We are a pure-play nuclear fuel supplier, focused on taking advantage of the long-term growth we see coming in our industry, while maintaining the ability to respond to market conditions as they evolve. Our strategy is to focus on our tier-one assets and profitably produce at a pace aligned with market signals in order to preserve the value of those assets and increase long-term shareholder value, and to do that with an emphasis on safety, people and the environment.
In light of today’s oversupplied market and the lingering uncertainty as to how long the weak market conditions will persist, we are focused on preserving the value of our lowest cost assets, on maintaining a strong balance sheet, on protecting and extending the value of our contract portfolio and on efficiently managing the company in a low price environment. We have undertaken a number of deliberate and disciplined actions. We have reduced supply, resisted selling into a weak spot market, restructured our global marketing organization, streamlined our operations and reduced costs.
We believe this approach provides us with the opportunity to meet rising demand with increased production from our best margin assets, and helps to mitigate risk during a prolonged period of uncertainty.
You can read more about our strategy in our 2017 Annual MD&A.
In response to market conditions, we have made the necessary decision to extend the suspension of production at our McArthur River/Key Lake operation, removing 18 million pounds of uranium per year from the market for an indeterminate duration. Our joint venture partner, Orano, has agreed to extend the suspension.
We evaluate our strategy in the context of our market environment and continue to adjust our actions in accordance with the following marketing framework:
- First, we will not produce from our tier-one assets to sell into an oversupplied spot market. Until we can commit our tier-one pounds under long-term contracts that provide an acceptable rate of return on these assets for our owners, we do not plan to restart McArthur River and Key Lake.
- Second, we do not intend to build up an inventory of excess uranium. Excess inventory serves to contribute to the sense that uranium is abundant and creates an overhang on the market, and it ties up working capital on our balance sheet.
- Third, in addition to our committed sales, we will capture demand in the market where we think we can obtain value. We will take advantage of opportunities the market provides, where it makes sense from an economic, logistical and strategic point of view. Those opportunities may come in the form of spot, mid-term or long-term demand, and will be additive to our current committed sales.
- Fourth, once we capture demand, we will decide how to best source material to satisfy that demand. Depending on the timing and volume of our production, purchase commitments, and our inventory volumes, this means we will be active buyers in the market in order to meet our demand obligations.
- And finally, in general, if we choose to source material to meet demand by purchasing it, we expect the price of that material will be more than offset by the leverage to market prices in our sales portfolio over a rolling 12-month period.
In addition to this framework, our contracting decisions always factor in who the customer is, our desire for regional diversification, the product form, and logistical factors.
Ultimately, we believe continuing to use this framework will allow us to create long-term value for our shareholders. And, as always, our focus will continue to be on maximizing cash flow, while maintaining our investment-grade rating so we can self-manage risk, including being in a position to retire our 2019 debt maturity when it comes due.
Our fuel services division is a source of profit and supports our uranium segment while allowing us to vertically integrate across the fuel cycle. Our focus is on maintaining and optimizing profitability.
We continue to explore opportunities in the second largest value driver of the fuel cycle. Having operational control of both uranium production and enrichment facilities would offer synergies that could enhance profit margins.
Our global marketing activities are consolidated as Cameco Marketing Inc. based out of Saskatoon.
Reserves and Resources
We hold about 458 million pounds of proven and probable reserves on three continents.
Supply & Demand
Long-term outlook for the uranium industry remains positive, despite current market uncertainty.
Caution about Forward-Looking Information
Please click here for additional information about the assumptions applied in making the forward-looking statements on this page and the factors that could cause results to differ materially.