CONSOLIDATED FINANCIAL RESULTS
In comparing the results for 2001 to the previous year, the following
discussion excludes the writedown of mineral properties ($128 million)
and the provision for waste disposal ($20 million) taken in 2000.
The after-tax effect of these special items was $132 million ($2.38
per share). There were no similar items in 2001.
Fourth Quarter. For the three months ended December
31, 2001, net earnings attributable to common shares increased to
$28 million ($0.50 per share) compared to $14 million ($0.26 per
share) before special items in 2000. This increase was mainly due
to a higher realized selling price for uranium concentrates and
increased volumes for both concentrates and conversion services.
Earnings were also bolstered by lower costs for administration and
a reduced effective income tax rate. These improvements were partially
offset by lower earnings from the gold business, which were the
result of a decline in volume for the quarter.
Earnings from operations were $59 million in the fourth quarter
of 2001 compared to $17 million in 2000.
Year. For 2001 net earnings attributable to common
shares were $56 million ($1.01 per share) compared to $45 million
($0.81 per share) before special items in 2000. The increase was
mainly attributable to the inclusion of Cameco's share of earnings
from Bruce Power of about $7 million after tax. Earnings also benefited
from improved results in the gold segment and reduced costs for
administration, exploration and income taxes. Earnings from the
gold business increased due to higher production and a lower unit
cost. The effective tax rate for the year declined to 39% compared
to 49% in the previous year due mainly to a greater proportion of
pre-tax earnings being realized outside of Canada where they are
subject to lower tax rates. These improvements were partially offset
by lower earnings from the nuclear business due to a reduction in
the realized selling prices for nuclear products. Although spot
prices have been rising, there is a timing lag before improvements
in the spot prices are reflected in the realized prices.
Earnings from operations were $95 million in 2001 compared to $102
million in 2000.
Cash flow from operating activities of $116 million was lower than
in 2000 due to increased accounts receivable at year-end. As previously
reported sales in the nuclear business in 2001 were unusually high
in the month of December.
SEGMENTED FINANCIAL RESULTS
Nuclear Business
Fourth Quarter. Revenue from the nuclear business
increased by 38% to $293 million from $212 million in the fourth
quarter of 2000 due mainly to a 33% increase in sales volume. As
the timing of deliveries of nuclear products within a calendar year
is at the discretion of customers, Cameco's quarterly delivery patterns
can vary significantly. A 5% increase in the average realized selling
price for uranium concentrates compared with the fourth quarter
of 2000 also contributed to the higher revenue. The rise in the
realized price was primarily attributable to a higher uranium spot
price which averaged $9.47 (US) in the fourth quarter compared to
$7.16 (US) in the same period in 2000.
The total cost of products and services sold, including depreciation,
depletion and reclamation (DDR), was $226 million in the fourth
quarter of 2001 compared to $169 million in 2000. This increase
reflects the higher sales volumes for the quarter.
Earnings before taxes (EBT) from the nuclear business increased
by $24 million or 62% in the fourth quarter of 2001 while the profit
margin for the quarter improved to 23% from 20% in the fourth quarter
of 2000.
Year. Revenue from the nuclear business rose by 1%
to $586 million due to a 3% increase in nuclear sales volume over
the previous year. Revenue was negatively influenced by a moderately
higher percentage of sales having market-related pricing which currently
have lower prices than fixed-price sales contracts.
In 2001 the total cost of products and services sold, including
DDR, was $470 million compared to $451 million in 2000, reflecting
the higher sales volumes. The average unit cost for uranium concentrates
was similar to the previous year while the unit cost for conversion
services rose by about 4% due mainly to a higher cost for acquired
services.
The uranium, exploration program continued at a level consistent
with the previous year.
In 2001 EBT from the nuclear business decreased marginally to $116
million from $117 million in 2000 and the profit margin declined
to 20% from 22%.
