Quarterly Reports - 2020 - Q1
On May 1, 2020, Cameco reported its consolidated financial and operating results for the first quarter ended March 31, 2020 in accordance with International Financial Reporting Standards (IFRS).
“We are living in unprecedented and challenging times.” said Tim Gitzel, Cameco’s president and CEO. “The impact of the coronavirus (COVID-19) pandemic has changed the world.
“For more than 30-years protecting the health and safety of our employees, their families and their communities and supporting local businesses has been a priority for us. That is why, consistent with our values, we have made a number of proactive decisions to protect our employees and their communities, and to help slow down the spread of the virus.
“Despite the disruptions to our operations as a result of COVID-19 and the prudent decisions we have made, we expect our business to be resilient. We will continue to provide the fuel required to power the nuclear reactors that will be part of the critical infrastructure needed to ensure hospitals, care facilities and other essential services are available during this pandemic.
“We have the tools we need to deal with the current uncertain environment. We are well positioned to self-manage the risk associated with the temporary suspension of production at Cigar Lake, Blind River, and in Port Hope. We have $1.2 billion in cash and short-term investments on our balance sheet and a $1 billion undrawn credit facility, which we do not anticipate we will need to draw on.
“Embedded in all our decisions is a commitment to addressing the environmental, social and governance risks and opportunities that we believe will make our business sustainable over the long term. In these uncertain times, perhaps more than ever, it will be critical that we continue to work together to build on the strong foundation we have already established.”
- Net loss of $19 million; adjusted net earnings of $29 million: Results are driven by normal quarterly variations in contract deliveries and our continued execution on all strategic fronts. Adjusted net earnings is a non-IFRS measure, see page 3 of news release.
- Withdrew outlook for 2020: Due to the rapidly developing COVID-19 pandemic and the number of moving pieces it has created, on April 13, 2020 we withdrew our 2020 outlook. We do not expect to resume providing outlook information until we have a sufficient basis to do so.
- Cigar Lake production suspended for indeterminate period: Production at Cigar Lake has been suspended for an indeterminate period as a precautionary measure due to the threat posed by COVID-19 to our workforce. The operation is in a safe state of care and maintenance. Orano has also suspended production at its McClean Lake mill. Our share of the cash and non-cash costs to maintain Cigar Lake during the suspension, and our contribution to the care and maintenance costs at McClean Lake are expected to range between $7 million and $9 million per month.
- Port Hope UF6 conversion plant and Blind River refinery temporarily suspended for four weeks: Due to the increasing challenges of maintaining an adequate workforce as a result of COVID-19 screening protocols put in place to align with the directives and guidance of government and public health authorities, we announced our plans to temporarily shutdown our UF6 conversion plant for approximately four weeks. Since the majority of the UO3 produced at the Blind River refinery is used to produce UF6 at the conversion plant, we also announced the temporary suspension of production at the refinery for approximately four weeks.
- Strong balance sheet: As of March 31, 2020, we had $1.2 billion in cash and short term investments and $1 billion in longterm debt with maturities in 2022, 2024 and 2042. In addition, we have a $1 billion undrawn credit facility. We expect our cash balances and operating cash flows to meet our capital requirements during 2020, therefore, we do not anticipate drawing on our credit facility.
- Federal Court of Appeal hearing in transfer pricing dispute with Canada Revenue Agency held: The Federal Court of Appeal hearing was held on March 4, 2020, and we anticipate that we will receive a decision in 2020. We believe there is nothing in the Tax Court of Canada’s decision that would warrant a materially different outcome from the Federal Court of Appeal or on further appeal.
- Uranium market responding to unplanned supply curtailments: The COVID-19 pandemic has disrupted global uranium production adding to the supply curtailments that have occurred in the industry for many years. The duration and extent of these disruptions are still unknown, but the uranium market has started to respond. The uranium spot price has increased by more than 35% since we announced the first disruption at Cigar Lake on March 23, 2020.