Tim Gitzel says the time is right for Cameco to move forward with its supply discipline strategy as the Saskatoon-based uranium miner announced plans to restart its McArthur River operation in northern Saskatchewan.
Production was halted at the McArthur River in January 2018 and the mine was placed in care and maintenance mode.
Gitzel, Cameco’s president and CEO, said production at the McArthur River mine and Key Lake mill is expected to be 15 million pounds yearly starting in 2024.
“It will take us some time to transition McArthur River/Key Lake from care and maintenance to its planned production capacity as we complete critical automation, digitization and other projects,” Gitzel said in a statement Wednesday.
Volumes at Cameco’s Cigar Lake operation will decrease in 2024 to 13.5 million pounds per year.
Gitzel said this will leave the company operating at about 40 per cent below its productive capacity in 2024, up from about 75 per cent below productive capacity in 2021.
“This will remain our production plan until we see further improvements in the uranium market and have made further progress in securing the appropriate homes for our unencumbered, in-ground inventory under long-term contracts, once again demonstrating that we are a responsible supplier of uranium fuel,” he said.
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Orano Canada, which is a partner with Cameco in McArthur River mine and Key Lake mill, supports the move.
Nicolas Maes said the restart is being met with a sense of enthusiasm.
“We are fully confident in our partner’s ability to effectively bring these Tier 1 assets into production within the planned schedule,” said Maes, CEO of Orano Mining.
“Given the continued unbalanced uranium market conditions, the restart of McArthur gives us the opportunity to reduce production at Cigar Lake, extending the life of this asset and postponing the need for new projects in northern Saskatchewan.”
Fourth-quarter results
Cameco also announced Wednesday that it is raising its annual dividend as it reported its fourth-quarter results.
The company said it will now pay an annual dividend of 12 cents per share, up from eight cents per share.
“With $1.3 billion in cash and cash equivalents and short-term investments on our balance sheet, improving fundamentals for our business and our decision to prepare McArthur River/Key Lake for production, we have line of sight to a significant improvement in our future financial performance,” Gitzel said.
“Our strong balance sheet positions us well to self-manage risk, including any global macro-economic uncertainty and volatility that may arise.”
The increased payment to shareholders came as Cameco reported a profit of $11 million or three cents per diluted share for the quarter ended Dec. 31, 2021 compared with a profit of $80 million or 20 cents per diluted share a year earlier.
Revenue for the quarter was $465 million, down from $550 million in the fourth quarter of 2020.
On an adjusted basis, Cameco says it earned six cents per diluted share, down from an adjusted profit of 12 cents per diluted share a year earlier.
In its outlook for this year, Cameco says it expects revenue for 2022 between $1.5 billion and $1.65 billion. Capital expenditures for the year are estimated between $150 million and $175 million.
CRA tax dispute
Cameco confirmed it has filed an appeal with the Tax Court of Canada to recover $777 million in cash and letters of credit from the Canada Revenue Agency (CRA).
Last year, the Supreme Court of Canada dismissed the CRA’s application for leave to appeal a lower court decision in a dispute over Cameco’s 2003, 2005 and 2006 tax years.
The dispute focused on Cameco’s marketing and trading structure involving foreign subsidiaries and the related transfer pricing methodology used for certain intercompany uranium sale and purchase agreements.
Cameco said it is now seeking the return of $295 million in cash and $482 million in letters of credit covering the 2007 to 2013 tax years.
The ongoing dispute is frustrating and a real sore spot, Gitzel said.
“It’s not fair to Cameco, to our employees, to the north. That’s money we could be using to invest in the north,” he said.
“When I went to law school 30 years ago, a Supreme Court decision was law, and people actually abided by it. Maybe that’s not the case now, so I’m super frustrated.”
It said there is nothing in the reasoning of previous lower court decisions that should result in a different outcome for those years.
Global News reached out to multiple communities in the north for comment, none responded in time for broadcast.
– with files from The Canadian Press
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