Gold Business
Fourth Quarter. Revenue from the gold business declined
by $4 million or 12% compared to the fourth quarter of 2000 due
to a 22% decrease in the amount sold. This was partially offset
by an increase in the realized price for gold which rose from $301
(US) per ounce in the fourth quarter of 2000 to $317 (US) this fourth
quarter due to more favourable hedge positions.
Gold production at Kumtor was 11% less than in the fourth quarter
of 2000 due to an increase in the in-circuit inventory and a 2%
decline in the ore grade which averaged 5.04 grams per tonne compared
to 5.12 grams in 2000. Kumtor's cash cost per ounce for the quarter
was $156 (US) compared to $125 (US) in the corresponding quarter
of 2000.
For the quarter the gross profit margin for gold declined to 28%
compared to 34% in 2000 due mainly to a higher unit cash cost, largely
the result of lower production and increased maintenance activity.
Kumtor Gold Company's (KGC) hedge position at the end of December
was 1,056,000 ounces, one-third being Cameco's share. These hedges
are expected to yield average prices in the range of $300 (US) to
$303 (US) per ounce. The mark-to-market gain on Cameco's share of
the hedge position was $6 million (US) at December 31, 2001 based
on a spot market gold price of $277 (US) per ounce.
Year. Revenue from the gold business rose by $6 million
or 6% compared to the previous year, reflecting an 8% increase in
sales volume which more than offset a decline in the average realized
selling price. Cameco's realized price for gold declined from $314
(US) in 2000 to $292 (US) per ounce this year.
Gold production at Kumtor was 12% greater than in 2000 due to higher-grade
ore which averaged 5.14 grams per tonne compared to 4.65 grams,
an increase of 11%. An improved recovery rate, which rose to 83%
from 82%, also contributed to the increased production. Kumtor's
cash cost per ounce declined to $142 (US) in 2001 compared to $153
(US) in 2000. The non-cash cost per ounce was also lower than in
2000 due to lower straight-line depreciation charges.
In 2001 the gross profit margin for gold was 29% compared to 26%
in 2000. The lower realized price was more than offset by the reduced
unit costs of production.
Corporate Expenses
In 2001 administration costs of $37 million decreased by $1 million
compared to the previous year. Interest and other costs rose by
$3 million reflecting lower interest income on the subordinated
loan to KGC and lower foreign exchange gains.
Bruce Power
The operating highlights for the Bruce Power limited partnership
(100%) for the fourth quarter and the period from May 12 to December
31, 2001 are as follows:
| |
|
3
Months
Ended
Dec 31/01 |
May
12/01
to
Dec 31/01 |
| |
Output (terawatt hours) |
5.3 |
15.5 |
| |
Capacity factor (%) |
75 |
87 |
| |
($
million) |
|
|
| |
Revenue |
$204 |
$599 |
| |
Operating costs |
189 |
468 |
| |
Earnings before interest &
taxes |
15 |
131 |
| |
Interest |
15 |
41 |
| |
Earnings (loss) before taxes |
$- |
$90 |
| |
Cameco's 15% interest |
- |
$13 |
| |
Less: Cameco's proprietary adjustments |
- |
1 |
| |
Cameco's share of earnings before
taxes |
- |
$12 |
In the quarter electricity generation of 5.3 terawatt hours reflected
a capacity factor of 75%. This capacity factor was lower than achieved
earlier in the year due to a planned maintenance outage. This outage
restricted revenue and resulted in no earnings before taxes.
Cameco's investment in Bruce Power was recorded from May 12, 2001.
From this date to the end of 2001, 15.5 terawatt hours were generated
reflecting a capacity factor of 87%.
Cameco's share of earnings before taxes for the May to December
period was $12 million.
| Note: |
A generating plan capacity factor for a given
period represents the amount of electricity actually generated
for sale expressed as a percentage of the amount of electricity
the plant is capable of producing for sale. |
CASH FLOW
In 2001 Cameco generated cash from operations of $116 million ($2.10
per share) compared to $224 million ($4.04 per share) in 2000. This
decrease of $108 million reflects higher year-end accounts receivable
which rose by $116 million compared to the previous year. As previously
mentioned, deliveries in the nuclear business were heavily skewed
to the fourth quarter. Cash from operations, excluding the changes
in other operating items such as accounts receivable and payable,
was $205 million compared to $201 million in 2000.
