Rising uranium price, sales volume boost Cameco earnings

Higher sales volumes and realized prices for uranium production and fuel services meant that Cameco’s (TSX: CCO; NYSE: CCJ) 2023 net earnings and cash from operations more than doubled from the previous year. Adjusted EBITDA was up 93%.

Strong financial performance is also expected this year.

Uranium spot prices have more than doubled to US$100 per lb. at the end of January, from only US$48 per lb. at the end of 2022 as demand for nuclear fuel has risen. The long-term price for uranium of US$72 per lb., increased about 38% over the same period.

“The benefits of nuclear power have come clearly into focus, with 28 countries around the world declaring support for the tripling of capacity to help achieve global net-zero greenhouse gas emissions by 2050,” Gitzel said in a release. “The uncertainty about where nuclear fuel supplies will come from to satisfy growing demand has led to increased long-term contracting activity, and in 2023, about 160 million lb. of uranium was placed under long-term contracts by utilities.”

Year-end revenue for 2023 was $2.6 billion, up from $1.9 billion for 2022. Net earnings were $361 million (up from $89 million). Adjusted EBITDA was $831 million, compared to $431 million in 2022.

Still, the stock declined by 7% or $4.51 in afternoon trading to $60.14 as fourth quarter earnings of 21¢ per share fell short of consensus expectations (22¢ per share).

Cameco produced 17.6 million lb. U3O8 last year, compared with 10.4 million lb. in 2022, resulting in 2023 net earnings of $606 million (up from $121 million).

This year, Cameco expects to produce 18 million lb. of uranium oxide (U3O8) at each of the McArthur River-Key Lake and the Cigar Lake mines in Saskatchewan. It’s working on a feasibility study to extend the Cigar Lake mine life to 2036 and is considering the potential to increase McArthur River annual production to 25 million lb. from 18 million pounds.

In the fuel services sector, the company produced 13.3 million kg elemental uranium in 2023 (compared to 13 million kg in 2022), giving it net earnings of $129 million ($120 million).

The company acquired a 49% interest in nuclear fuel services provider Westinghouse, in the fall. Brookfield Asset Management holding the remaining 51% interest.

“We believe Westinghouse is well-positioned for long-term growth driven by the expected increase in global demand for nuclear power,” Gitzel said. “In 2024, we expect our share of its adjusted EBITDA to be between $445 million and $510 million. Further, over the next five years, we expect its adjusted EBITDA will grow at a compound annual growth rate of 6% to 10%.”