Cameco Provides Production and Market Update
September 03 2023 - 2:00PM
Business Wire
Cameco (TSX: CCO; NYSE: CCJ) provided a market update
today regarding challenges at the Cigar Lake mine and Key Lake mill
that are expected to impact our 2023 production forecast.
At the Cigar Lake mine, we now expect to produce up to 16.3
million pounds of uranium concentrate (U3O8) (100% basis) this
year, a reduction from the previous forecast of 18 million pounds
U3O8 (100% basis). Production from the McArthur River/Key Lake
operations for 2023 is anticipated to be 14 million pounds U3O8
(100% basis), down from the previous forecast of 15 million pounds
U3O8 (100% basis).
As previously reported, mining activities at the Cigar Lake
operation were initiated from a new zone in the orebody (west pod)
in the second quarter of this year, which impacted productivity. As
mining activities continued in the west pod during the third
quarter, equipment reliability issues emerged which further
affected performance. The mine is scheduled to enter its planned
annual maintenance shutdown that will run through most of
September.
At the Key Lake mill, ramp up activities remain ongoing.
However, as noted in our second quarter MD&A, there is
continued uncertainty regarding planned production in 2023 at Key
Lake due to the length of time the facility was in care and
maintenance, the operational changes that were implemented,
availability of personnel with the necessary skills and experience,
and the impact of supply chain challenges on the availability of
materials and reagents. These factors have combined to impact
production at Key Lake, leading to the reduced forecast. The
McArthur River mine continues to operate well and is expected to
achieve its planned production for the year. Any ore from McArthur
River that is not immediately processed at Key Lake will be stored
in inventory for future milling.
Cameco’s strategy of full-cycle value capture positions us to
effectively manage the expected production shortfall and meet our
delivery commitments to our customers. We maintain the flexibility
to source material through various means beyond production if
required, including increasing our market purchases, pulling
forward long-term purchases, using inventory or borrowing product.
Any pounds we do not produce this year will remain available to us
and, with increasing supply pressures, potentially become more
valuable when delivered in the future. We have exposure to higher
prices under the market-related contracts in our long-term
portfolio and a pipeline of contracting discussions underway, which
we expect will also benefit from the increased focus on securing
access to scarce supplies and generate long-term value for Cameco.
And we have a strong balance sheet to help us self-manage risk.
This expected production shortfall further highlights the
growing security of supply risk at a time when we believe the
demand outlook is stronger and more durable than ever and where the
risk has shifted from producers to utilities. Uncertainty about
where nuclear fuel supplies will come from to satisfy growing
demand continues to drive long-term contracting, with clear
evidence that the broader uranium market is moving toward
replacement rate contracting for the first time in over a decade.
This is the type of contracting necessary to promote the price
discovery already seen in the enrichment and conversion markets and
that is expected to incentivize investments in the supply needed to
satisfy the growing long-term requirements.
This unplanned event may lead to variability in the other
outlook provided in our second quarter MD&A for 2023; however,
it is too soon to quantify what the impact might be. We will
provide an update when we better understand the implications these
production challenges may have on market dynamics.
The Cigar Lake operation is owned 54.547% by Cameco, 40.453% by
Orano Canada Inc. (Orano) and 5% by TEPCO Resources Inc.
The McArthur River mine is owned 69.805% by Cameco and 30.195%
by Orano. The Key Lake mill is owned 83.333% by Cameco and 16.667%
by Orano.
Qualified Persons
The technical and scientific information discussed in this
document for Cigar Lake and McArthur River/Key Lake was approved by
the following individuals who are qualified persons for the
purposes of NI 43-101: Lloyd Rowson, general manager, Cigar Lake,
Cameco; Greg Murdock, general manager, McArthur River, Cameco;
Daley McIntyre, general manager, Key Lake, Cameco.
Profile
Cameco is one of the largest global providers of the uranium
fuel needed to energize a clean-air world. Our competitive position
is based on our controlling ownership of the world’s largest
high-grade reserves and low-cost operations. Utilities around the
world rely on our nuclear fuel products to generate safe, reliable,
carbon-free nuclear power. Our shares trade on the Toronto and New
York stock exchanges. Our head office is in Saskatoon,
Saskatchewan.
