Cameco forecasts lower trading volumes, decrease in revenue

With the sale of its gold interests, Cameco is focused on doubling annual uranium production by 2018

RENO, NV - 

In Cameco's financial results released late Wednesday, the company forecast that its revenues will decrease 5% to 10% this year due to lower trading volumes in uranium.

Cameco predicted that it would mine 21.5 million pounds of uranium this year and sell 31 million to 33 million pounds based on the contracts now in place. The production increase will be driven by the company's plan to double production at the Inkai in situ operation in Kazakhstan.

By 2011, Inkai is expected to produce 5.2 million pounds of U3O8 annually with Cameco's share forecast to be 3.1 million pounds.

With the sale of Centerra, we are now fully focused on the growing interest in nuclear energy," Cameco CEO, Jerry Grandey, said in a news release. "Operationally and financially, we are well positioned to meet our goal of doubling annual uranium production by 2018."

The company is also targeting production at its new Cigar Lake facility by mid-2013. Cigar Lake is believed to have proven and probable reserve of 104.7 million pounds of uranium and measured and indicated resources of 600,000 pounds of uranium.

Cameco is hoping to double overall uranium production by 2018.

Uranium production was reported to be 20.8 million pounds in 2009, up 20% from 2008. High production at McArthur River/Key Lake, Rabbit Lake and Smith Ranch-Highland, and the continued ramp up of production at Inkai contributed to the increase.

FINANCIALS

Cameco reported adjusted net earnings for 2009 of C$582 million (US$550mn) or $1.49 per share for 2009, down from $589 million or $1.67 per share in 2008. The 1% decrease in 2009 was attributed to lower uranium profits due to higher costs, lower profits in gold from lower sales, and higher profits from the electricity business due to higher realized selling prices.

Adjusted fourth-quarter 2009 earnings were C$248 million (US$235mn) or 63 cents per share, a 39% increase over the C$179 million (US$163mn) or 49-cents/sh reported during the same period of 2008. The higher earnings resulted primarily from increased profits in gold due to a higher selling price averaging $1,129 per ounce.

Cameco sold its interest in Centerra Gold during the fourth quarter of 2009, which netted $871 million for the uranium company.

Exploration expenses this year will be 80% to 90% higher than the C$49 million budgeted in 2009.

Cameco plans to invest C$90 million to $95 million on uranium exploration with $40 million targeted for exploration in Kazakhstan.

Consolidated capital expenditures are planned to be C$552 million this year, a 65% increase over 2009. Major sustaining expenditures planned this year include $47 million for mine development at McArthur River, $87 million at Key Lake, $28 million for U.S. in situ recovery, and $17 million for mine development at Eagle Point as part of Rabbit Lake.

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