Michael Joel-Hansen
Saskatoon StarPhoenix
Saskatoon-based Cameco Corp. says it had a “robust” first quarter despite a decrease in uranium earnings, but its chief executive says that could change because the United States has launched an investigation into its reliance on foreign critical minerals, which include uranium.
Tim Gitzel said Cameco went through a similar investigation during Donald Trump’s first term in power, but uranium was not hit with any penalties.
“We take nothing for granted; that was a different time and different trade environment,” he said during an earnings call with analysts on Thursday.
Gitzel pointed out that energy products deemed compliant with the current Canada-United States-Mexico Agreement (CUSMA) are currently not subject to tariffs.
“(That’s) preserving the flow of nuclear fuel imports into the U.S. market,” he said.
CIBC Capital Markets analysts said Cameco is in a good position to deal with a challenging macroeconomic environment and can take advantage of strong uranium prices because of its tier-one assets, along with its long-term relationship with utilities serviced by Westinghouse.
“We believe shares remain undervalued at current prices based on our sum-of-the-parts valuation,” they said in a note on Thursday.
Cameco reported adjusted net earnings of $70 million for the quarter ending March 31 compared to a net loss of $7 million a year ago, while revenue was $789 million, up from $634 million. Westinghouse Electric Co., which Cameco owns 49 per cent of, reported a net loss of $62 million, which the company said was expected.
But the company had a 10 per cent decrease in net earnings for uranium as a result of issues with its JV Inkai operation in Kazakhstan, which suspended production from Jan. 1 to Jan. 23.
Nevertheless, Gitzel said Cameco remains on track to meet its long-term goals.
“First-quarter production in both our uranium and fuel services segments was strong and on track with our 2025 outlook, which is unchanged,” he said in a news release.
Cameco said it is still expecting to produce 18 million pounds of uranium at its McArthur River/Key Lake and Cigar Lake facilities in Saskatchewan this year.
Cameco spent $8 million on exploration in the first quarter, which was up by $1 million from a year ago. It is expecting to spend $27 million on exploration in 2025, with much of the focus being on its core projects in Saskatchewan.
“We think (those) are the best properties, in the Athabasca basin,” Gitzel said. “We continue to work them.”
Overall, he said the nuclear industry is in a good place, with the World Bank announcing an end to its ban on financing nuclear projects along with 10 new builds getting the go-ahead in China.
Gitzel said this growth is placing a strain on supply, and a large portion of the uranium needed to meet future demand has not been contracted yet.
“The world’s utilities still have a lot of uranium to buy,” he said.
• Email: mhansen@postmedia.com
