Cameco (TSX: CCO; NYSE: CCJ) today reported its consolidated
financial and operating results for the second quarter ended June
30, 2024, in accordance with International Financial Reporting
Standards (IFRS).
“Second quarter operational performance was strong, driving
financial results that remain in line with our full-year 2024
outlook,” said Tim Gitzel, Cameco’s president and CEO. “As
expected, those results reflect normal quarterly variability, and
while we believe Westinghouse is on track and continues to perform
as expected, our overall results continue to be impacted by the
required purchase accounting and other non-operational
acquisition-related costs related to that investment.
“At the end of the second quarter, Alice Wong announced her
retirement as senior vice-president and chief corporate officer.
It’s been an absolute pleasure to work with Alice during her
37-year career with Cameco. Personally, and on behalf of the
company, I would like to thank Alice for her expertise, wisdom,
leadership and outstanding contributions, and I wish her the very
best in retirement. Rachelle Girard, who was in the role of
vice-president of investor relations and has demonstrated sound
judgment and excellent leadership qualities in her 18 years with
Cameco, has been appointed senior vice-president and chief
corporate officer. We are pleased to welcome Rachelle to Cameco’s
senior executive team and look forward to a strong contribution as
we position the company to leverage opportunities in these exciting
times for the nuclear industry.
“Cameco is in the enviable position of having what we believe
are the world’s premier, tier-one assets, with investments across
the fuel cycle and the reactor life cycle. With our disciplined
strategy that aligns our operational, marketing, and financially
focused decisions, in a market where we are seeing sustained,
positive momentum for nuclear energy, we believe those assets and
investments will allow us to generate full-cycle value.
“Under the marketing element of our strategy, with the positive
demand sentiment and a long-term uranium price that has continued
to strengthen, we are continuing to be selective in committing our
unencumbered, tier-one, in-ground uranium inventory and UF6
conversion capacity to capture greater upside for many years to
come. Our contract portfolio spans more than a decade, with annual
commitments from 2024 through 2028 increasing this past quarter to
an average of about 29 million pounds per year. That portfolio
guides the operational element of our strategy, which is
underpinned by production rates that align with the market demand,
and costs in our uranium segment that continue to reflect our
transition back to a tier-one cost structure. And from the
perspective of our financial decisions, the strategy sets the
foundation for strong cash flow generation, which guides our
conservative, risk-managed capital allocation priorities, including
a focus on debt reduction and the prudent refinancing activities
undertaken in 2024.
“As a proven, reliable supplier we are recognized for our
experience and our thorough understanding of how nuclear fuel
markets work. With full-cycle support emerging for nuclear energy,
reinforced by positive public opinion, promising policy decisions,
and market-based solutions, we believe we are in the unique
position of utilizing that experience and understanding to provide
reliable sources of supply to meet the durable, long-term demand
emerging across the fuel cycle.
“Nuclear energy is clearly being recognized as a critical tool
in the fight against climate change, with additional advantages in
the context of reliability, capacity, scalability and energy
security being highlighted by governments and energy-intensive
industries alike. Cameco and Westinghouse, as proven producers of
uranium products and services that have demonstrated strong and
sustainable performance, underpinned by licensed and permitted
operations in geopolitically stable jurisdictions, can be expected
to benefit from those significant tailwinds.
“We are a responsible, commercial supplier with a strong balance
sheet, long-lived, tier-one assets in reliable jurisdictions, and a
proven operating track record. We believe we have the right
strategy to achieve our vision of ‘energizing a clean-air world’ in
a manner that reflects our values, including a commitment to
address the risks and opportunities that we believe will make our
business sustainable over the long term.”
- 2024 financial outlook on track: We continue to expect
strong cash flow generation, with estimated consolidated revenue of
between about $2.85 billion and $3.0 billion. We maintain the
outlook for our share of Westinghouse’s 2024 adjusted EBITDA of
between $445 million and $510 million. See Outlook for 2024 in our
second quarter MD&A for more information. Adjusted EBITDA
attributable to Westinghouse is a non-IFRS measure, see below.
- Financial results continuing to reflect a transition to
tier-one economics: Solid second quarter results with net
earnings of $36 million, adjusted net earnings of $62 million,
adjusted EBITDA of $337 million; first six months net earnings of
$29 million, adjusted net earnings of $118 million, and adjusted
EBITDA of $681 million. Results are driven by normal quarterly
variations in contract deliveries in our uranium and fuel services
segments, and the addition of Westinghouse, which is also impacted
by quarterly variability. Gross profit improved due to increased
sales volume and an increase in the Canadian dollar average
realized price. Adjusted net earnings and adjusted EBITDA are
non-IFRS measures, see below.
