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Cameco cuts 700 jobs, extends shutdown

Uranium producer Cameco (TSX: CCO) says it will cut 700 jobs and indefinitely extend the suspension of its largest uranium operation, due to ongoing market weakness.
Cameco cuts 700 jobs, extends shutdown Cameco cuts 700 jobs, extends shutdown Cameco cuts 700 jobs, extends shutdown Cameco cuts 700 jobs, extends shutdown Cameco cuts 700 jobs, extends shutdown

Largest uranium operation to remain mothballed

Staff reporter

"Until we are able to commit our production under long-term contracts that provide an acceptable rate of return for our owners, we do not plan to restart," president and CEO Tim Gitzel said.

Cameco announced in November it would suspend its majority-owned McArthur River mine and Key Lake mill in Saskatchewan for 10 months from January due to market oversupply, sending uranium stocks higher.

Cameco said its joint venture partner Orano, previously known as Areva Resources Canada, had agreed to extend the suspension.

Cameco said it would lay off 550 site employees, leaving about 200 for care and maintenance, and cut 150 people from its corporate office.

It reported net losses of C$76 million (US$58 million) for the June quarter, up from net losses of $2 million (US$1.5 million) in the previous corresponding period.

Cameco said the results were impacted by lower profits on its uranium and fuel service segments, and higher unit cost of sales now production had ceased in the US and due to care and maintenance costs.

"We will not produce from our tier-one assets to deliver into an oversupplied spot market," Gitzel said.

The cutbacks come as the US launched an investigation this month into whether uranium imports threatened national security, with Canada-based Cameco saying last week it was too early to speculate on any potential impact.

Cameco expected cash provided by operations to be about 20-30% higher in 2018 than last year as it drew down inventory and focused on operating efficiently.

The company changed its 2018 guidance, increasing its forecast consolidated revenue from $1.8-$1.93 million to $1.89-$2.14 million.

It also upped its delivery forecast by 2Mlb to 34-35Mlb, but lowered the expected realised price by 20c/lb to $46.10/lb and raised the anticipated average unit cost of sales from $38-$40/lb to $40-$42/lb.

It expected to buy a further 2-4Mlb of uranium to meet delivery commitments and maintain its target inventory.

Looking ahead, Cameco said it expected to produce 9Mlb of uranium in 2019 and purchase up to 11Mlb on top of its commitments to purchase 5-6Mlb, to deliver between 25-27Mlb and maintain its target inventory.

Cameco shares ranged between C$9.90-$15.95 over the past year and closed down 3c to $14.26 yesterday.