Cameco: Go Long for Big Gains

Uranium miner Cameco Corporation (CCJ) reported its third quarter result on 30th Oct. The result has a lot of positives for the company as the net loss came down to just $4 million or $0.01 per diluted share from $146 million or $0.37 per diluted share in the third quarter of 2014.

On an adjusted basis, however, Cameco earned an income of $78 million or $0.20 per diluted share compared to that of $93 million $0.23 per diluted share earned last year.

The reasons quoted for this decline were lower gross profit from the uranium segment and lower tax recovery. Offsetting the effect of the weakness in uranium were the higher gross margins in the fuel services segment as well as the NUKEM segment.

Positives to watch

There were a few things for Cameco investors to get excited about Cameco post the third quarter result amid all the weakness that most mining industries are talking about. One of them is that the company is on track to deliver its sale guidance for the current year. Secondly, the management looked very pleased to mention a better than expected progress at the Cigar Lake which has boosted the production guidance for the full year.

As mentioned by Cameco CEO, Tim Gitzel, due to better than expected performance in operations, the company had produced 8 million pounds of packaged uranium by the end of October, which was the upper end of the original annual forecast. As a result, the yearly target has now been revised to at least 10 million packaged pounds from the McClean Lake mill for 2015 and may possibly reach 18 million pounds by 2018.

Cameco forecasts that consumption will be able to outpace production by 2024. Whatever time it takes, the long-term outlook for nuclear and uranium is pretty strong as energy needs of the world are increasing and governments are promoting more and more unconventional sources of energy. So going forward, a big advantage on Cameco’s side will be that it has some of the best uranium assets in the world, a solid contract portfolio, strong long-term relationship with customers and the strategy that is focused on the Tier 1 properties.


As ambiguity regarding the future of nuclear power is becoming more and more clear, the prospects of uranium miners like Cameco are growing brighter and brighter. More facilities are on the verge of restarting. Many new ones are also going to come up within the end of this decade. Need for clean technologies makes nuclear power an inevitable option. These factors favour Cameco as it gears up for the future demand with a low cost production ramp particularly at Cigar Lake. Therefore, being one of the largest in the industry would prove to be beneficial for the company once enough reactors come online.

Published on Dec 18, 2015
By Vinay Singh

Copyrighted 2020. Content published with author's permission.

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