- Uranium segment on track for 2024 outlook with strong
operational performance: In our uranium segment, production and
financial results for the quarter and for the first six months of
the year were strong. Higher revenues and gross profit compared to
last year were primarily driven by a higher average realized price.
Deliveries of 6.2 million pounds during the quarter were higher
than in the second quarter of 2023, while deliveries of 13.5
million pounds year-to-date were lower than the same period last
year due to normal quarterly variations, although it remained in
line with the delivery pattern disclosed in our annual MD&A.
Our annual expectation for uranium deliveries of between 32 million
and 34 million pounds remains unchanged. See Uranium in our second
quarter MD&A for more information.
- Combined fuel services production unchanged: In our fuel
services segment, normal quarterly variations in contract
deliveries resulted in lower delivery volumes during the second
quarter and for the first half of the year, compared to the same
periods in 2023. Production was lower in the second quarter and for
the first six months due to temporary operational issues that
impacted the first half of 2024, resulting in a higher unit cost of
sales, driving a slight increase in our 2024 outlook for fuel
services average unit cost of sales. Although fuel services outlook
and production results are not broken down by individual product
line (includes the combined production of UO2, UF6, and heavy water
reactor fuel bundles), we previously indicated we were targeting
production of 12,000 tonnes at the Port Hope UF6 conversion
facility in 2024. Our annual production expectation for fuel
services remains between 13.5 million and 14.5 million kgU of
combined fuel services products in 2024, but we now expect the
conversion component of that guidance to be between 11,000 tonnes
and 11,500 tonnes of UF6. See Fuel Services in our second quarter
MD&A for more information.
- Long-term contracting success continues, maintaining
exposure to higher prices: As of June 30, 2024, we had
commitments requiring delivery of an average of about 29 million
pounds per year from 2024 through 2028, an increase from an average
of about 28 million pounds per year at the end of March. We also
have contracts in our uranium and fuel services segments that span
more than a decade, and in our uranium segment, many of those
contracts benefit from market-related pricing mechanisms. In
addition, we have a large and growing pipeline of business under
discussion, which we expect will help further build our long-term
contract portfolio.
- Maintaining financial discipline and balanced liquidity to
execute on strategy:
- Strong balance sheet: As of June 30, 2024, we had $362
million in cash and cash equivalents and $1.4 billion in total
debt. In addition, we have a $1.0 billion undrawn credit facility,
which matures October 1, 2027. With improving prices under our
long-term contract portfolio, the progress we are making in our
uranium segment towards the return to our tier-one cost structure,
and an expected increase in our UF6 conversion production, we
expect to see strong cash flow generation in 2024.
- Focused debt reduction: Thanks to our risk-managed
financial discipline, and strong cash position, in the second
quarter we continued to prioritize the reduction of the
floating-rate term loan used to finance the Westinghouse
acquisition, repaying another $100 million (US) of the remaining
$400 million (US) principal outstanding. We plan to continue to
prioritize repayment of the remaining $300 million (US) outstanding
principal on the term loan while balancing our liquidity and cash
position.
- Prudent refinancing: Consistent with the conservative
financial management we have demonstrated and our 2024 capital
allocation priorities, in the second quarter we successfully
refinanced the $500 million senior unsecured debentures that we
retired at maturity on June 24, 2024. The new $500 million senior
unsecured debentures, Series I, mature May 24, 2031, and have a
coupon of 4.94%.
- Maintaining financial flexibility: We plan to file a new
base shelf prospectus when the current one expires in October.
- JV Inkai production purchase allocation remains under
discussion: Production at our JV in Kazakhstan was lower for
the quarter and the first half of 2024 due to challenges with
sulfuric acid supply in the early part of the year. JV Inkai
continues to experience procurement and supply chain issues, most
notably related to the stability of sulfuric acid deliveries. The
2024 production expectation of 8.3 million pounds of U3O8 (100%
basis) is tentative and contingent upon receipt of sufficient
volumes of sulfuric acid. Subsequent to the end of the quarter,
Kazatomprom issued a news release indicating that at the end of
June, the government of the Republic of Kazakhstan introduced
amendments to the country’s Tax Code, including significant
increases to the Mineral Extraction Tax (MET) rate paid by mining
entities on uranium production, beginning in 2025. We are
evaluating the new MET and if it remains as currently formulated,
preliminary conclusions indicate that production costs in
Kazakhstan would be similar to northern Saskatchewan operations,
depending on the assumptions used for uranium price, production
profile, and exchange rate. See Uranium 2024 Q2 Updates in our
second quarter MD&A for more information.
