Cameco uranium production forecast unchanged despite delays

The Canadian company in February announced its plans to restart uranium production at McArthur River/Key Lake, which had been idled since 2018. Recruitment, training and operational readiness activities at the sites are progressing, the company said in its quarterly results announcement. Some CAD45 million (USD35 million) of operational readiness costs have been expensed during the second quarter, and around 670 employees and long-term contractors are now on site in northern Saskatchewan. This is expected to increase to about 850 when operations resume later this year, the company said. Operational readiness activities are transitioning from construction to early-stage commissioning of mining and milling circuits, and critical automation and digitisation projects are being tied into existing infrastructure.

However, operations are now expected to begin closer to the end of the year, President and CEO Tim Gitzel said. This is due to "challenges" with respect to the availability of critical materials, equipment and skills for some of the automation, digitisation and other projects. "In addition, after four years on care and maintenance, we have experienced some normal commissioning issues as we work to safely and systematically integrate the existing and new assets with updated operating systems at the mill," Gitzel said. "We have adjusted our schedule to accommodate these delays and anticipate first production will be deferred to later in the fourth quarter."

McArthur River/Key Lake is expected to produce up to 2 million pounds U3O8 (769 tU, 100% basis) this year, Gitzel said. The company expects to produce 18 million pounds U3O8 (100% basis) from the Cigar Lake after successfully catching up on development work deferred from 2021. Cameco's share of that is about 9.5 million pounds, including its increase in ownership which was announced earlier this year when Cameco, along with Orano, acquired Idemitsu Canada Resources Ltd's 7.875% participating interest in the Cigar Lake Joint Venture.

Inkai shipments on hold

Shipments of Cameco's share of production from the Inkai joint venture in Kazakhstan to the Blind River refinery in Canada remain on hold until an alternative shipping route that does not rely on Russian railway lines or ports has been finalised, the company said. "Year-to-date we have taken no deliveries from our share of Inkai's 2022 production. While the work on enabling shipping via the Trans-Caspian route continues, we have no confirmed date for when the first shipment with our share of Inkai's production will proceed via that route." Inkai is a joint venture of Cameco and Kazakh company Kazatomprom.

Cameco remains committed to its supply discipline strategy, Gitzel said, but is benefiting as the market continues to transition and geopolitics highlight concentration of supply concerns and has added over 45 million pounds U3O8 to its long-term uranium contract portfolio so far this year. "It is still early days, but we are seeing some utilities beginning to pivot toward procurement strategies that more carefully weigh the origin risk," he said.

The company's net earnings for the quarter were CAD84 million (adjusted net earnings CAD72 million).