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General Market Commentary
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General Energy
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General Market Commentary
Future supply of uranium less predictable, says Cameco
Dual-listed Cameco remains on track to achieve its guidance for the full-year and has increased its revenue target for the year.
According to CEO and president Tim Gitzel, the uranium company continues to demonstrate its resilience.
During the third quarter, ended September 30, Cameco continued to deliver on its strategy, and further strengthened its balance sheet through reducing its outstanding debt by one-third – it retired $500-million in debt during the quarter.
The company also extended the maturity date of its revolving credit facility (RCF) to November 2023, while reducing it by $250-million to $1-billion, as the company “does not have a history” of drawing on excess capacity and, with $864-million in cash and short-term investments on the balance sheet, the company does not anticipate needing the excess capacity on the RCF.
Gitzel on Monday commented that Cameco remained optimistic about “the long-term fundamentals driven by the increasing recognition of the role that nuclear must play in ensuring safe, reliable and affordable low-carbon electricity generation”.
“[The company] recognises that today’s low price is creating tomorrow’s opportunity for us,” he noted in a statement, adding that the one-tier production shutdown highlights the need for the uranium market to transition to ensure availability for growing fuel demand.
Gitzel further explained that the price needed to transition to one where price was set by the production cost curve. “When we look at utilities’ uncovered requirements, and the success we are having on the long-term contracting front, we know there is acceptable business to be done.”
This activity has been a leading indicator in past uranium cycles, which he said gave Cameco the confidence that the uranium market will undergo the same transition as seen in the conversion market.
For 2019, Cameco declared a yearly dividend of $0.08 per common share.
Looking ahead, the fourth quarter is expected to be Cameco’s largest delivery quarter this year, with the company already having begun buying some of the material needed to meet its commitments.
In addition, with the company’s McArthur River/Key Lake operation, in Canada, still on care and maintenance, Cameco said it would need to buy material to meet its 2020 sales commitments.
As a result, Cameco is expected to make significant purchases of material on the spot market.