Uranium is one of the more interesting rare earth commodities in the market right now. While not as exciting as palladium, gold, and other precious metals, industry experts have been predicting that Uranium companies will explode as international competition to purchase these much-desired assets continues to grow.
Nations like Russia have already been monopolizing global uranium production, purchasing stakes in major companies across the world. While the market is expected to explode in the years to come, some companies are in fact reporting losses.
The world’s largest publicly traded uranium miner, Cameco (TSX: CCG)(NYSE: CCG) surprised analysts today when it swung into a loss for the first three months of 2019 despite growing demand for nuclear energy.
The Saskatchewan, Canada-based company reported C$18.3 million in net losses in the first quarter, a drastic change from the same time last year which saw the company report C$57.8 million in profit. On a per share basis, shareholders saw a five-cent loss per share as opposed to the 14 cents per share profit seen at the beginning of 2018.
“We see growing support for nuclear, and with more than 50 reactors under construction, demand is certain and predictable,” said Cameco’s CEO and President Tim Gitzel. “However, supply is uncertain and declining. There is still a long way to go before we decide to restart McArthur River and Key Lake,” added the executive, referring to a couple of the company’s main assets. “While we are encouraged by the contracting activity, make no mistake, there is still a long way to go before we decide to restate [them].”
Last year, Cameco shut down its flagship McArthur uranium mine, which also happened to be the world’s biggest uranium producing facility at the time. While that particular operation isn’t set to resume anytime soon, a number of other nuclear power reactors are starting up again.
Cameco also highlighted the major win it had with the Canadian Revenue Agency (CRA), where a tax court ruled in favor of the mining company for previous years, awarding the firm around C$10.25 million in compensation for legal fees and an additional sum for disbursements.
Shares of the uranium miner didn’t react much in response to the poor earnings results. General sentiment surrounding the company has been positive, as global trends for uranium have acted as a rising tide lifting many companies despite mediocre, short-term results.
China is one big driver for uranium demand, with the country having made plans to quadruple its nuclear fleet to move the nation away from coal – sending uranium prices through the roof in doing so. Time will tell whether shares of Cameco will indeed skyrocket as many anticipate they will or if such excitement is overrated.
Cameco Company Profile
Cameco is one of the world’s largest uranium producers. When operating at normal production, the flagship McArthur River mine in Saskatchewan accounts for roughly 50% of output in normal market conditions.
In recent years, the company has reduced production in response to weak uranium markets. In the long term, Cameco has the ability increase annual uranium production by restarting shut mines and investing in new ones.
In addition to its large uranium mining business, Cameco operates uranium conversion and fabrication facilities. – Warrior Trading News
