Wednesday, February 4, 2015

Following Meltdown, Cameco Is Positioned For Long-Term Growth

This article was first published by Seeking Alpha on January 16, 2015

By Sarfaraz A. Khan

On Tuesday, Cameco Corp. (NYSE:CCJ), the leading U.S.-listed uranium miner, provided an update on the ramp-up of its Cigar Lake operations and gave production guidance for next year. In 2014, the company produced 0.34 million pounds of uranium concentrate (U3O8) from Cigar Lake in the first 10 months of operations. The output was within the company's guidance of between 0.2 and 0.6 million pounds. The Saskatoon, Saskatchewan-based company also said that production from the Canadian mine in the current year will come in at 6 to 8 million pounds. That is significantly better than Credit Suisse's estimate of 3.6 million pounds, as per a January report emailed to me from the bank's analyst Ralph Profiti. Cameco intends to gradually grow the mine's annual production to 18 million pounds by 2018.

Cigar Lake mine is 50% owned and operated by Cameco, while the remaining stake is held by subsidiaries of France's Areva SA (OTCPK:ARVCF), Japan's Idemitsu (OTCPK:IDKOY) and Tokyo Electric Power Company (OTCPK:TKECY). The ore mined at Cigar Lake is processed to uranium concentrate from Areva's McClean Lake mill, which is located around 70 kilometers from the mine.

This is a positive development that would allow Cameco to significantly grow its output over the next few years. As per Credit Suisse estimates, Cameco's uranium production could grow by 47% from 23.6 million pounds in 2013 to 34.7 million pounds by 2018. Similarly, Morningstar estimates also predicted 50% growth in Cameco's uranium production from 2013 to 2019. This would put …. Read full article at Seeking Alpha.