- Collective agreements approved by union membership at
McArthur River/Key Lake and Cameco Fuel Manufacturing (CFM):
New three-year collective agreements were signed with United
Steelworkers Local 8914 at the McArthur River mine and Key Lake
mill, and with unionized employees at CFM, with terms expiring in
December 2025 and June 2027, respectively.
- Changes to the executive team: Effective June 30, 2024,
Alice Wong retired from her role as senior vice-president and chief
corporate officer after more than 37 years with Cameco, serving in
her current role since 2011. Effective July 1, 2024, Rachelle
Girard was appointed senior vice-president and chief corporate
officer with oversight of investor relations, human resources,
supply chain management, and internal audit and corporate ethics,
and Cory Kos was appointed vice-president, investor relations.
Consolidated financial results
THREE MONTHS
SIX MONTHS
HIGHLIGHTS
ENDED JUNE 30
ENDED JUNE 30
($ MILLIONS EXCEPT WHERE INDICATED)
2024
2023
CHANGE
2024
2023
CHANGE
Revenue
598
482
24%
1,232
1,169
5%
Gross profit
175
110
59%
362
277
31%
Net earnings attributable to equity
holders
36
14
>100%
29
133
(78)%
$ per common share (basic)
0.08
0.03
>100%
0.07
0.31
(77)%
$ per common share (diluted)
0.08
0.03
>100%
0.07
0.31
(77)%
Adjusted net earnings (losses) (ANE)
(non-IFRS, see below)
62
(3)
>100%
118
112
5%
$ per common share (adjusted and
diluted)
0.14
(0.01)
>100%
0.27
0.26
4%
Adjusted EBITDA (non-IFRS, see below)
337
54
>100%
681
278
>100%
Cash provided by operations (after working
capital changes)
260
87
>100%
323
302
7%
The financial information presented for the three months and six
months ended June 30, 2023, and June 30, 2024, is unaudited.
Selected segment highlights
THREE MONTHS
SIX MONTHS
ENDED JUNE 30
ENDED JUNE 30
HIGHLIGHTS
2024
2023
CHANGE
2024
2023
CHANGE
Uranium
Production volume (million lbs)
7.1
4.4
61%
12.9
8.8
47%
Sales volume (million lbs)
6.2
5.5
13%
13.5
15.2
(11)%
Average realized price1
($US/lb)
56.43
49.41
14%
57.04
46.81
22%
($Cdn/lb)
76.93
67.05
15%
77.15
63.17
22%
Revenue
481
369
30%
1,042
963
8%
Gross profit
144
72
100%
313
208
50%
Net earnings attributable to equity
holders
192
68
182%
445
256
74%
Adjusted EBITDA2
248
118
110%
550
378
46%
Fuel services
Production volume (million kgU)
2.9
3.4
(15)%
6.7
7.6
(12)%
Sales volume (million kgU)
2.9
3.2
(9)%
4.4
5.6
(21)%
Average realized price 3
($Cdn/kgU)
39.98
35.63
12%
42.80
36.51
17%
Revenue
118
113
4%
190
206
(8)%
Net earnings attributable to equity
holders
33
39
(15)%
53
70
(24)%
Adjusted EBITDA2
42
48
(13)%
67
86
(22)%
Adjusted EBITDA margin (%)2
36
42
(14)%
35
42
(17)%
Westinghouse
Revenue
670
-
n/a
1,325
-
n/a
(our share)
Net loss
(47)
-
n/a
(170)
-
n/a
Adjusted EBITDA2
121
-
n/a
197
-
n/a
1
Uranium average realized price is
calculated as the revenue from sales of uranium concentrate,
transportation and storage fees divided by the volume of uranium
concentrates sold.
2
Non-IFRS measure, see below.
3
Fuel services average realized price is
calculated as revenue from the sale of conversion and fabrication
services, including fuel bundles and reactor components,
transportation and storage fees divided by the volumes sold.