Cash used in investing activities increased to $131 million this
year from $85 million last year due primarily to the investment
in Bruce Power which totaled $88 million at December 31, 2001 including
outstanding amounts for fabricated fuel. Expenditures for property,
plant and equipment were $36 million lower than in 2000 when the
development at McArthur River was completed. During the year Cameco
received $21 million (US) in repayment of principal on the subordinated
loan to KGC compared to $11 million (US) in 2000. The outstanding
balance on this loan was $76 million (US) at the end of 2001.
BALANCE SHEET
At December 31, 2001 total inventories had decreased by 3% to $354
million compared to $365 million at December 31, 2000. This decline
was due to the depletion of the broken ore inventory at Rabbit Lake
in preparation for the planned one year shutdown. Total long-term
debt increased to $354 million from $294 million at December 31,
2000. At December 31, 2001, Cameco's net debt to capitalization
ratio was 15%, up from 13% at the end of 2000.
TRENDS, EVENTS AND UNCERTAINTIES
The most significant factors impacting the financial performance
of Cameco were:
- the market price for U3O8,
- sales volumes for nuclear products,
- foreign exchange rates between the Canadian and US dollars,
- the market price for gold,
- the unit costs of production, and
- the quantity and profitability of electricity generated by Bruce
Power.
Uranium Spot Market
The spot price on December 31, 2001 was $9.50 (US) per pound U3O8,
unchanged from the end of the third quarter. At the end of the fourth
quarter of 2000, the spot price was $7.10 (US).
Spot demand in the fourth quarter was the highest during 2001.
Spot supply, while not aggressive, was sufficient to meet each successive
new demand that arose. As a consequence the spot price held steady
through the quarter. The quarter ended with significant demand going
into 2002.
The spot market volume in 2001 was approximately 17 million pounds
U3O8, compared to about 15 million pounds
during 2000.
For UF6 conversion services, the spot market price also
held steady through the fourth quarter at $5.25 (US) per kgU. This
compares to $3.25 (US) per kgU at the end of 2000.
Uranium Long-Term Market
The long-term price indicator published by TradeTech was steady
through the quarter ending the year at $10.50 (US) per pound U3O8.
This compares with $9.25 (US) at the end of 2000.
The long-term market was active in 2001 with long-term contracting
estimated to have been about 80 million pounds U3O8.
The sum of annual spot market and long-term contract volumes has
over the past several years been well below annual western world
consumption illustrating the substantial increase in uncovered utility
requirements and continued inventory drawdown.
Public Opinion Remains Supportive
A US survey conducted for the Nuclear Energy Institute in the fourth
quarter of 2001 found 65% of adults surveyed favour the use of nuclear
energy and 66% consider nuclear power plants safe. The percentages
of US adults with these views was considerably higher than at any
time since the questions were first asked in the early 1980s.
In Sweden which produces 44% of its electricity from nuclear power,
a poll commissioned by the nuclear safety organization found that
almost 80% of the Swedish population supports the continued use
of nuclear power in spite of the adoption by the government in 1980
of a nuclear phase-out policy.
In Germany a recent opinion poll commissioned by the German Atomic
Forum found that only 22% of the people surveyed expect nuclear's
contribution to German industry to decline strongly in the next
20 years. This appears to contradict the views of the German parliament
which recently approved a plan to phase out nuclear power over the
next 20 years. Germany relies on nuclear energy for 33% of its
electricity.
Gold Market Review
During the fourth quarter of 2001 the average spot market gold
price was $279 (US) per ounce compared to $274 (US) in the third
quarter. In spite of a brief price increase following the events
of September 11, gold prices ended the year at $277 (US).
