Despite having produced and sold record levels of uranium and gold in 1998,
The Saskatoon-based company earned $44 million (or 76 cents per share) on revenue of $719 million last year, compared with $82 million ($1.51 per share) in 1997. Nuclear products and services accounted for 80% of 1998 revenue, with the remainder derived from gold-related activities.
Cameco attributed the drop in earnings to low gold and uranium prices, which led to writedowns in both sectors totalling $24 million.
Cameco is the world’s largest uranium producer. Sales volumes were up 10% last year from 1997, but the average selling price fell, owing to a 27% decline in the uranium spot price. Gold sales in 1998 reached 234,000 oz., a 35% increase from the previous year.
Cameco President Bernard Michel says the Kumtor gold project “continues to outperform expectations, achieving, in 1998, production of 645,000 ounces at an average cash cost of US$179 per ounce.”
The company holds a one-third interest in Kumtor, where reserves were recently restated (using a price of US$325 per oz.) to reflect the persistently low prices. At the end of 1998, the deposit hosted 4.4 million contained ounces, with an average grade of 4.88 grams gold per tonne, compared with 8.6 million contained ounces grading 3.54 grams a year earlier.
Resources increased to 6.6 million contained ounces with an average grade of 3.67 grams, compared with 3.9 million contained ounces grading 3.75 grams a year earlier. At the end of 1998, Kumtor had about 750,000 oz. hedged at an average price of US$307 per oz.
The company invested $694 million last year, mostly for the purchase of Uranerz. Capital expenditures included $120 million for development of the McArthur River and Cigar Lake mines in Saskatchewan. These two deposits are the world’s largest, highest-grade uranium deposits, and Cameco describes them as “the cornerstones” of its future.
Be the first to comment on "DIAMOND PAGE — Higher output but lower prices for Cameco"