Cameco set to receive $300 million tax refund

Cameco Corp. [CCO-TSX, CCJ-NYSE] said Monday it is set to receive a substantial refund of $300 million from the Canada Revenue Agency (CRA). The Canadian uranium giant said it is anticipating the refund after the CRA issued a revised reassessment for the 2007 to 2013 tax years. The refund will consist of $89 million in cash and $211 million in letters of credit, which the company previously remitted to the government of Canada based on prior reassessments CRA had issued in its long-standing tax dispute.

“Timing of the refund has yet to be determined.’’

Cameco shares advanced on the news, rising 1.8% or 61 cents to $33.67 on volume of 192,370. The shares currently trade in a 52-week range of $41.05 and $26.15.

Cameco is one of the largest global providers of the uranium fuel needed to energize a clean air world. The company’s competitive position is based on its controlling ownership of the world’s largest high-grade uranium reserves and low/cost operations.

The company has interests in tier-one mining and milling operations that have licensed capacity to produce more than 30 million pounds (its share) of uranium concentrates annually, backed by more than 469 million pounds of proven and probable mineral reserves.

The company’s assets in the Athabasca Basin in northern Saskatchewan include two of the highest-grade mines in the world – Cigar Lake and McArthur River/Key Lake. Cameco also has interests operations located in Kazakhstan and the United States.

On Monday, Cameco said a series of court decisions that were completely and unequivocally in Cameco’s favour for the 2003, 2005 and 2006 tax years determined that the income earned by Cameco’s foreign subsidiary from the sale of non-Canadian produced uranium was not taxable in Canada.

“In accordance with these decisions, CRA has issued reassessments reducing the proposed transfer pricing adjustment from $5.12 billion to $3.25 billion, resulting in a reduction of $1.87 billion in income taxable in Canada compared to the previous reassessments issued to Cameco for the 2007 through 2013 tax years,’’ the company said in a press release.

“These revisions to income result in the refund of approximately $300 million.’’

Cameco went on to say that while the pending return of $300 million in cash and security to the company is positive and certainly warranted, it said the company’s broader tax dispute with CRA remains ongoing. “CRA continues to hold a further $480 million, consisting of $206 million in cash, and $274 million in letters of credit, that Cameco has remitted or secured to date, tying up a significant portion of our financial capacity.”