Foreign Exchange
Most of the company's revenues are in US dollars. At December 31,
2001, Cameco had a foreign currency hedge portfolio of $592 million
(US) with an average spot exchange rate of $1.5637. Timing differences
between the maturity and final usage of hedge contracts result in
deferred charges. This impact will be recognized in the financial
statements as hedge contracts are closed against their underlying
exposure. At the end of the fourth quarter deferred charges will
have the effect of reducing the reported exchange rate by $0.06
over the five-year hedge designation period.
During the quarter the Canadian dollar weakened against the US
dollar from $1.5790 at the end of the third quarter to $1.5926 as
of December 31, 2001. As a result Cameco's mark-to-market position
on its foreign currency hedge portfolio was a loss of $17 million.
Ontario Electricity Market
In November 1997 the government of Ontario established a framework
for restructuring the provincial electric power industry. Through
this initiative the province is shifting from a monopoly-based electricity
system to a competitive electricity market. On December 18, 2001
the Ontario government reaffirmed that the electricity market would
be open to competition as of May 1, 2002.
Upon market opening the existing arrangement through which Bruce
Power sells all of its output at a fixed price to Ontario Power
Generation will terminate. From that time forward, Bruce Power will
sell its output into the new Independent Market Operator (IMO) spot
market and to contracts with wholesale electricity customers such
as power traders, local distribution companies, new retailers and
large industrial power users. Bruce Power has already negotiated
a number of wholesale contracts for a significant part of its expected
output. Bruce Power is not adversely affected by the collapse of
Enron.
Saskatchewan Royalty Regime Revised
In December 2001 the Saskatchewan royalty regime was revised, effective
January 1, 2001, to include both a basic and a tiered royalty. Under
the new regime the basic royalty is unchanged; it is equal to 5%
of gross sales of uranium and is reduced by the Saskatchewan resource
credit equal to 1% of the gross sales of uranium.
The tiered royalty is an additional levy on the gross sales of
uranium which applies only when the sales price exceeds prescribed
levels adjusted for inflation. Uranium sales subject to the tiered
royalty are first reduced by capital allowances for new mine or
mill construction and certain mill expansions. When these capital
allowances are reduced to zero, tiered royalties become payable.
Under the new regime the total uranium royalty payable assuming
various uranium sales prices and all capital allowances are reduced
to zero, is shown in the following table.
| Revised Saskatchewan Royalty
Regime |
| Uranium Sales Price |
Net Basic Royalty |
Tiered Royalty |
Total Royalty |
Total Royalty |
Marginal Rate |
$ Cdn/ lbs U3O8
|
% of Sales Price |
% |
| 15 |
.60 |
.04 |
.64 |
4.3 |
10 |
| 20 |
.80 |
.34 |
1.14 |
5.7 |
10 |
| 25 |
1.00 |
.78 |
1.78 |
7.1 |
14 |
| 30 |
1.20 |
1.35 |
2.55 |
8.5 |
19 |
| 35 |
1.40 |
2.10 |
3.50 |
10.0 |
19 |
Under the new regime the marginal rates range from 4% to 19%, whereas
under the previous regime the range was from 4% to 50%.
Cameco did not pay tiered royalties in 2001. In 2002 only the basic
royalty is expected to be paid due to available capital allowances.
The company believes it will benefit from the new regime as uranium
prices rise in the coming years.
OUTLOOK FOR 2002
Uranium Production (Cameco's share)
At McArthur River production of 13 million pounds U3O8
is planned for 2002. The ore from McArthur River will be blended
for processing with low-grade ore in stockpile at Key Lake. At Rabbit
Lake, mining of the Eagle Point deposit will resume during spring
of 2002 with milling commencing in the third quarter. Eagle Point
has about 18 million pounds U3O8 of reserves.
| (000's
lbs U3O8) |
2002 Plan |
2001 Actual |
| McArthur River |
13,000 |
12,048 |
| Key Lake |
300 |
648 |
| Rabbit Lake |
3,000 |
4,563 |
| Crow Butte |
800 |
815 |
| Highland |
400 |
695 |
| Total |
17,500 |
18,769 |
In the US Highland's production volume will decline in accordance
with a mining plan announced in November 1998. At the Inkai development
project in Kazakhstan, nominal production is planned for the test
mine scheduled to begin operation in early 2002.
