Lower deliveries of uranium meant lower revenues for
The second-quarter profit puts Cameco $12.9 million in the black for the first half of the year, with revenue of $208.7 million. By comparison, revenue in the first half of 2000 was $305.9 million and earnings were $20 million.
Cameco’s mainstay uranium operations saw revenue decline sharply in the first half of the year, as many customers took only limited deliveries of uranium oxide concentrate during the period. Lower prices for the product — averaging US$8.26 per lb. against an average of US$8.94 in the first half of 2000 — also cut into the top line.
The company’s McArthur River mine in northern Saskatchewan, where Cameco owns a 69.8% interest and
The company’s U.S. operations, Crow Butte in Nebraska and Highland in Wyoming, together produced 349 tonnes U3O8.
Rabbit Lake’s mill was shut down in June, though it may restart in the second quarter of 2002 in order to process feed from the project’s Eagle Point orebody and ultimately from the Cigar Lake uranium deposit, in which Cameco has a 50% interest, Cogema 37%, and a consortium of Japanese power generation firms 13%.
Feasibility work at Cigar Lake pegs the capital cost of the mine at $350 million, and Cameco believes production could get under way in 2005. Cigar Lake has a reserve of 577,000 tonnes at a grade of 18.2% U3O8, plus a further inferred resource of 317,000 tonnes at 16.9% U3O8.
Cameco also invested $57 million for a 15% interest in Bruce Power, a company formed to take over generation from Ontario Hydro at the Bruce nuclear plant, near Kincardine, Ont. A further $39 million went into purchases of uranium fuel pellets for the reactors. The company has made a further $4 million in uranium purchases since the end of the quarter. Bruce Power ran at 97% capacity during the period since Cameco made its investment.
Cameco’s gold operation at Kumtor in Kyrgyzstan had a good first half, with cash costs down to US$134 per oz. from US$171. The division contributed $32 million in revenue and operating earnings of $11 million in the second quarter, making $57 million in revenue and $18 million in earnings in the 6-month period.
Cameco, which keeps a hedge book, realized an average of US$287 per oz. in the half year, compared with US$314 in the first half of 2000, but the decline in price was offset by a 33% increase in production — to 127,279 oz. — and a 44% increase in gold sales. Higher production was credited to mining a higher-grade section of the Kumtor orebody, which yielded average millhead grades of 5.1 grams per tonne, up from 4.1 grams in the comparable period last year.
During the half-year, Cameco’s corporate income tax fell by $17 million to $2.8 million, in line with both declining operating profits and a falling corporate tax rate.
Cameco has $28 million in cash, part of a current-assets portfolio of $614 million, with current liabilities of $138 million and long-term debt of $377 million. Inventories of uranium made up $424 million of the current assets, a figure that reflected the low rate of uranium deliveries during the period.
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