Cameco confident despite earnings drop

11 February 2013

Canada's Cameco has promised to focus on reducing costs after a year that saw net earnings fall despite exceeding annual production targets.

A fourth-quarter write-down of $168 million on the company's investment in the Kintyre project in Western Australia contributed to a $184 million fall in the company's net 2012 earnings of $266 million, down from $250 million in 2011. Lower earnings from the company's uranium businesses, a result of lower prices and increased production costs, and lower earnings from fuel cycle services resulting from a decrease in sales volumes, also contributed. However, these were partially offset by higher earnings from Cameco's electricity business thanks to higher generation and lower operating costs.

The uranium market has weakened since Cameco purchased Kintyre from Rio Tinto in 2008, and the company said in 2012 that it would not be proceeding with a detailed feasibility study under current market conditions.

Cameco president Tim Gitzel said the company had delivered "solid results" in a "busy and challenging" year. "Our focus in 2013 will be on execution and reducing costs without compromising on our values," he noted.

Gitzel said the company remained confident in a positive future for the nuclear industry. New reactor construction in China and "strong indications" of a return-to-service of Japanese nuclear plants presented a positive signs for demand, while the supply side would be affected by the forthcoming end of the Russian high-enriched uranium agreement and also decisions to delay or cancel new mine projects. "We see a great opportunity to grow our business," he said.

The Cigar Lake mine in Saskatchewan is still expected to come into operation in mid-2013. The ore is to be processed at Areva's McClean Lake mill, and the first packaged yellowcake is expected in the fourth quarter of the year.

No money from ship sale

Cameco is not entitled to receive any proceeds from the sale of a ship that the company had to clean up after a yellowcake spill at sea, the Canadian federal court has ruled. The Altona was crossing the Pacific in late December 2010 with a consignment of uranium bound for China when severe weather conditions caused some sea containers to shift and some of the drums to open. The ship returned to port in British Columbia and Cameco carried out a remediation plan to remove all the containers and decontaminate the affected areas of the ship, at a cost of about $8 million to the company.

In the meantime, the Altona's owner went bankrupt while owing German bank HSH Nordbank AG nearly €7 million ($9 million) on a mortgage on the vessel. The ship was subsequently sold for $4.8 million. Cameco had sought to recoup some of the remediation costs from the proceeds of the sale, but the court has upheld the bank's prior claim on the money.

Researched and written
by World Nuclear News