Cameco plans public offering

In line with its goal to become a private corporation by 1995, Cameco has filed a preliminary prospectus for a $100-million share offering.

RBC Dominion Securities, leading a group of underwriters, will decide on a share price once demand for the shares and market conditions have been established.

Presently, ownership of the large uranium miner is divided between the Saskatchewan government (61.5%) and the federal government (38.5%). Cameco was formed in 1988 by the merger of Saskatchewan Mining Development Corp. and Eldorado Nuclear Ltd.

“Privatization was almost the raison d’etre of the merger,” said Rita Mirwald, director of corporate affairs at Cameco. But she explained that it took at least a year before the newly consolidated company could consider a public offering. Since then, equity markets, particularly for uranium miners, have been less than rosy.

“We’ve been trying to find a strategic time in terms of both uranium markets and equity markets,” she said. “RBC is recommending that we get into the equity markets now.”

Proceeds from the offering will be used to reduce long-term debt, which totalled $301 million at the end of the first quarter. Since its formation, the company has more than halved its long-term debt.

Cameco operates and has a 66.7% interest in two of the world’s largest uranium mines, the Key Lake mine and the Rabbit Lake mine, both in northern Saskatchewan. The Saskatoon-based company, which also operates uranium refining and conversion facilities in Ontario, provides about 10% of the western world’s supplies.

Reserves at Cigar Lake and McArthur River, which contain the highest known grades of uranium ore in the world, should enable the company to produce at present capacity for the next 30 years.

Although Cameco intends to continue its focus on uranium mining, it also produces gold and explores for base metals and diamonds. In 1991, $10.9 will be spent on exploration compared with $11.1 million last year. About $6 million of that budget will be spent on gold exploration.

Cameco had a net income of $7.2 million (17 cents per share) in the first quarter, compared with $1.5 million (three cents per share) during the same period last year.

Cameco has about 10.4 million shares outstanding.