The table below shows the costs of produced and purchased
uranium incurred in the reporting periods (see non-IFRS measures
starting below). These costs do not include care and maintenance
costs, selling costs such as royalties, transportation and
commissions, nor do they reflect the impact of opening inventories
on our reported cost of sales.
THREE MONTHS
SIX MONTHS
ENDED JUNE 30
ENDED JUNE 30
($CDN/LB)
2024
2023
CHANGE
2024
2023
CHANGE
Produced
Cash cost
16.96
23.35
(27)%
18.11
23.24
(22)%
Non-cash cost
9.10
12.82
(29)%
9.41
11.81
(20)%
Total production cost 1
26.06
36.17
(28)%
27.52
35.05
(21)%
Quantity produced (million lbs)1
7.1
4.4
61%
12.9
8.8
47%
Purchased
Cash cost
109.11
68.31
60%
96.25
68.17
41%
Quantity purchased (million lbs)1
1.7
3.8
(55)%
4.4
4.2
5%
Totals
Produced and purchased costs
42.10
51.06
(18)%
45.00
45.75
(2)%
Quantities produced and purchased (million
lbs)
8.8
8.2
7%
17.3
13.0
33%
1
Due to equity accounting, our share of
production from JV Inkai is shown as a purchase at the time of
delivery. These purchases will fluctuate during the quarters and
timing of purchases will not match production. There were no
purchases during the quarter. In the first six months of 2024, we
purchased 1.1 million pounds at a purchase price per pound of
$129.96 ($96.88 (US)).
Non-IFRS measures
The non-IFRS measures referenced in this document are
supplemental measures, which are used as indicators of our
financial performance. Management believes that these non-IFRS
measures provide useful supplemental information to investors,
securities analysts, lenders and other interested parties in
assessing our operational performance and our ability to generate
cash flows to meet our cash requirements. These measures are not
recognized measures under IFRS, do not have standardized meanings,
and are therefore unlikely to be comparable to similarly titled
measures presented by other companies. Accordingly, these measures
should not be considered in isolation or as a substitute for the
financial information reported under IFRS. The following are the
non-IFRS measures used in this document.
ADJUSTED NET EARNINGS
Adjusted net earnings (ANE) is our net earnings attributable to
equity holders, adjusted for non-operating or non-cash items such
as gains and losses on derivatives, adjustments to reclamation
provisions flowing through other operating expenses and bargain
purchase gains, that we believe do not reflect the underlying
financial performance for the reporting period. Other items may
also be adjusted from time to time. We adjust this measure for
certain of the items that our equity-accounted investees make in
arriving at other non-IFRS measures. ANE is one of the targets that
we measure to form the basis for a portion of annual employee and
executive compensation (see Measuring our results in our 2023
annual MD&A).
In calculating ANE we adjust for derivatives. We do not use
hedge accounting under IFRS and, therefore, we are required to
report gains and losses on all hedging activity, both for contracts
that close in the period and those that remain outstanding at the
end of the period. For the contracts that remain outstanding, we
must treat them as though they were settled at the end of the
reporting period (mark-to-market). However, we do not believe the
gains and losses that we are required to report under IFRS
appropriately reflect the intent of our hedging activities, so we
make adjustments in calculating our ANE to better reflect the
impact of our hedging program in the applicable reporting period.
See Foreign exchange in our 2023 annual MD&A for more
information.
We also adjust for changes to our reclamation provisions that
flow directly through earnings. Every quarter we are required to
update the reclamation provisions for all operations based on new
cash flow estimates, discount and inflation rates. This normally
results in an adjustment to an asset retirement obligation asset in
addition to the provision balance. When the assets of an operation
have been written off due to an impairment, as is the case with our
Rabbit Lake and US ISR operations, the adjustment is recorded
directly to the statement of earnings as “other operating expense
(income)”. See note 10 of our interim financial statements for more
information. This amount has been excluded from our ANE
measure.
As a result of the change in ownership of Westinghouse when it
was acquired by Cameco and Brookfield, Westinghouse’s inventories
at the acquisition date were revalued based on the market price at
that date. As these quantities are sold, Westinghouse’s cost of
products and services sold reflect these market values, regardless
of their historic costs. Our share of these costs is included in
earnings from equity-accounted investees and recorded in cost of
products and services sold in the investee information (see note 7
to the financial statements). Since this expense is non-cash,
outside of the normal course of business and only occurred due to
the change in ownership, we have excluded our share from our ANE
measure.
