Outlook for 2013

Over the next several years, we expect to invest significantly in expanding production at existing mines and advancing projects, subject to market conditions, as we pursue our growth strategy. The projects are at various stages of development, from exploration and evaluation to construction.

We expect our existing cash balances and operating cash flows will meet our anticipated 2013 capital requirements without the need for significant additional funding. Cash balances will decline as we use the funds in our business and pursue our growth plans.

Our outlook for 2013 reflects the growth expenditures necessary to help us achieve our strategy. We do not provide an outlook for the items in the table that are marked with a dash.

See 2012 Financial results by segment for details.

2013 Financial Outlook

BPLP is not included in consolidated amounts due to a change in accounting. NUKEM is also excluded.

  Consolidated Uranium Fuel Services Electricity
  1. 1 Based on a uranium spot price of $43.65 (US) per pound (the Ux spot price as of February 4, 2013), a long-term price indicator of $56.00 (US) per pound (the Ux long-term indicator on January 28, 2013) and an exchange rate of $1.00 (US) for $1.00 (Cdn).
  2. 2 This increase is based on the unit cost of sale for produced material and committed long-term purchases. If we decide to make discretionary purchases in 2013, then we expect the overall unit cost of product sold to increase further.
  3. 3 Direct administration costs do not include stock-based compensation expenses. See Corporate expenses for more information.
  4. 4 Does not include our share of capital expenditures at BPLP.
  5. 5 Outlook corrected from 14 to 15 million KgU on February 19, 2013 to match the Port Hope production target.
Production – 23.3 million lbs 15 to 16 million kgU5 –
Sales volume – 31 to 33 million lbs Increase Increase
0% to 5%		 –
Capacity factor – – – 88%
Revenue compared to 2012 Increase
0% to 5%		 Increase
0% to 5%1		 Increase
5% to 10%		 Decrease
5% to 10%
Average unit cost of sales
(including D&A)		 – Increase
0% to 5%2		 Decrease
0% to 5%		 Increase
25% to 30%
Direct administration costs compared to 20123 Decrease
0% to 5%		 – – –
Exploration costs compared to 2012 – Decrease
5% to 10%		 – –
Tax rate Recovery of
15% to 20%		 – – –
Capital expenditures $655 million4 – – $93 million
(our share)

First Quarter 2013

It is not our practice to provide earnings outlook. However, due to a combination of factors expected to occur in the first quarter, we have determined it appropriate to provide some outlook for investors regarding our current expectations for our first quarter earnings.

In our uranium and fuel services segments, our customers choose when in the year to receive deliveries, so our quarterly delivery patterns, sales volumes and revenue, can vary significantly. We expect our uranium deliveries for the first quarter will be in the range of 5 million to 6 million pounds, down considerably from the 8 million reported in the first three months of 2012. Uranium sales for the balance of 2013 are expected to be more heavily weighted (~60%) to the second half of the year. However, not all delivery notices have been received to date, which could alter the delivery pattern. Typically, we receive notices six months in advance of the requested delivery date.

In addition, BPLP has outages scheduled for three of its four units in the first three months of 2013. Accordingly, we expect electricity generation to be significantly lower in the first quarter of 2013 than it was in the first quarter of 2012. The capacity factor is likely to be in the range of 75% to 80% and it is probable BPLP will report an operating loss for the quarter.

As a result, we expect our adjusted net earnings for the first quarter of 2013 will be significantly lower than the $124 million ($0.31 per share) in the first quarter of 2012. We do not believe that these factors will continue to have an impact on our adjusted net earnings for subsequent quarters of 2013. The guidance we have provided in the outlook table reflects our current expectations for the full year. We also expect our net earnings attributable to equity holders will be similarly impacted.

Sensitivity Analysis

For 2013:

  • a change of $5 (US) per pound in each of the Ux spot price ($43.65 (US) per pound on February 4, 2013) and the Ux long-term price indicator ($56.00 (US) per pound on January 28, 2013) would change revenue by $77 million and net earnings by $44 million
  • a change of $5/MWh in the electricity spot price would change our 2013 net earnings by $2 million based on the assumption that the spot price will remain below the floor price of $51.62/MWh provided for under BPLP’s agreement with the Ontario Power Authority (OPA)