After Kazatomprom’s Cuts, All Eyes Were on Cameco

Published on: February 11, 2024

Following the reduction in production guidance by the world’s largest uranium producer Kazatomprom (LSE:59OT, OTC Pink:NATKY) for 2024, attention turned to the production guidance of Cameco Corp (TSX:CCO) (NYSE:CCJ). Last week, Cameco released the financial and operational performance for 2023 along with the financial forecast for 2024.

Kazakhstan’s government-controlled Kazatomprom, through its sovereign wealth fund, recently issued a production warning, stating that the company may not be able to achieve its production targets over the next two years and also reduced its 2024 production guidance. As the world’s largest uranium producer, Kazatomprom’s production cuts have significant implications for the uranium market, leading to a rise in uranium prices to a 17-year high of $107 per pound. Furthermore, the company previously limited its production to stabilize prices.

Specifically, Cameco reported producing 17.6 million pounds of uranium last year, including 9.4 million pounds from McArthur River/Key Lake and 8.2 million pounds from Cigar Lake, both slightly below the company’s expectations. It is worth noting that at the beginning of 2023, the company had set a production target of 20.3 million pounds, which was reduced to 18.7 million pounds in September.

Additionally, the company has set a uranium production guidance of 22.4 million pounds for 2024.

In addition to production, Cameco has reported its fourth-quarter and full-year financial performance and reports as of December 31, 2023. The Q4 revenue increased by 61% to $844 million CAD, and the annual revenue increased by 39% to $2.59 billion CAD. Net profit was $80 million CAD, or 18 cents per share, compared to a loss of $15 million CAD for the same period the previous year. Furthermore, the company’s 2023 net profit ($361 million), adjusted net profit ($339 million), and operating cash flow ($688 million) more than doubled compared to 2022, with adjusted EBITDA growing by 93% to $831 million.

Cameco’s President and CEO, Tim Gitzel, expressed optimism about the industry’s prospects. He also explained Cameco’s contracting strategy and the acquisition of a 49% stake in GE Hitachi Nuclear Energy completed in November last year.

Uranium has become a hot topic on the social media platform X (formerly known as Twitter). Additionally, following the release of Cameco’s financial report, many have questioned the company’s financial data, especially the sales price data. The financial report shows that the actual average selling price of uranium for the company in 2023 was only $49.76 per pound, whereas the current spot price of uranium has exceeded $100.

Finally, one noteworthy statistic is that Cameco’s long-term contracted volume accounts for only about 20% of the company’s current reserves and resources. This means that amid the strong uranium price, the company has room to sign more supply agreements, thereby driving the company’s performance to new heights.

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