about 10%, or 120 employees, by May.

For 2017, Cameco expects uranium production of 25.2-million pounds, with sales expected to range between 30-million to 32-million pounds.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 
Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.16 0.199s - 106pq - 2rq
Subscribe Now