Quarterly Report - 2021 - Q2
On July 28, 2021, Cameco (TSX: CCO; NYSE: CCJ) reported its consolidated financial and operating results for the second quarter ended June 30, 2021 in accordance with International Financial Reporting Standards (IFRS).
“Our second quarter results reflect the continued execution of our strategy and the proactive decisions to suspend production to protect the health and safety of our workers, their families and their communities,” said Tim Gitzel, Cameco’s president and CEO. “We are not at the regular tier-one run rate of our business. We are taking the steps we believe are necessary, including investing in digital and automation technologies, to support the restart of our tier-one assets to create a more flexible asset base that will allow us to align our production decisions with our contract portfolio commitments and opportunities, allow us to eliminate the care and maintenance costs incurred while our tier-one production is suspended, and to benefit from the very favourable life-of-mine economics our tier-one assets provide.
“Despite the near-term costs of our strategy and associated with the precautionary production suspensions at Cigar Lake, we have a strong balance sheet. We ended the quarter with about $1.2 billion dollars in cash. We also successfully added an additional 7 million pounds U3O8 to our long-term sales contract portfolio, bringing the total contracted so far in 2021 to 16 million pounds.
“We are excited about the future of nuclear power generation, about the fundamentals of uranium supply and demand and about the prospects for our company and remain committed to our tier-one strategy and to our vision. Globally, we see demand for both traditional and non-traditional uses of nuclear power growing as the increasing focus on electrification while phasing out carbon intensive sources of energy continues to take hold.
“Our vision to energize a clean-air world recognizes that we have an important role to play in enabling the vast reductions in greenhouse gas emissions required to accomplish the targets being set by countries and companies around the world to achieve a resilient, net-zero carbon economy. We are vertically integrated across the nuclear fuel cycle. Our uranium and fuel services products are used around the world in the generation of safe, carbon-free, affordable, base-load nuclear energy. In addition, we are exploring other emerging and non-traditional opportunities within the fuel cycle, which align well with our commitment to responsibly and sustainably manage our business and increase our contributions to global climate change solutions, such as our investment in Global Laser Enrichment LLC and the memorandum of understanding signed with GE Hitachi Nuclear Energy and Global Nuclear Fuel-Americas to explore several areas of cooperation to advance the commercialization and deployment of BWRX-300 small modular reactors in Canada and around the world.
“We believe we have the right strategy to achieve our vision and we will do so in a manner that reflects our values. For over 30 years, we have been delivering our products responsibly. Sustainability is at the heart of what we do. 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.”
- Q2 net loss of $37 million; Q2 adjusted net loss of $38 million: Results are driven by normal quarterly variations in contract deliveries and our continued execution of our strategy. This quarter was also impacted by additional care and maintenance costs of $8 million resulting from the proactive suspension of production at the Cigar Lake mine for about four months until its restart in mid-April. While production was suspended, we kept and continued to pay all our employees. These costs were offset by the receipt of $9 million from the Canadian Employment Wage Subsidy for the quarter. Adjusted net earnings is a non-IFRS measure, see page 3.
- Cigar Lake restarted and 2021 outlook updated: We safely resumed production at Cigar Lake following the evacuation of non-essential personnel at the beginning of July due to the proximity of a forest fire. We expect to produce up to 12 million pounds on a 100% basis in 2021, provided there are no further disruptions due to COVID-19, forest fires or any other cause. We have updated our 2021 consolidated outlook, including for our uranium segment. See Outlook for 2021 in our second quarter MD&A.
- Contracting continues: In addition to the 9 million pounds U3O8 in long-term sales contracts finalized and executed in April and reported in our first quarter MD&A, we added an additional 7 million pounds which had been under negotiation, bringing the total volume contracted so far in 2021 to 16 million pounds. Negotiations continue on the business opportunities remaining in our pipeline. Contracting is undertaken in accordance with the framework outlined in the Strategy in action section of our second quarter MD&A and is not tied to a year-end or quarter-end.
- Strong balance sheet: As of June 30, 2021, we had $1.2 billion in cash and short-term investments and $1.0 billion in long-term debt. 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 2021, therefore, we do not anticipate drawing on our credit facility this year.
- Clean-energy innovation: On July 7, 2021, we announced we signed a memorandum of understanding with GE Hitachi Nuclear Energy and Global Nuclear Fuel-Americas to explore several areas of cooperation to advance the commercialization and deployment of BWRX-300 small modular reactors in Canada and around the world.
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