Westinghouse has also expensed some non-operating
acquisition-related transition costs that the acquiring parties
agreed to pay for, which resulted in a reduction in the purchase
price paid. Our share of these costs is included in earnings from
equity-accounted investees and recorded in other expenses in the
investee information (see note 7 to the financial statements).
Since this expense is outside of the normal course of business and
only occurred due to the change in ownership, we have excluded our
share from our ANE measure.
To facilitate a better understanding of these measures, the
table below reconciles adjusted net earnings with our net earnings
for the second quarter and first six months of 2024 and compares it
to the same periods in 2023.
THREE MONTHS
SIX MONTHS
ENDED JUNE 30
ENDED JUNE 30
($ MILLIONS)
2024
2023
2024
2023
Net earnings attributable to equity
holders
36
14
29
133
Adjustments
Adjustments on derivatives
14
(35)
47
(41)
Inventory purchase accounting (net of
tax)
12
-
50
-
Acquisition-related transition costs (net
of tax)
5
-
19
-
Adjustment to other operating expense
(income)
(2)
8
(17)
6
Income taxes on adjustments
(3)
10
(10)
14
Adjusted net earnings (losses)
62
(3)
118
112
The following table shows what contributed to the change in
adjusted net earnings (non-IFRS measure, see above) for the second
quarter and first six months of 2024 compares to the same periods
in 2023.
THREE MONTHS
SIX MONTHS
ENDED JUNE 30
ENDED JUNE 30
($ MILLIONS)
IFRS
ADJUSTED
IFRS
ADJUSTED
Net earnings (losses) - 2023
14
(3)
133
112
Change in gross profit by segment
(We calculate gross profit by deducting
from revenue the cost of products and services sold, and
depreciation and amortization (D&A), net of hedging
benefits)
Uranium
Impact from sales volume changes
10
10
(24)
(24)
Higher realized prices ($US)
60
60
186
186
Foreign exchange impact on realized
prices
2
2
3
3
Lower (higher) costs
1
1
(61)
(61)
Change – uranium
73
73
104
104
Fuel services
Impact from sales volume changes
(3)
(3)
(15)
(15)
Higher realized prices ($Cdn)
13
13
28
28
Higher costs
(17)
(17)
(32)
(32)
Change – fuel services
(7)
(7)
(19)
(19)
Other changes
Higher administration expenditures
(9)
(9)
(5)
(5)
Higher exploration and research and
development expenditures
(2)
(2)
(8)
(8)
Change in reclamation provisions
11
1
26
3
Higher (lower) earnings from
equity-accounted investees
(7)
10
(109)
(40)
Change in gains or losses on
derivatives
(48)
1
(91)
(3)
Change in foreign exchange gains or
losses
49
49
68
68
Lower finance income
(23)
(23)
(45)
(45)
Higher finance costs
(20)
(20)
(36)
(36)
Change in income tax recovery or
expense
5
(8)
10
(14)
Other
-
-
1
1
Net earnings - 2024
36
62
29
118
EBITDA
EBITDA is defined as net earnings attributable to equity
holders, adjusted for the costs related to the impact of the
company’s capital and tax structure including depreciation and
amortization, finance income, finance costs (including accretion)
and income taxes. Included in EBITDA is our share of
equity-accounted investees.
ADJUSTED EBITDA
Adjusted EBITDA is defined as EBITDA adjusted for the impact of
certain costs or benefits incurred in the period which are either
not indicative of the underlying business performance or that
impact the ability to assess the operating performance of the
business. These adjustments include the amounts noted in the ANE
definition.
In calculating adjusted EBITDA, we also adjust for items
included in the results of our equity-accounted investees that are
not adjustments to arrive at our ANE measure. These items are
reported as part of other expenses within the investee financial
information and are not representative of the underlying
operations. These primarily include transaction, integration and
restructuring costs related to acquisitions.
The company may realize similar gains or incur similar
expenditures in the future.
ADJUSTED EBITDA MARGIN
Adjusted EBITDA margin is defined as adjusted EBITDA divided by
revenue for the appropriate period.
EBITDA, adjusted EBITDA and adjusted EBITDA margin are non-IFRS
measures which allow us and other users to assess results of
operations from a management perspective without regard for our
capital structure.
To facilitate a better understanding of these measures, the
tables below reconcile net earnings with EBITDA and adjusted EBITDA
for the second quarter and first six months of 2024 and 2023.
