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TORONTO (miningweekly.com) – Canadian uranium producer Cameco late on Friday reported its full-year 2013 and fourth-quarter ended December 31 results, posting a strong performance in weak markets.
The Saskatoon, Saskatchewan-based company revealed that it had abandoned its production target of 36-million pounds of uranium by 2018, as a result of the unexpected continued uranium market uncertainty.
Cameco cited the continued depressed uranium price, which has been severely affected by the March 2011 Fukushima nuclear reactor damage caused by the earthquake and tsunami, in Japan, as one of the main reasons for its decision.
During this period, the spot uranium price has more than halved from $72.63/lb before the Fukushima disaster struck, to a current price of about $35.50/lb.
Cameco noted that Japan had been restarting reactors at a slower-than-expected rate, which was compounded by unexpected reactor shutdowns in the US and in South Korea, which led to a demand slump.
Meanwhile, the global supply side had been performing well, resulting in bloated global supplies and downward price pressure.
Cameco said the challenge for the industry was the pathway and timing of the transition from today’s stagnant, over-supplied short-term market, to the “promise” of nuclear growth and positive uranium market conditions in the long term.
Australian rival Paladin Energy on Friday revealed that it had suspended production at its Kayelekera mine, in Malawi, saying the operation was a severe drain on the company’s finances in the sustained low uranium-price environment.
However, there were also indicators surfacing of market stabilisation. The company expected growing demand in the medium term from the nuclear power industry, as several new generators had come on line, and several more were scheduled to become operational.
Overall, Cameco expected the global increase in plants from 433 representing 394 GW, to 526 representing 514 GW by 2023, to illustrate a promising growth picture.
The end of the Russian Highly Enriched Uranium commercial agreement in 2013, removing 24-million pounds of yearly supply from the market, also underlined the need for increasing reliance on primary uranium supplies in the future.
Cameco said that it expected to produce 23.8-million to 24.3-million pounds of uranium in 2014, up from 23.6-million pounds in 2013.
Based on the contracts Cameco has in place, it expected to sell between 31-million and 33-million pounds of uranium oxide in 2014.
Cameco also said that it still expected to bring its high-grade Cigar Lake uranium mine, in northern Saskatchewan, into production in the first quarter, with ore processing to begin at Areva's McClean Lake mill by the end of the second quarter.
FINANCIAL RESULTS
For the three months ended December 31, Cameco reported net earnings of $64-million, up 56% year-on-year from $41-million. On an adjusted basis, net earnings slumped 36% year-on-year to $150-million, or $0.38 a share, compared with $233-million, or $0.59 a share.
Analysts had however, expected adjusted earnings of $0.54 a share for the quarter.
Revenue in the quarter rose 15% to $977-million, when compared with $846-million in the same three months of 2012.
Cameco's uranium sales fell 12% to 12.7-million pounds in the quarter, while its average realised uranium price dropped 4% to $47.76/lb.
For the full year, Cameco’s net earnings rose 26% to $318-million, or $0.81 a share, compared with $253-million, or $0.64 a share.
On an adjusted basis, earnings were $445-million, or $1.12 a share, compared with $434-million, or $1.10 a share, in 2012.
Revenues in 2013 climbed 29% to $2.44-billion, compared with $1.89-billion.
On Monday morning, Cameco’s TSX-listed stock fell 3.59% to C$22.59 apiece.