Reports related to this article:
Project(s): View 6 related projects in PECWeb
Plant(s): View 4 related plants in PECWeb
en
Researched by Industrial Info Resources (Sugar Land, Texas)--On February 11, executives of Canada-based uranium supplier Cameco Corporation (NYSE:CCJ) (Saskatoon, Saskatchewan) shared the company's fourth-quarter and full-year results. Timothy Gitzel, chief executive officer, president and director, described 2012 as a busy and strong year. He also said that "near-term challenges in the market" have stuck around longer than he had anticipated. He said that the long-term outlook for the industry continues to be extremely strong, with average annual growth in Uranium demand projected to be around 3% out to 2022.
Financial Results
In 2012, Cameco achieved a production of 21.9 million pounds and sales volumes of 32.5 million pounds, and a large portion of this amount came from the second half of the year. Cameco's revenue was $2.3 billion, which was down by 3% from the company's record-level in 2011. Net earnings were down due to a write-down of the Kintyre property and lower earnings from the company's uranium segment. There was a decrease in this segment mainly because productions costs went up and there were lower average realized uranium prices.
For 2013, the company expects to see an increase in production to 23.3 million pounds. Cameco also expects to increase revenue in its uranium and fuel service segment by up to 5%. In the last quarter of 2013, Cameco projects that uranium deliveries will be much lower than usual. Gitzel said that he thinks uranium deliveries will be between 5 to 6 million pounds, when they were 8 pounds in the first quarter of 2012. He also noted that approximately 60% of the company's deliveries will come in the second half of 2013.
Projects and Outlook
"Throughout the year, we will continue to invest significantly in our growth plans. As we announced in our third quarter, we are pursuing 36 million pounds of annual supply by 2018, primarily through expansions at out existing operations and through the development of Cigar Lake," Gitzel explained. Cigar Lake, which is located in Saskatchewan, Canada, is one of the world's most significant uranium deposits. In 2006, the mine had flooded, and Cameco was required to start a five-phase remediation program in early 2007 to remove all the water. Cameco also had to dewater and secure the mine, and this process took a few years. Work was completed at the 420-meter level of the mine where the last inflow occurred. The mine was eventually secured and inspected. This month, crews were able to re-enter the main working level of the mine. The mine is expected to come into production in the middle of 2013 and it is projected to produce the first packaged pounds in the fourth quarter. "Cigar Lake will be a 2013 highlight." Gitzel said.
Cameco has other big projects in the works. The company currently has 64 reactors under construction. Uranium demand is growing by an average of 3% a year, and this trend is expected to continue to 2022. "We haven't seen this kind of growth since the 1970's when countries like France, countries in Western Europe, Japan and the U.S. were all building reactors." Gitzel stated. He also explained that there has been growth in uranium demand because secondary suppliers, which historically "bridged the gap between production and consumption," are disappearing. For example, this year, the Russian highly-enriched uranium commercial agreement ends. According to Gitzel, this is huge. "The end of the agreement will mean the removal from the market of more annual pounds than Cameco's entire production in 2012," Gitzel said. He also explained that both secondary and primary supply is becoming "more uncertain." Last year, a number of producers (including Cameco) canceled or delayed projects because of uranium prices. Many projects have not been moving forward. While uranium demand is becoming "more certain," supply, on the other hand, is becoming unpredictable. This aspect is actually good for Cameco's business, Gitzel said.
Industrial Info is tracking 23 projects (which are located in North America, Asia and Oceania) that Cameco is the plant parent of. 18 of these projects are located in North America. In this region, they have a total investment value of $2.4 billion. The most expensive project that Industrial Info is tracking has a total investment value of $855 million. This project is located in Pinehouse, Saskatchewan. For this project, Cameco is involved in a 70/30 joint venture with AREVA Resources Canada Incorporated. The companies will be performing economic evaluation for the McArthur River U-G uranium mine expansion. Construction is projected to kick off in the fourth quarter of 2014, and the project is projected to be completed in 2017.
There is a lot of uncertainty in the uranium business. For example, "the uncertainty around Japan's reactor fleet, as well as some retirements of older reactors, have led to excess inventories and discretionary buying, resulting in diminished near-term demand." Gutzel explained. This scenario has persisted longer than Cameco had anticipated, however, in 2012, there was still a lot of improvement. Gitzel said that the establishment of the Nuclear Regulatory Authority in Japan has brought stability to the regulatory environment. It has also brought insights to when reactors will restart in Japan.
The executives at Cameco are optimistic about pursuing intended growth plans. The Yeelirrie project (which is located in Australia) and the Millennium project will serve the company well in the future, Gitzel said. (Industrial Info is currently tracking the progress of theYeelirrie project, which has a total investment value of $258.5 million.)
Gitzel also spoke a little about NUKEM, which the company acquired in 2012. NUKEM is a leading trader and broker of nuclear fuel products and services. This acquisition added a new segment to Cameco's business. "This acquisition gives us access to unconventional and secondary sources of supply, thereby strengthening our position in nuclear fuel markets and complementing our core business," he explained.
