In 2014, Cameco continued to demonstrate strength, despite persistent challenging market conditions. In a year when the uranium spot price hit a nine-year low, we achieved record average realized uranium price and record revenue from our uranium business. Those results are no accident. Over the past 26 years, we’ve focused on being a leading low cost uranium producer—putting together a world class portfolio of assets, running our operations as efficiently as possible, and keeping a close eye on market developments so we can respond appropriately. That’s why, today, you see us as committed as ever to our strategy of producing safely, profitably and responsibly according to market conditions. It’s a strategy that works.
That isn’t to say we haven’t faced challenges. Like other producers, we have had to delay some projects, reduce our workforce and cut operating costs as a result of a persistently low uranium price, lack of long-term contracting and a supply overhang in our industry. Our advantage is that we have the ability and the experience to weather the current conditions and benefit when brighter days return for the industry.
Our 2014 results demonstrate what I mean. In addition to record realized price and record revenue from our uranium business, we achieved strong annual revenue, almost matching our 2013 record, saw increased gross profit, and returned solid production.
We did all of this without compromising on our commitment to sustainability. I firmly believe this is something that is not an add-on for our business, but is at the core of our success. Over our many years in business, we’ve learned that our focus on safety, the environment and people is not only the right thing to do, but is one of our primary business advantages. It helps us build trust and credibility, foster community support, attract and retain employees, manage risk, and drive innovation and continual improvement. As a result of that continued focus, in 2014, our injury rates continued to trend downward, our environmental performance in many areas improved, and we received a number of Top Employer awards, including being named one of Canada’s Top Employers and a Top Diversity Employer, both for the fifth year in a row.
2014 was also a special year for Cameco as we saw first production from the long awaited Cigar Lake mine. I was there to celebrate the first pounds being shipped to the mill, and I can tell you it was a momentous day and a career highlight for many at the site, myself included. This is a long lead time industry, so mine startups don’t happen every day, and certainly not of the caliber of Cigar Lake—the second largest, high grade orebody in the world. Of course, there is still work to be done at Cigar Lake as we continue to ramp up production at the mine over the next few years. And that rampup is important because we expect those low cost pounds to come at a time when we believe more uranium will be needed.
There is no doubt that more uranium will be needed; it’s just a question of when. We live in a world facing considerable challenges: a global population of about 7 billion people, of which 2 billion have little or no access to electricity, plus another two billion expected by 2050. There is a real and growing need for baseload power, which makes things like health care, education, communication and transportation systems possible. Within that context, nuclear power is an option that provides safe, clean, reliable and affordable electricity. That’s why we see countries such as China, India, Russia, and some in the Middle East pursuing significant nuclear growth plans, and other countries adding nuclear for the first time.
So as we enter 2015, we will continue to do the things we know work: operate safely and efficiently, remain flexible and adaptive to changing market conditions, always look for ways to increase shareholder value, and prepare for the bright future we know is on the horizon.
President and CEO
March 11, 2015