Cameco settles tax dispute with IRS, reports Q2 loss

Saskatoon-based Cameco says its goal of producing 36 million pounds of uranium a year by 2018 no longer makes sense.
Cameco has settle a multi-million dollar tax dispute with the IRS, reports a second-quarter loss. File / Global News

Saskatchewan uranium miner Cameco has settled a tax dispute with the Internal Revenue Service (IRS) in the U.S.

The Saskatoon-based company will have to pay $122,000 U.S., far below the $122 million that had been proposed.

READ MORE: Cameco CEO ‘cautiously optimistic’ that better days will come in 2017

“We are encourage by this outcome as we believe it confirms, from an IRS perspective, our view that our structure and transfer pricing arrangements are appropriate,” said Cameco president and CEO Tim Gitzel in a statement.

The dispute was for the tax years 2009 through 2012 and centred on whether Cameco set up a subsidiary in low-tax Switzerland and sold its uranium at a low price simply to avoid tax.

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Cameco is facing a similar tax dispute with the Canadian Revenue Agency.

The CRA is looking to shift an estimated $7.4 billion in foreign earnings between 2003 and 2015 back to Canada, which could result in a potential $2.2 billion tax bill.

READ MORE: Cameco, CRA heading to court over potential $2.2B tax dispute

Cameco has maintained it was a legal and sound business practice.

The company continues to face difficult market conditions and word of the settlement comes as Cameco reports a loss of $2 million dollars for its latest quarter, compared with a loss of $137 million a year ago.

Gitzel said the company has taken action to address lower uranium prices.

“In the current environment, we have reduced supply, avoided selling into a weak spot market, resisted locking-in long-term commitments at today’s low prices (and) significantly reduced costs,” Gitzel said in his statement.

READ MORE: Cameco Q1 $18M loss bigger than expected

Revenue in the quarter came in at $470 million, up from $466 million.

With files from The Canadian Press

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