Caution Regarding Forward-Looking Information and
Statements
This news release includes statements and information about
expectations for the future, which are referred to as
forward-looking information. This forward-looking information is
based on current views, which can change significantly, and actual
results and events may be significantly different from what is
currently expected. Examples of forward-looking information in this
news release include our expectation of changes to our 2023
production forecast, as a result of lower expected production at
the Cigar Lake mine and the McArthur River/Key Lake operations; the
scheduled annual maintenance shutdown at the Cigar Lake mine;
uncertainty regarding planned 2023 production at Key Lake due to
various factors; our expectation that the McArthur River mine will
achieve its planned production for the year, and the future milling
of any ore not immediately processed; that our strategy positions
us to manage the expected production shortfall effectively; our
anticipated flexibility to source material through means other than
production; our view that any pounds we do not produce this year
could be produced in the future, potentially at higher value; our
exposure to higher prices under certain contracts, our pipeline of
contracting discussions, and our expectation of benefitting from an
increased focus on securing access to scarce supplies; our views
regarding the growing security of supply risk and our ability to
self-manage risk; our belief that demand outlook is stronger and
more durable than ever, and has shifted risk from producers to
utilities; our belief that uncertainty regarding sourcing nuclear
fuel supplies continues to drive long-term contracting, and the
move toward replacement rate contracting; the possibility of other
changes to the outlook we have previously provided, and our
intention to provide a further update in the future. Material risks
that could lead to different results include the risk that
production levels at the Cigar Lake mine and the McArthur River/Key
Lake operations could be lower than we currently expect, due to the
factors we have described as adversely affecting productivity, or
for other reasons; there may be delays in commencing or completing
scheduled maintenance at Cigar Lake; the risk that the McArthur
River mine may not achieve planned production for the year, or that
there will be impediments to storage and future milling of ore that
is not immediately processed; we may be unable to manage the
expected production shortfall effectively if we are unable to
source material through other means; other circumstances may arise
which delay or prevent the future production of any pounds not
produced this year, or those pounds may be become less valuable;
the risk that the outcome of our contracting discussions will not
be as favourable to us as we expect; the risk that our views
regarding supply risk, demand outlook, drivers of long-term
contracting, the movement toward replacement rate contracting and
incentives to invest in supply may prove to be incorrect, or we may
be unable to self-manage risk as effectively as we expect; and the
risk that these or other factors may result in further changes to
our previously provided outlook, or that we are not able to provide
a timely update regarding those changes. Cameco has made material
assumptions which may prove incorrect, including assumptions
regarding the extent of the impact that the challenges at the Cigar
Lake mine and Key Lake mill will have on production levels; the
ability to commence and complete scheduled maintenance at Cigar
Lake within expected timeframes; the ability of the McArthur River
mine to achieve its production level, and for the storage and
future milling of ore; our ability to source material through means
other than production; our ability to achieve future production of
pounds not produced this year; our ability to conclude contracting
discussions on favourable terms; assumptions regarding future
developments and trends in the uranium market; our ability to
self-manage risk; and our ability to identify and provide updates
regarding further changes to our outlook. Other material risks and
assumptions associated with Cameco’s business are described in
greater detail in Cameco’s current annual information form and its
most recent annual and subsequent quarterly MD&A.
Forward-looking information is designed to help you understand
management’s current views of our near-term and longer-term
prospects, and it may not be appropriate for other purposes. Cameco
will not necessarily update this information unless required by
securities laws.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230903444081/en/
Investor inquiries: Rachelle Girard 306-956-6403
rachelle_girard@cameco.com
Media inquiries: Veronica Baker 306-385-5541
veronica_baker@cameco.com
Cameco (NYSE:CCJ)
Historical Stock Chart
From Apr 2024 to May 2024
Cameco (NYSE:CCJ)
Historical Stock Chart
From May 2023 to May 2024