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Cameco says outlook for 2024 ‘remains solid’

02 May 2024

CEO Tim Gitzel said the Canadian nuclear fuel company’s results for the first quarter of 2024 – with losses of CAD7 million (USD5 million) – were driven by normal quarterly variations, coupled with costs related to its acquisition last year of Westinghouse.

Key Lake, in Saskatchewan, is the world’s largest high-grade uranium milling operation (Image: Cameco)

“In the first quarter operational performance was strong across our uranium, fuel services and Westinghouse segments,” Gitzel said. “Financial results are in line with the 2024 outlook we provided, which has not changed, and are as expected, reflecting normal quarterly variability and the required purchase accounting and other non-operational acquisition-related costs for Westinghouse.”

First-quarter production results were “strong and are on track with our 2024 plans”, he said. Attributable uranium production for the quarter was 5.8 million pounds U3O8 (2231 tU), a year-on-year increase of 1.3 million pounds U3O8. The mining operations at McArthur River/Key Lake and Cigar Lake are each expected to produce 18 million pounds U3O8 (on a 100% basis) in 2024.

Cameco closed its acquisition of Westinghouse, in a strategic partnership with Brookfield, last November. Cameco now owns a 49% interest and Brookfield owns the remaining 51%. The company had previously said it expects this to generate a net loss of between CAD170 million and CAD230 million in 2024 due to the impact of the purchase accounting, which requires the revaluation of Westinghouse’s inventory and other assets at the time of acquisition, and the expensing of some non-operating acquisition-related transition costs. CAD123 million of the expected net loss for Westinghouse in 2024 was incurred in the first quarter “due to normal variability in the timing of its customer requirements and delivery and outage schedules”.

Westinghouse’s first quarter “is typically its weakest”, Cameco said in its quarterly in-depth management’s discussion and analysis (MD&A) document, with stronger expected performance in the second half of the year, and higher expected cash flows in the fourth quarter, and Gitzel said the company was “delighted” with its acquisition. “It’s even better than we thought when we bought it,” he told investors. “The potential there in all elements of their business is really good.”

Inkai update

Production from the Inkai joint venture in Kazakhstan was slightly down year-on-year, with 1.6 million pounds U3O8 produced this quarter compared with 1.9 million pounds in the same period in 2023 (both on a 100% basis). Inkai’s current production target for 2024 is 8.3 million pounds of U3O8 (100% basis), but procurement and supply chain issues, most notably related to the availability of sulphuric acid, mean this target is tentative.

Cameco said it is working with its closely with JV Inkai and its joint venture partner Kazatomprom to receive its share of production via the Trans-Caspian International Transport Route, which does not rely on Russian rail lines or ports, but warned that delays to deliveries could happen “if transportation using this shipping route takes longer than anticipated”.

“To mitigate the risk of transportation delays or production shortfalls, we have inventory, long-term purchase agreements and loan arrangements in place we can draw on,” the company said.

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