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Uranium turnaround coming into focus, says Cameco

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(Kitco News) - Cameco (NYSE:CCJ) changed its full year guidance for 2019 after noting a slight revenue improvement based on a better spot uranium price and favorable exchange rate, the company said Friday in its Q3 release.

The company expects full-year revenue between $1.77 billion and $1.92 billion for 2019. Previous estimates were between $1.73 billion to $1.88 billion. The anticipated average realized price for uranium is forecast at $44.70 per pound, previously $44.20.

Cameco stock was up 3% to $9.19 a share.

In 3Q the company reported a net loss of $13 million, and an adjusted net loss of $2 million.

The company said it is making progress reducing overhead, but care and maintenance costs are still significant. Cameco shut down its McArthur River mine in 2017 to fix market over-supply.

"[From] a gross profit point of view, 2019 is expected to be a weaker year for us," said the company in a news release. "[Our] outlook for the average unit cost of sales in 2019 continues to be impacted by care and maintenance costs, which, although lower than in 2018, are expected to be between $130 million and $160 million. Despite the impact on our expected results, we continue to believe these are the right decisions to create long-term shareholder value."

Looking ahead, the company's president and CEO Tim Gitzel pointed to better contracting terms as a sign of a turnaround in the sector.

"The fact that we have tier-one production shutdown tells us this market needs to transition to ensure those pounds will be available to fuel growing demand," said Gitzel in a news release. "The price needs to transition to one where price is 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. In fact, this activity has been a leading indicator in past uranium cycles, which gives us confidence that the uranium market will undergo the same transition we have seen in the conversion market.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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