VANCOUVER (miningweekly.com) – The NYSE-listed stock of senior Canadian uranium miner Cameco on Wednesday fell 19% to C$10.71 apiece after the company reported late Tuesday that it expected to book impairment charges for the full-year ranging between $180-million and $220-million.

In what has been an exceptionally difficult year for uranium miners, that saw spot prices dip below $20/lb, Cameco said it expected to report a net loss for 2016, owing in part to asset impairments resulting from fair market value assessments at year-end.

“Our current earnings expectations are not reflective of the strength of our core uranium business, which saw us achieve our outlook for delivery volumes at a realised price 83% higher than the current spot price. The current earnings expectations do, however, reflect the consequences of a continued weak uranium market and our resolve to make the necessary decisions to defend and preserve our core uranium business for the long-term benefit of our stakeholders,” president and CEO Tim Gitzel said in a statement.

Cameco delivered 31.5-million pounds of uranium at an average realised price of $54.46/lb in 2016.

2017 STRATEGIC REVAMP
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.

Cameco also plans to implement changes to the air commuter service by which employees and contract workers get to and from the mine and mill sites in northern Saskatchewan, as well as work schedule changes to achieve additional cost savings. These changes will start in April and are expected to be completed during 2018.

The changes are not expected to impact 2017 output, which Cameco plans to announce together with its full-year results for 2016 after markets close on February 9.

“These are necessary actions to take in a uranium market that has remained weak and oversupplied for more than five years. While it is positive that we are starting to see other producers announce their intent to reduce supply, we have not yet seen an actual reduction in supply. Ultimately, it will be the return of both term demand and term contracting in a significant way that will signal that market fundamentals have turned more positive,” Gitzel stated.