At Port Hope conversion volume is expected to increase marginally
from 11,000 tonnes in 2001.
Uranium Market
After a year in which the uranium spot price increased over 30%
some industry analysts are predicting an increase during 2002 but
at a more modest rate. For UF6 conversion service prices
which also saw a strong increase in 2001 analysts do not foresee
significant downside risk to current price levels and anticipate
modestly higher prices during 2002.
Long-term market demand for uranium in 2002 is expected to be similar
to that reported for 2001 (see Trends, Events and Uncertainties
above).
Nuclear Revenue and Margins
Cameco's nuclear revenue in 2002 is expected to rise nominally
over the 2001 level. Nuclear sales volumes are expected to be slightly
higher. Although market prices rose significantly during 2001 the
average prices realized are expected to be relatively unchanged
in 2002. About 60% of Cameco's long-term contracts contain pricing
which references the spot price at the time of delivery. Nuclear
margins are expected to be similar to 2001.
For 2002 deliveries a $1.00 (US) change in the U3O8
spot price from current levels would change revenue by about
$20 million (Cdn), net earnings by about $9 million (Cdn) and cash
flow by about $14 million (Cdn).
Gold Business
The 2002 Kumtor plan anticipates production of 660,000 ounces (Cameco's
share is one-third). This 12% decline from 2001 is largely due to
an 8% drop in average ore grade to 4.67 grams per tonne. The unit
cash cost is expected to increase about 9% to $155 (US) per ounce
due to the lower production volume. The average realized gold price
(including related hedge positions at the end of 2001) is expected
to decline marginally to $288 (US) per ounce.
Bruce Power
Maintenance work on one Bruce B reactor unit which began near the
end of the third quarter will continue into the first quarter before
it returns to service. During the year there are outages planned
for two other units as well. This maintenance program is expected
to lead to a slightly lower capacity factor in 2002 than in 2001.
Over the longer term Bruce Power's goal is to achieve a capacity
factor of over 90%.
The restart program for the two Bruce A units will continue during
the year in order to bring them back online by the summer of 2003.
Of the $340 million project estimate approximately $65 million has
been spent to date and the remainder will be largely incurred in
2002. An important milestone in the restart program will be Bruce
Power's submission of an environmental assessment study to the Canadian
Nuclear Safety Commission (CNSC), anticipated in 2002.
The investment in Bruce Power is expected to contribute significantly
to Cameco's earnings and cash flows beginning in 2003.
Capital Expenditures
In 2002 capital expenditures are projected to be approximately
$60 million, about one-half of which is to maintain existing capacity
at all operations.
Cameco's share of expenditures at Cigar Lake are estimated at $13
million. In 2002 a construction license application is expected
to be submitted to the CNSC and approval is expected to take about
one year. The 2002 work program will focus on preparatory work including
building a freeze plant and some underground drilling ahead of the
construction phase anticipated in 2003. Once regulatory approval
is granted and a development decision is taken, construction would
be expected to take about 27 months and could lead to a production
startup in 2005.
At the Inkai in situ leach project in Kazakhstan, Cameco's share
of work at the test mine is expected to cost about $4 million.
Bruce Power's internal cashflow is expected to be sufficient to
fund the majority of its 2002 capital programs including the program
to restart two of the Bruce A units.
FIRST QUARTER 2002
Revenue in the nuclear business is expected to be stronger than
in the first quarter of 2001 generating nearly 20% of the year's
revenue compared to less than 10% in the same quarter in 2001. Improved
sales volumes and prices are anticipated. In the gold business revenue
is expected to decrease compared to the first quarter of 2001.
DIVIDEND ANNOUNCEMENT
Cameco also announced today that the company's board of directors
declared its regular quarterly dividend of $0.125 per common share
payable on April 15, 2002 to shareholders of record at the close
of business on April 1, 2002.
