Cameco Says Net Falls, Forecasts Uranium Sales Gain

Cameco Corp., the world’s largest uranium producer, said first-quarter profit fell 47 percent from a year earlier, when utilities stocked up on the metal. Cameco forecast higher sales in the second quarter.

Net income fell to C$59 million ($53 million), or 16 cents a share, from C$112 million, or 30 cents, a year earlier, Saskatoon, Saskatchewan-based Cameco said in a statement. Sales fell 25 percent to C$409 million.

Uranium sales were “unusually high” in the 2006 quarter as utilities took advantage of contracts that allowed them to accelerate purchases while prices were lower, Brian Mok, an analyst at Research Capital in Toronto, said in a note April 24. Cameco said sales will be about 50 percent higher in the second quarter than in the first.

“Historically, the first quarter is weakest for uranium shipments as utilities traditionally have taken deliveries in the latter half of the year,” Mok said in the note.

Cameco sold 7.2 million pounds of uranium in the first quarter, down from 12 million a year earlier. The average price was $24 a pound, up from $19.61 a year earlier. The price was below the spot-market average of $85 because of sales under long- term contracts.

Cameco is moving to boost production from its uranium mines in Canada, the U.S. and Kazakhstan as global demand for nuclear power expands. The price of uranium more than doubled on average from a year earlier as an underground flood in October inundated Cameco’s unfinished Cigar Lake mine, the world’s largest undeveloped high-grade deposit, spurring supply concerns.

Shares of Cameco rose 58 cents, or 1.1 percent, to C$52.28 at 10:13 a.m. on the Toronto Stock Exchange. They have risen 11 percent this year.

Cigar Lake Expenses

Cameco’s first-quarter results included C$11 million of expenses related to efforts to resume construction at the Cigar Lake mine, the company said. Cameco said it expects to “dewater” the mine in the third quarter, depending on regulator approval, and continued progress on plugging the flow of water.

First-quarter profit from Cameco’s share of the Bruce nuclear power complex in Ontario fell to C$10 million from C$47 million a year earlier because of higher operating costs from planned reactor maintenance, the company said.

Cameco’s forecast for a 50 percent increase in sales in the second quarter includes C$47 million in revenue that previously was deferred because of uranium-product loan agreements.

Information from: www.bloomberg.com