Cameco raises 2015 capital spending budget nearly 10% to $405M

SASKATOON – Cameco Corp. (TSX:CCO) says it has raised its capital spending budget for this year by nearly 10 per cent to $405 million. The company says it is mostly due to higher spending at the McArthur River-Key Lake uranium operation and Areva’s McClean Lake mill.

The Saskatoon-based company had previously budgeted $370 million for capital projects this year.

Cameco said Wednesday that its share of spending on the McClean Lake mill modifications this year are now estimated at about $80 million, up from the previous estimate of $60 million to $70 million, due to larger quantities of piping, electrical and instrumentation materials and related labour.

The McClean mill is being ramped up to handle output from the Cigar Lake mine, which is expected to produce between six and eight million pounds of uranium in 2015 – half of it attributable to Cameco.

Cameco also said the increase in this year’s capital budget for the McArthur River-Key Lake operations is due mainly to timing issues. The mine-mill operation, which is undergoing equipment maintenance and upgrades, experienced a 29 per cent lower production output in the first quarter compared to last year due to unplanned equipment repairs.

The revised capital spending estimates were included with Cameco’s first-quarter financial results.

The uranium company’s revenue for the quarter was $566 million, up 35 per cent from $419 million a year earlier.

Cameco’s adjusted earnings for the first quarter almost doubled to $69 million or 18 cents per share. It also reported a $9 million net loss, or two cents per share, which was mostly due to a mark-to-market loss on its foreign-exchange derivatives.

The company also said Wednesday that it now expects 2015 revenue will be about five per cent higher than the $2.398 billion produced last year, rather than decline by a similar amount, as a result of a weaker Canadian dollar.

“We have continued to perform well in an uncertain market,” Cameco president and CEO Tim Gitzel said in a statement.

READ MORE: India signs deal to buy uranium from Cameco

Cameco also said it expects to benefit from a new deal to supply uranium to India under an agreement announced last week in Ottawa during one of the stops on an official visit to Canada by Indian Prime Minister Narendra Modi.

The company said that its agreement with India’s Department of Atomic Energy provides for the sale of 7.1 million pounds of uranium concentrate through 2020 in a market that has until now been closed to Cameco.