The Rabbit Lake mine site. Photo courtesy Cameco.com
During Cameco’s financial review of 2015, higher-ups at the mining company said they managed to hold steady and perform well in tough times.
When looking back at the past year during a Monday conference call, CEO Tim Gitzel noted that in 2015 Cameco earned record annual revenue, earned record revenue in its uranium business, and experienced larger than average realized prices due to the weak Canadian dollar.
“In 2015 we continued to perform well despite being in what is a very difficult industry to be in right now,” Gitzel said.
The low Canadian dollar hurt foreign exchange values for Cameco, as did the continued oversupply of uranium in the market.
In 2015 the company’s net earnings were $65 million, which is $120 million less than the year before.
The company does not plan to do much capital spending, instead opting to focus on its current production facilities, like Cigar Lake.
Last year Cigar Lake produced more than 11.3 million pounds, which was considerably more than the 6 to 8 million pounds originally forecast.
Getzel admits, Cameco hadn’t expected the industry to move forward so slowly in the fog of Fukushima. Japan’s mine restarts are moving slower due to the establishment of a new regulatory authority.
“Now, almost five years post-Fukushima I don’t think anyone expected these conditions to last this long,” he said.
“We’ve learned to put those expectations aside and instead focus on preparing for whatever comes our way and watching the market closely so that we’re ready to respond.”
But he’s also giving a peek at the outlook for uranium demand in years to come. There are multiple reactors in the works right now in China, South Korea and India.
“Ten years from now we see over 200 million pounds in demand and significantly less than that of supply so something’s gotta happen in the meantime. So that’s what gets us out of bed and into work in the morning, knowing that a brighter future is coming in that regard,” he said.
This gives hope for a new discovery near the McArthur River mine site. Cameco exploratory drillers found a hefty uranium deposit in the Fox Lake/Read Lake area in the Athabasca Basin.
“It is a validation of the good work done by our exploration group. Also a validation of our continuing interest in the Athabasca Basin in northern Saskatchewan which continues to be a prolific source of uranium for the world,” said Sean Quinn, senior vice-president of Cameco.
For a mining company that pours millions, or hundreds of millions, to find ore bodies, the discovery is a worthwhile one, Quinn said.
The Fox Lake area is getting $7 million for exploration in 2016; it’s the largest drilling project for 2016. Despite this, Gitzel says now is not the time to invest in new mine sites.
He acknowledges it gives the company hope for what is expected to be a strong demand for uranium in years to come, saying “this is a long-term game but we always have to be thinking ahead.”
Another important development for Cameco in the upcoming year is a licence agreement application made by business partner, Areva.
Areva has sought a boost to its annual production limit. Cameco has budgeted for 16 million pounds of uranium production, which is 3 million pounds more than Areva is currently licenced for.
The approval process could be done by the first half of the year, but production shouldn’t be affected even if it’s not ready until the second half, said senior vice-president and chief corporate officer Alice Wong.