Writedown cuts into earnings at Cameco

Uranium and gold producer Cameco (CCO-T) salvaged a quarterly profit despite having taken a $45.5-million charge against the value of its properties.

For the three months ended Sept. 30, the Saskatoon-based company made $32 million on revenue of $169.2 million (or 52 cents a share), compared with earnings of $18.2 million on revenue of $202.6 million in the third quarter of 1998.

During the recent quarter, Cameco wrote down the value of the Kumtor gold operation in Kyrgyzstan by $46 million to $184 million. This allowed the company to recapture $6 million in deferred taxes, which partly offset the writedown. Cameco also wrote down $3 million against the carrying value of other gold investments.

Things were brighter on the uranium front. Sales of uranium oxide in the first nine months of 1999 were up 17%, compared with year-ago levels, though prices were lower. Revenue over the nine months totalled $498 million, compared with $492 million a year ago, whereas earnings fell to $60.2 million from $93.2 million.

Revenue in the third quarter was $169.2 million, or $33.4 million lower than a year ago. The decrease reflects a decline in spot prices and the fact that more of the uranium was sold at spot, as opposed to forward, prices. The company also registered a $71-million gain on a $238-million deal to sell minority interests at three Saskatchewan projects (Key Lake, Midwest Lake and McArthur River) to Cogema. Proceeds from the Cogema sale have been used to reduce Cameco’s debt. Total debt is now $379 million, of which $127.2 million is current. Current assets total $552.2 million; total assets, $2.9 billion.