Cameco reports uranium supply deal with China
Cameco Corp. [TSX-CCO, NYSE-CCJ] said it has signed a uranium supply agreement with China Nuclear International Corp., a subsidiary of China National Nuclear Corp. (CNNC) one of the country’s largest nuclear power operators.
The contract, finalized earlier this year, was marked as part of the 2023 International Forum on Natural Uranium Industry taking place in Beijing.
“China is counting on nuclear energy to play a major role in its commitment to achieve net-zero emissions, and CNNC is a large and growing part of that effort,’’ said Cameco president and CEO Tim Gitzel. “Cameco is very pleased to continue increasing our contribution towards the attainment of China’s important climate goals.’’
Terms of the details of the supply agreement are commercially confidential and will not be disclosed publicly. The contract volumes are reflected in the 215 million pounds of uranium Cameco reported having under long-term contracts as of April 27, 2023, and the reported average annual delivery volumes of 28 million pounds per year from 2023 to 2027 as of June, 2023.
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 ownership of the world’s largest high-grade reserves and low-cost operations in Saskatchewan.
The company recently released a market update regarding challenges it faces at the Cigar Lake uranium mine and Key Lake mill in Saskatchewan that are expected to impact its 2023 production forecast.
Cigar Lake is the globe’s largest operating uranium mine, accounting for 13% of the world’s mine supply and 10% of total supply, including secondary material. Cigar Lake can produce 18 million pounds of U308 annually.
Cigar Lake is a joint venture held 54.547% by Cameco, 40.453% by Orano Canada Inc. and 5.0% by TEPCO Resources Inc.
Cameco has been the operator a Cigar Lake since 2002. Cigar Lake ore is processed 70 kilometres northeast at the McClean Lake mill, which is operated by Orano.
At the Cigar Lake mine, the company expects to produce up to 16.3 million pounds of uranium concentrate (U308) (100% basis) this year, a reduction from the previous forecast of 18 million pounds U308.
Production from the McArthur River/Key Lake operations for 2023 is anticipated to be 14 million pounds U308 (100% basis), down from an earlier forecast of 15 million pounds.
Cameco shares eased slightly on the news, falling 0.057% or $0.03 to $52.62. The shares are currently trading in a 52-week range of $56.87 and $28.98.