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Cameco earnings spriral, market said to improve
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27th July 2012
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TORONTO ( – Canada’s biggest listed uranium producer Cameco reported sharply lower earnings during the second quarter ended June 30, based on lower sales volumes, lower realised prices and higher costs.

The Toronto-listed company on Friday said net earnings were down by 85% to C$8-million, compared with earnings of C$55-million or 2 Canadian cents a share in the same period a year earlier.

However, on an adjusted basis, which did not include once-off items, the company’s profit dropped by 52% to C$34-million or 9 Canadian cents a share.

Revenue fell 8% to C$391-million.

“Our deliveries in the second quarter were low and we recorded a $30-million expense related to a contract termination, which impacted our results,” president and CEO Tim Gitzel said during an investor telephone conference.

The yellowcake producer was more upbeat about its expected performance during the second half of the year, and said more than a third of its 2012 deliveries were to take place during the fourth quarter and it expected an improved average realized uranium price, owing to pricing under the mix of contracts.

Cameco said it expected to produce 21.7-million pounds of uranium this year.

Gitzel added that the uranium market was also looking set to improve as the company foresees a strong and promising growth profile for the industry. In addition to Japan having restarted two nuclear reactors this month, 95 new reactors would be built over the next decade, more than 60 of which are currently under construction, driving a looming increase in demand.

“This translates into an expected yearly average growth rate of about 3% for global uranium consumption,” Gitzel said.

He added that this growth would come at a time when uranium supply was challenged as a number of new primary supply projects have been put on hold, and a significant source of secondary supply – the Russian-US agreement concerning the disposition of highly enriched uranium extracted from nuclear weapons was coming to an end after 2013.

“That alone is the equivalent of removing a mine producing 24-million pounds of uranium a year from the market,” the miner said.

The company’s stock traded at C$21.92 apiece on the TSX on Friday, having lost about 16% of its value in the past year.

Edited by: Creamer Media Reporter


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