For the quarter ended June 30, 2024:
FUEL
($ MILLIONS)
URANIUM
SERVICES
WESTINGHOUSE
OTHER
TOTAL
Net earnings (loss) attributable to
equity holders
192
33
(47)
(142)
36
Depreciation and amortization
52
9
-
1
62
Finance income
-
-
-
(8)
(8)
Finance costs
-
-
-
43
43
Income taxes
-
-
-
18
18
244
42
(47)
(88)
151
Adjustments on equity investees
Depreciation and amortization
2
-
89
-
Finance income
-
-
(1)
-
Finance expense
-
-
54
-
Income taxes
4
-
(11)
-
Net adjustments on equity investees
6
-
131
-
137
EBITDA
250
42
84
(88)
288
Gain on derivatives
-
-
-
14
14
Other operating income
(2)
-
-
-
(2)
(2)
-
-
14
12
Adjustments on equity investees
Inventory purchase accounting
-
-
16
-
Acquisition-related transition costs
-
-
6
-
Other expenses
-
-
15
-
Net adjustments on equity investees
-
-
37
-
37
Adjusted EBITDA
248
42
121
(74)
337
For the quarter ended June 30, 2023:
FUEL
($ MILLIONS)
URANIUM
SERVICES
OTHER
TOTAL
Net earnings (loss) attributable to
equity holders
68
39
(93)
14
Depreciation and amortization
32
9
1
42
Finance income
-
-
(31)
(31)
Finance costs
-
-
23
23
Income taxes
-
-
23
23
100
48
(77)
71
Adjustments on equity investees
Depreciation and amortization
3
-
-
Income taxes
7
-
-
Net adjustments on equity investees
10
-
-
10
EBITDA
110
48
(77)
81
Loss on derivatives
-
-
(35)
(35)
Other operating expense
8
-
-
8
Adjusted EBITDA
118
48
(112)
54
For the six months ended June 30, 2024:
FUEL
($ MILLIONS)
URANIUM1
SERVICES
WESTINGHOUSE
OTHER
TOTAL
Net earnings (loss) attributable to
equity holders
445
53
(170)
(299)
29
Depreciation and amortization
88
14
-
2
104
Finance income
-
-
-
(14)
(14)
Finance costs
-
-
-
82
82
Income taxes
-
-
-
49
49
533
67
(170)
(180)
250
Adjustments on equity investees
Depreciation and amortization
10
-
173
-
Finance income
-
-
(3)
-
Finance expense
-
-
118
-
Income taxes
24
-
(48)
-
Net adjustments on equity investees
34
-
240
-
274
EBITDA
567
67
70
(180)
524
Gain on derivatives
-
-
-
47
47
Other operating income
(17)
-
-
-
(17)
(17)
-
-
47
30
Adjustments on equity investees
Inventory purchase accounting
-
-
66
-
Acquisition-related transition costs
-
-
25
-
Other expenses
-
-
36
-
Net adjustments on equity investees
-
-
127
-
127
Adjusted EBITDA
550
67
197
(133)
681
For the six months ended June 30, 2023:
FUEL
($ MILLIONS)
URANIUM1
SERVICES
OTHER
TOTAL
Net earnings (loss) attributable to
equity holders
256
70
(193)
133
Depreciation and amortization
100
16
2
118
Finance income
-
-
(59)
(59)
Finance costs
-
-
46
46
Income taxes
-
-
59
59
356
86
(145)
297
Adjustments on equity investees
Depreciation and amortization
5
-
-
Income taxes
11
-
-
Net adjustments on equity investees
16
-
-
16
EBITDA
372
86
(145)
313
Loss on derivatives
-
-
(41)
(41)
Other operating expense
6
-
-
6
Adjusted EBITDA
378
86
(186)
278
CASH COST PER POUND, NON-CASH COST PER POUND AND TOTAL COST
PER POUND FOR PRODUCED AND PURCHASED URANIUM
Cash cost per pound, non-cash cost per pound and total cost per
pound for produced and purchased uranium are non-IFRS measures. We
use these measures in our assessment of the performance of our
uranium business. These measures are not necessarily indicative of
operating profit or cash flow from operations as determined under
IFRS.
To facilitate a better understanding of these measures, the
table below reconciles these measures to cost of product sold and
depreciation and amortization for the second quarter and first six
months of 2024 and 2023.
