Cameco announces Ukraine supply deal, Q4 results

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Cameco Corp. [CCO-TSX, CCJ-NYSE] has reached a supply deal with Energoatom, Ukraine’s state-owned nuclear energy utility. Under the agreement, Cameco will provide Energoatom with sufficient volumes of natural uranium hexafluoride (UF6) to meet Ukraine’s full nuclear fuel needs through 2035.

Cameco said the 12-year agreement will run from 2024 through 2035 and has the potential to be the largest supply contract in Cameco’s history, said Cameo President and CEO Tim Gitzel.

Details were announced ahead of the release Thursday of Cameco’s financial and operating results for the fourth quarter and year ended December 31, 2022.

The agreement requires Cameco to supply 100% of Energoatom’s UF6 requirements (consisting of uranium and conversion services) for nine nuclear reactors at its Rivne, Khmelnytskyy and South Ukraine nuclear power plants.

These plants have combined requirements over the contract terms of approximately 15l3 million KgU as UF6 (the equivalent of about 40.1 million pounds of uranium concentrate or U308).

The contract contains an option for Cameco to supply up to 100% of the fuel requirements for the six reactors at the Zaporizhzhya nuclear power plant, currently under Russian control, should it be returned to Energoatom.

“If this option was exercised in 2024, the Zaporizhzhya plant would require roughly 10.4 million KgU as UF6 (the equivalent of around 27.2 million pounds of U308) over the contract period,’’ Cameco said.

Key commercial terms, such as pricing mechanism, volume and tenor, have been agreed to, but the contract is subject to finalization, which is anticipated in the first quarter of 2023.

The Uranium contract details were released after the close of trading on February 9, 2023, when Cameco shares closed at $36.76. The shares are currently trading in a 52-week range of $41.05 and $24.59.

“Demand for nuclear power, supported by growth across the near, medium, and long term, is driving the best fundamentals we have ever seen for the nuclear fuel market,’’ said Cameco in a press release containing it 2022 year-end results.

“In 2022, we were successful on contracting 80 million pounds of uranium and 17 million pounds of KgU of conversion services, which a record number of contracts signed in a market that has strengthened and is in durable growth mode,’’ the company said.

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 recently said restart activities at McArthur River and Key Lake continue to progress with first production coming from the mill expected later in the fourth quarter of 2022.

Located in northern Saskatchewan, McArthur River/Key Lake are the world’s largest high-grade uranium mine and mill. Due to low uranium prices, the operation was placed on care and maintenance in 2018.

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