It's time, once again, to check in on the king of
uranium.
For the third quarter,
Cameco 's (NYSE: CCJ) revenue clocked in at
$694 million, about 5% lower than last year. Adjusted
per-share earnings were off 30%, hit by higher costs in the
uranium and gold businesses. Cash flow was strong, however,
and through the first nine months of the year, has come in
54% higher than in 2008.
Honing in on uranium, higher unit costs continue to be
driven by spot market purchases that Cameco is making for
trading purposes. I continue to view this activity as a
bullish sign. Sales volume was off slightly from last
quarter, but customer offtake is very lumpy in this business.
Mined production, meanwhile, was up big. Cameco cranked out
5.6 million pounds, compared to 3.8 million last quarter, and
is on target for 20 million pounds of production for the full
year.
In the very short term, the troubles at
BHP Billiton 's (NYSE: BHP)
Olympic Dam minehave put some spring in uranium's step.
Mine mishaps aside, Cameco is very positive on uranium prices
and fundamentals going forward. China's nuclear power output
is set to rise six-fold by 2020. India is busily allocating
new reactor construction sites to firms like
General Electric (NYSE: GE) and
Shaw Group (NYSE: SHAW) partner
Westinghouse.
As with oil, gold, and other asset prices, uranium would
of course tend to benefit from ongoing dollar weakness. The
company cited analyst estimates of a $50 to $70 long-term
contract level, and it agrees with that range.
On the exploration and development front, Cameco has begun
confirmation drilling at Kintyre, the Australian asset picked
up from
Rio Tinto (NYSE: RTP) last year. The firm is
also working to expand the resource at Inkai in Kazakhstan.
There are many other exploratory efforts under way, from
Niger to Peru, about which you can expect Cameco to keep
tight-lipped unless and until there is major news. Cameco has
such a deep pipeline that it's not nearly as hard-pressed as,
say,
Gold Fields (NYSE: GFI) to turn up new
deposits, so it's not going to be throwing a huge amount of
cash at grassroots exploration.
This article was originally published as
Powerful Production at Camecoon
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