THREE MONTHS
SIX MONTHS
ENDED JUNE 30
ENDED JUNE 30
($ MILLIONS)
2024
2023
2024
2023
Cost of product sold
284.7
264.5
640.5
654.5
Add / (subtract)
Royalties
(32.2)
(14.1)
(50.0)
(38.8)
Care and maintenance costs
(11.7)
(11.1)
(23.8)
(23.1)
Other selling costs
(4.5)
(1.4)
(9.4)
(4.1)
Change in inventories
69.6
124.4
99.8
(97.7)
Cash operating costs (a)
305.9
362.3
657.1
490.8
Add / (subtract)
Depreciation and amortization
51.5
32.2
88.2
100.1
Care and maintenance costs
(0.2)
(1.0)
(0.4)
(2.5)
Change in inventories
13.3
25.2
33.6
6.3
Total operating costs (b)
370.5
418.7
778.5
594.7
Uranium produced & purchased (million
lbs) (c)
8.8
8.2
17.3
13.0
Cash costs per pound (a ÷ c)
34.76
44.18
37.98
37.75
Total costs per pound (b ÷ c)
42.10
51.06
45.00
45.75
Management's discussion and analysis (MD&A) and financial
statements
The second quarter MD&A and unaudited condensed consolidated
interim financial statements provide a detailed explanation of our
operating results for the three and six months ended June 30, 2024,
as compared to the same periods last year. This news release should
be read in conjunction with these documents, as well as our audited
consolidated financial statements and notes for the year ended
December 31, 2023, first quarter and annual MD&A, and our most
recent annual information form, all of which are available on our
website at cameco.com, on SEDAR+ at sedarplus.ca, and on EDGAR at
sec.gov/edgar.shtml.
Qualified persons
The technical and scientific information discussed in this
document for our material properties McArthur River/Key Lake, Cigar
Lake and Inkai was approved by the following individuals who are
qualified persons for the purposes of NI 43-101:
MCARTHUR RIVER/KEY LAKE
- Greg Murdock, general manager, McArthur River, Cameco
- Daley McIntyre, general manager, Key Lake, Cameco
CIGAR LAKE
- Kirk Lamont, general manager, Cigar Lake, Cameco
INKAI
- Sergey Ivanov, deputy director general, technical services,
Cameco Kazakhstan LLP
Caution about forward-looking information
This news release includes statements and information about our
expectations for the future, which we refer to as forward-looking
information. Forward-looking information is based on our current
views, which can change significantly, and actual results and
events may be significantly different from what we currently
expect. Examples of forward-looking information in this news
release include: our expectation that we remain on track to achieve
our full-year 2024 outlook; our ability to position the company to
leverage opportunities in the nuclear industry; the sustained,
positive momentum we see for nuclear energy, which we believe will
allow us to generate full-cycle value; our selectivity in
committing inventory and conversion capacity allowing us to capture
greater future upside; our belief that our contract portfolio
aligns with market demand and our transition back to a tier-one
cost structure, setting the foundation for strong cash flow and
debt reduction; our ability to provide supply to meet long-term
demand across the fuel cycle; the ability of Cameco and
Westinghouse to benefit from the recognition of nuclear energy as a
critical tool in the fight against climate change; the belief in
our strategy to achieve our vision of energizing a clean-air world
in a manner that reflects our values, and address risks and
opportunities to make our business sustainable over the long term;
our cash flow generation expectations, including our consolidated
revenue outlook and the outlook for our share of Westinghouse’s
2024 adjusted EBITDA; our expectations regarding our uranium
segment being on track for our 2024 outlook, and our expected
annual uranium deliveries; our fuel services production targets;
our expectation that our pipeline of business under discussion will
help further build our long-term contract portfolio; our
expectations regarding a return to our tier-one cost structure, our
expected increase in our UF6 conversion production, and our
expectations regarding cash flow generation; our intention to
prioritize debt repayment while balancing our liquidity and cash
position; our intention to file a new base shelf prospectus; our
production expectations for JV Inkai, our allocation of planned
production, the timing of deliveries and our evaluation of the
implications of announced tax law changes in Kazakhstan; including
our preliminary analysis of their impact on Inkai’s production
costs and preliminary conclusions that indicate production costs in
Kazakhstan would be similar to northern Saskatchewan operations;
and the expected date for announcement of our 2024 third quarter
results.
