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Fundamentals give Cameco growing confidence

Major producer Cameco said the strength of long-term uranium market fundamentals was giving it confidence as it moved to reduce debt and kept an eye on the potential for a restart of its McArthur River/Key Lake operations in Canada.
Fundamentals give Cameco growing confidence Fundamentals give Cameco growing confidence Fundamentals give Cameco growing confidence Fundamentals give Cameco growing confidence Fundamentals give Cameco growing confidence

Cameco’s Key Lake mill in Saskatchewan, which was mothballed in 2018

Staff reporter

Cameco said on Friday it had priced a private placement consisting of US$400 million principal amount of 2.95% senior unsecured debentures, Series H, maturing in October 2027.

It planned to use the net proceeds to redeem its outstanding Series E 3.75% senior unsecured debentures due November 2022.

Senior vice president and CFO Grant Isaac said like many other companies, Cameco was taking advantage of currently favourable debt capital markets to reset the maturity profile of its long-term debt.

"With the $500 million reduction in our long-term debt in 2019 and a strong cash position, we have an enviable balance sheet," he said.

"The strength of the long-term uranium market fundamentals give us growing confidence in our ability to continue to layer in the long-term contracts necessary to support the restart of our McArthur River/Key Lake operation and to solidify our role as a low-cost, safe, reliable, commercial supplier of the uranium fuel needed for zero-carbon nuclear electricity generation."

Cameco had restarted its Cigar Lake operation in September but the continuing suspension of its highest-grade mine McArthur River and the Key Lake mill, also in Saskatchewan, was removing about 18Mlbpa from the market. 

McArthur River/Key Lake were put on care and maintenance in 2018 due to prolonged market weakness.

Uranium spot prices dipped below US$30/lb in September, having breached the mark for the first time since 2016 earlier this year.

The company plans to issue its September quarter results before market open on November 4.

Its shares (TSX: CCO) have traded between C$7.69-$16.71 over the past year and closed down 1% on Friday to $12.24, capitalising it at $4.8 billion (US$3.6 billion).