Before Gitzel went to the question and answer segment of the conference call, he emphasized that 2012 was a challenging year, but despite all the hurdles, Cameco was able to deliver a strong performance, and he expects that 2013 will follow in the same trend.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Financial Results
In 2012, Cameco achieved a production of 21.9 million pounds and sales volumes of 32.5 million pounds, and a large portion of this amount came from the second half of the year. Cameco's revenue was $2.3 billion, which was down by 3% from the company's record-level in 2011. Net earnings were down due to a write-down of the Kintyre property and lower earnings from the company's uranium segment. There was a decrease in this segment mainly because productions costs went up and there were lower average realized uranium prices.
For 2013, the company expects to see an increase in production to 23.3 million pounds. Cameco also expects to increase revenue in its uranium and fuel service segment by up to 5%. In the last quarter of 2013, Cameco projects that uranium deliveries will be much lower than usual. Gitzel said that he thinks uranium deliveries will be between 5 to 6 million pounds, when they were 8 pounds in the first quarter of 2012. He also noted that approximately 60% of the company's deliveries will come in the second half of 2013.
Projects and Outlook
"Throughout the year, we will continue to invest significantly in our growth plans. As we announced in our third quarter, we are pursuing 36 million pounds of annual supply by 2018, primarily through expansions at out existing operations and through the development of Cigar Lake," Gitzel explained. Cigar Lake, which is located in Saskatchewan, Canada, is one of the world's most significant uranium deposits. In 2006, the mine had flooded, and Cameco was required to start a five-phase remediation program in early 2007 to remove all the water. Cameco also had to dewater and secure the mine, and this process took a few years. Work was completed at the 420-meter level of the mine where the last inflow occurred. The mine was eventually secured and inspected. This month, crews were able to re-enter the main working level of the mine. The mine is expected to come into production in the middle of 2013 and it is projected to produce the first packaged pounds in the fourth quarter. "Cigar Lake will be a 2013 highlight." Gitzel said.
Cameco has other big projects in the works. The company currently has 64 reactors under construction. Uranium demand is growing by an average of 3% a year, and this trend is expected to continue to 2022. "We haven't seen this kind of growth since the 1970's when countries like France, countries in Western Europe, Japan and the U.S. were all building reactors." Gitzel stated. He also explained that there has been growth in uranium demand because secondary suppliers, which historically "bridged the gap between production and consumption," are disappearing. For example, this year, the Russian highly-enriched uranium commercial agreement ends. According to Gitzel, this is huge. "The end of the agreement will mean the removal from the market of more annual pounds than Cameco's entire production in 2012," Gitzel said. He also explained that both secondary and primary supply is becoming "more uncertain." Last year, a number of producers (including Cameco) canceled or delayed projects because of uranium prices. Many projects have not been moving forward. While uranium demand is becoming "more certain," supply, on the other hand, is becoming unpredictable. This aspect is actually good for Cameco's business, Gitzel said.
Industrial Info is tracking 23 projects (which are located in North America, Asia and Oceania) that Cameco is the plant parent of. 18 of these projects are located in North America. In this region, they have a total investment value of $2.4 billion. The most expensive project that Industrial Info is tracking has a total investment value of $855 million. This project is located in Pinehouse, Saskatchewan. For this project, Cameco is involved in a 70/30 joint venture with AREVA Resources Canada Incorporated. The companies will be performing economic evaluation for the McArthur River U-G uranium mine expansion. Construction is projected to kick off in the fourth quarter of 2014, and the project is projected to be completed in 2017.
There is a lot of uncertainty in the uranium business. For example, "the uncertainty around Japan's reactor fleet, as well as some retirements of older reactors, have led to excess inventories and discretionary buying, resulting in diminished near-term demand." Gutzel explained. This scenario has persisted longer than Cameco had anticipated, however, in 2012, there was still a lot of improvement. Gitzel said that the establishment of the Nuclear Regulatory Authority in Japan has brought stability to the regulatory environment. It has also brought insights to when reactors will restart in Japan.
The executives at Cameco are optimistic about pursuing intended growth plans. The Yeelirrie project (which is located in Australia) and the Millennium project will serve the company well in the future, Gitzel said. (Industrial Info is currently tracking the progress of theYeelirrie project, which has a total investment value of $258.5 million.)
Gitzel also spoke a little about NUKEM, which the company acquired in 2012. NUKEM is a leading trader and broker of nuclear fuel products and services. This acquisition added a new segment to Cameco's business. "This acquisition gives us access to unconventional and secondary sources of supply, thereby strengthening our position in nuclear fuel markets and complementing our core business," he explained.
Before Gitzel went to the question and answer segment of the conference call, he emphasized that 2012 was a challenging year, but despite all the hurdles, Cameco was able to deliver a strong performance, and he expects that 2013 will follow in the same trend.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