Material risks that could lead to different results include:
unexpected changes in uranium supply, demand, long-term
contracting, and prices; changes in consumer demand for nuclear
power and uranium as a result of changing societal views and
objectives regarding nuclear power, electrification and
decarbonization; the risk that our views regarding nuclear power,
its growth profile, and benefits, may prove to be incorrect; the
risk that we may not be able to achieve planned production levels
within the expected timeframes, or that the costs involved in doing
so exceed our expectations; the risk that the production levels at
Inkai may not be at expected levels due to the unavailability of
sufficient volumes of sulfuric acid or for any other reason, or
that it may not be able to deliver its production when expected, or
of the adverse effect of changes in Kazakhstan tax law to JV
Inkai’s business and life-of-mine plans for 2025 and beyond; risks
to Westinghouse’s business associated with potential production
disruptions, the implementation of its business objectives,
compliance with licensing or quality assurance requirements, or
that it may otherwise be unable to achieve expected growth; the
risk that we may not be able to meet sales commitments for any
reason; the risks to our business associated with potential
production disruptions, including those related to global supply
chain disruptions, global economic uncertainty, political
volatility, labour relations issues, and operating risks; the risk
that we may not be able to implement our business objectives in a
manner consistent with our environmental, social, governance and
other values; the risk that the strategy we are pursuing may prove
unsuccessful, or that we may not be able to execute it
successfully; the risk that we may not realize the expected
benefits from the Westinghouse acquisition; the risk that
Westinghouse may not be able to implement its business objectives
in a manner consistent with its or our environmental, social,
governance and other values; and the risk that we may be delayed in
announcing our future financial results.
In presenting the forward-looking information, we have made
material assumptions which may prove incorrect about: uranium
demand, supply, consumption, long-term contracting, growth in the
demand for and global public acceptance of nuclear energy, and
prices; our production, purchases, sales, deliveries and costs; the
market conditions and other factors upon which we have based our
future plans and forecasts; our contract pipeline discussions;
Inkai production, its receipt of sufficient volumes of sulfuric
acid, and our allocation of planned production and timing of
deliveries; assumptions about Westinghouse’s production, purchases,
sales, deliveries and costs, the absence of business disruptions,
and the success of its plans and strategies; the success of our
plans and strategies, including planned production; the absence of
new and adverse government regulations, policies or decisions; that
there will not be any significant adverse consequences to our
business resulting from production disruptions, including those
relating to supply disruptions, economic or political uncertainty
and volatility, labour relation issues, aging infrastructure, and
operating risks; the assumptions relating to Westinghouse’s
adjusted EBITDA; and our ability to announce future financial
results when expected.
Please also review the discussion in our 2023 annual MD&A,
our 2024 first and second quarter MD&A and our most recent
annual information form for other material risks that could cause
actual results to differ significantly from our current
expectations, and other material assumptions we have made.
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. We
will not necessarily update this information unless we are required
to by securities laws.
Conference call
We invite you to join our second quarter conference call on
Wednesday, July 31, 2024, at 8:00 a.m. Eastern.
The call will be open to all investors and the media. To join
the call, please dial please dial 844-763-8274 (Canada and US) or
647-484-8814. An operator will put your call through. The slides
and a live webcast of the conference call will be available from a
link at cameco.com. See the link on our home page on the day of the
call.
A recorded version of the proceedings will be available:
- on our website, cameco.com, shortly after the call
- on post view until midnight, Eastern, August 31, 2024, by
calling 855-669-9658 (Canada), 877-344-7529 (US) or 412-317-0088
(Passcode 7511295)
2024 third quarter report release date
We plan to announce our 2024 third quarter results before
markets open on Thursday, November 7, 2024.
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, as well as significant
investments across the nuclear fuel cycle, including ownership
interests in Westinghouse Electric Company and Global Laser
Enrichment. Utilities around the world rely on Cameco to provide
global nuclear fuel solutions for the generation of safe, reliable,
carbon-free nuclear power. Our shares trade on the Toronto and New
York stock exchanges. Our head office is in Saskatoon,
Saskatchewan, Canada.
As used in this news release, the terms we, us, our, the Company
and Cameco mean Cameco Corporation and its subsidiaries unless
otherwise indicated.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240730311316/en/
Investor inquiries: Cory Kos 306-716-6782
cory_kos@cameco.com
Media inquiries: Veronica Baker 306-385-5541
veronica_baker@cameco.com
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