Our response to Coronavirus (COVID-19)

We continue to closely monitor the developments related to the COVID-19 pandemic. The situation continues to evolve, and our priority is to protect the health and well-being of our employees, their families and their communities. We activated our Corporate Crisis Management Plan, which includes our Pandemic Plan, and our various Local and Corporate Business Continuity Plans. Our Pandemic Plan and Local and Corporate Business Continuity Plans continue to be in effect across our global operations.

Following the precautions and restrictions enacted by all levels of government where we operate and considering the unique circumstances at each of our operating sites, we proactively implemented a number of measures and made a number of decisions to ensure a safe working environment for all our workers and help slow down the spread of the virus. In addition to the safety protocols we put in place, we:

  • asked employees at corporate office to work remotely from home
  • asked that all meetings be conducted by phone or videoconference where possible
  • suspended all business travel
  • restricted non-essential contractors, visitors and deliveries at all locations
  • suspended work on the Vision in Motion (VIM) project in Port Hope
  • suspended production at Cigar Lake in March 2020, in conjunction with Orano for about five months and for a second time in December 2020 for about four months
  • suspended production, in April 2020, at the Port Hope UF6 conversion facility and at the Blind River refinery for about four weeks
  • did not implement any temporary layoffs as a result of disruptions to our business – employees were provided with paid leaves of absence and vacation time was utilized to deal with the various pandemic impacts
  • set up and awarded COVID-19 Relief Funds totaling $1.25 million to support our northern Saskatchewan and Ontario communities impacted by the virus

The proactive decisions we have made to protect our employees and to help slow down the spread of the COVID-19 virus are necessary decisions that are consistent with our values. The health and safety of our employees, their families and their communities continue to be the priority in all our plans, which will align with the guidance of the relevant health authorities where we operate.

In April 2021, we announced the restart of the Cigar Lake mine following the second COVID-19 related shutdown that began in December 2020. Production at the mine resumed near the end of April. The further safety measures we implemented, the licensed COVID-19 testing facility at the mine site and the ongoing provincial vaccine rollout program provided us with greater certainty around our ability to operate safely and sustainably. We will closely monitor the COVID-19 case counts and the ongoing success of the vaccine rollout and will continue to have regular dialogue with public health authorities and northern Saskatchewan leaders. Given the ongoing risks to production due to the COVID-19 pandemic, we will not be in a position to provide additional outlook for 2021 until we understand the rate at which we will be able to sustainably operate the mine.

As a result of the temporary production suspension at Cigar Lake, during the first quarter, we incurred an additional $33 million in care and maintenance costs. Even while production was suspended, we kept and continued to pay all our employees. Partially offsetting these additional costs was the receipt of $12 million under the Canada Emergency Wage Subsidy program.

As vaccinations progress, we will continue to assess our gradual return to the workplace plan for those employees at our corporate and division head offices who are currently working from home.

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 and risk of additional disruptions are still not fully known.

In this environment, we believe the risk to uranium supply is greater than the risk to uranium demand and expect it will create a renewed focus on ensuring availability of long-term supply to fuel nuclear reactors. Over time, we expect this renewed focus on security of supply will provide the market signals producers need and will help offset any near-term costs we may incur as a result of the current disruptions to our business.

Our utility customers’ nuclear power plants continue to be part of the critical infrastructure needed to guarantee the availability of 24-hour electricity to run hospitals, care facilities and other essential services. Our customers are going to need uranium. As a reliable, independent, commercial supplier, we will continue to work with our customers to help meet their delivery needs. Our deliveries in 2020 were not impacted and we do not currently expect there will be a material impact on our 2021 deliveries. Given the production suspension at Cigar Lake until the restart in April, we have increased our outlook for purchases in 2021 to meet our delivery commitments and to maintain a working inventory. We now expect to purchase between 11 million and 13 million pounds in the uranium segment this year (previously between 8 million and 10 million pounds). Until we understand the rate at which we will be able to sustainably operate the Cigar Lake mine and with ongoing uncertainty around production due to the COVID-19 pandemic, we may make additional purchases. To the end of March, we had purchased 1.5 million pounds of uranium and delivered 5.0 million pounds under contract. In April, we finalized and executed an additional 9 million pounds U3O8 in long-term sales contracts which had been under negotiation.

Thanks to the disciplined execution of our strategy on all three fronts – operational, marketing and financial – we expect to have the financial capacity to execute our strategy and manage any disruptions to our operations caused by the COVID-19 pandemic. As of March 31, 2021, we had $1.0 billion in cash and short-term investments and $1.0 billion in long-term debt. In addition, we have a $1.0 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. Our balance sheet remains strong, and we believe we are well positioned to self-manage risk. With the Supreme Court of Canada’s dismissal of Canada Revenue Agency’s (CRA) application for leave, the dispute for the 2003, 2005 and 2006 tax years is fully and finally resolved in our favour. Furthermore, we are confident the courts would reject any attempt by CRA to utilize the same or similar positions and arguments for the other tax years currently in dispute (2007 through 2014) and believe CRA should return the $785 million in cash and letters of credit we have been required to pay or otherwise secure. However, timing of any payments is uncertain.