PROFILE
Cameco, with its head office in Saskatoon, Saskatchewan, is the
world's largest uranium producer. The company's competitive position
is based on its large high-grade reserves and low cost operations.
Cameco is also one of the world's largest commercial providers of
uranium conversion services. The company's uranium products are
used to generate electricity in nuclear energy plants around the
world providing one of the cleanest sources of energy available
today. Cameco has an interest in the Bruce nuclear generating plant
in Ontario and also produces gold. The company's shares trade on
the Toronto and New York stock exchanges.
FORWARD-LOOKING STATEMENTS
Statements contained in this news release which are not historical
facts are forward-looking statements that involve risks, uncertainties
and other factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements.
Factors that could cause such differences, without limiting the
generality of the following, include: volatility and sensitivity
to market prices for uranium, electricity in Ontario and gold; competition;
the impact of change in foreign currency exchange rates and interest
rates; imprecision in reserve estimates; environmental and safety
risks including increased regulatory burdens; unexpected geological
or hydrological conditions; political risks arising from operating
in certain developing countries; a possible deterioration in political
support for nuclear energy; changes in government regulations and
policies, including trade laws and policies; demand for nuclear
power; replacement of production and failure to obtain necessary
permits and approvals from government authorities; legislative and
regulatory initiatives regarding deregulation, regulation or restructuring
of the electric utility industry in Ontario; Ontario electricity
rate regulations; weather and other natural phenomena; ability to
maintain and further improve positive labour relations; operating
performance of the facilities; success of planned development projects;
and other development and operating risks.
CONFERENCE CALL
Cameco is hosting a conference call on Friday, February 8, 2002
from 9:00 a.m. to 10:00 a.m. Eastern time (8:00 a.m. to 9:00 a.m.
Saskatoon time) to discuss the fourth quarter and annual results.
The call will be open to all members of the investment community.
Members of the media will be invited to listen but not ask questions.
In order to join the conference call on Friday, February 8, please
dial (416) 641-6652 or (888) 489-9498
(Canada and US). An operator will put your call through. Alternatively
an audio feed of the conference call will be available on the web
site at www.cameco.com by using Windows
Media Player or Real Player software. See the link on the home page
on the day of the call. Please feel free to pass this invitation
to colleagues in your organization who have an interest in Cameco.
A recorded version of the call will be available shortly after
the call on the company's web site www.cameco.com or by telephone
replay until midnight, Friday, February 22 by calling (416) 626-4100
and entering the code 20222629.
If you would like to print the notes to the consolidated financial
statements, please go to the Cameco web site at www.cameco.com,
or, to receive a fax copy (36 pages total), call the investor relations
department at 306-956-6400.
For further information, please contact:
Bob Lillie
Manager, Investor Relations
Cameco Corporation
Phone: (306) 956-6639
Fax: (306) 956-6318
|
Jamie McIntyre
Director, Investor and Corporate Relations
Cameco Corporation
Phone:(306) 956-6337
Fax:(306) 956-6318 |
INVESTOR INFORMATION
Common Shares
CCO
The Toronto Stock Exchange
CCJ
New York Stock Exchange
Preferred Securities
CCJPR
New York Stock Exchange |
Investor Inquiries
Cameco Corporation
2121 - 11th Street West
Saskatoon, Saskatchewan
S7M 1J3
Phone: (306) 956-6400
Fax: (306) 956-6318
Web: www.cameco.com
|
Transfer Agent
CIBC Mellon Trust Company
320 Bay Street,
P.O. Box 1
Toronto, Ontario
M5H 4A6
Phone: (800) 387-0825
(North America)
Phone: (416) 643-5500
(outside North America)
|
Fourth
Quarter Results / PDF
(191 KB)
2001
Financial Results / PDF
(264 KB)
E-mail Notification
(Subscribers will be notified by e-mail when a news release or quarterly
report is posted on our site.)
RSS
