The Cameco mine at McArthur River. Photo courtesy Cameco.ca
The financial situation for uranium giant Cameco has gone from bad to worse.
Third quarter losses for the year total $124 million dollars, with losses for the first nine months of the year at $143 million. That represents a 100 per cent drop from the same period a year ago when the company recorded a profit of $83 million. The financial results were released this morning. For shareholders, it means a loss of 31 cents per share.
Cameco President and CEO, Tim Gitzel, says it is a result of a world oversupply of uranium and the continued lack of new demand. This has been an ongoing problem since the Fukushima nuclear meltdown in 2011. Fifty-six reactors are under construction worldwide, but none of them are online, so there is limited demand for uranium.
On top of that, Cameco is in a $2.1 billion legal battle with the Tokyo Electric Power Company, which has scrapped plans for a ten-year contract with Cameco to supply uranium ore for the next 10 years. That dispute will go to arbitration early in 2019.
Cameco is also in a legal fight with Revenue Canada, which claims the company owes more than $2.2 billion dollars in back taxes. At issue is whether the company set up a subsidiary company in Switzerland in order to sell its uranium from a lower-taxed country.
A similar tax battle with the IRS was settled, with Cameco being ordered to pay $122,000 in back taxes, far below the $122 million being sought. Cameco President, Tim Gitzel, says the decision is a win for Cameco and he is confident of a similar result with Revenue Canada.
In the meantime, the company has reduced its production targets from $25 million to $24 million pounds, and it is continuing its focus on high production, low cost mines like Key Lake and Cigar Lake in Saskatchewan.