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Cameco Corp CCJ

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Cameco’s Q3 Losses Widen Due to Its Strategy to Buy Uranium From the Spot Market

Analyst Note

| Kristoffer Inton |

As we expected in our second-quarter earnings update, COVID-19 continued to weigh on Cameco during the third quarter. Production from Cigar Lake was meaningfully reduced as the mine only restarted in September, filling more sales volume with spot market purchases. Spot prices have remained in the $30 per pound range as global supply wrestled with pandemic-related shutdowns, meaning a shift to purchases rather than production led to a sharp rise in costs per ton. So, while average realized prices per metric ton were up 9%, costs were up 17%. Combined with a 10% increase in sales volumes, gross losses widened to $34 million, up from a $3 million loss in the year ago quarter.

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Company Profile

Business Description

Cameco is one of the world's largest uranium producers. When operating at normal production, the flagship McArthur River mine in Saskatchewan accounts for roughly 50% of output in normal market conditions. Amid years of uranium price weakness, the company has reduced production, instead purchasing from the spot market to meet contracted deliveries. In the long term, Cameco has the ability increase annual uranium production by restarting shut mines and investing in new ones. In addition to its large uranium mining business, Cameco operates uranium conversion and fabrication facilities.

11th Street West, Suite 2121
Saskatoon, SK, S7M 1J3, Canada
T +1 306 956-6220
Sector Energy
Industry Uranium
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 1,824