Cameco Corp. [CCO-TSX, CCJ-NYSE] says it is committed to the supply discipline that has sparked a recent improvement in the price of uranium and sparked new activity in its long-term contracting business.
Cameco’s total attributable 2022 production guidance of up to 11 million pounds of U308 remains unchanged.
However, in a press release containing its 2022 second quarter results, the company said it continues to transition from care and maintenance to operational readiness at its McArthur River/Key Lake operation in Saskatchewan. The company said it is increasing the workforce on site and moving into early-stage commissioning.
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.
Cameco has said it plans to produce 15 million pounds per year (100%) basis at McArthur River/Key Lake, starting in 2024. That is 40% below the licensed annual capacity of the operation.
At that time, the company said it plans to reduce production at Cigar Lake, Saskatchewan, to 13.5 million pounds per year (100% basis), 25% below its licensed capacity, for combined reduction of 33% of licensed capacity at its two operations.
The company has said it expects to produce 15 million pounds (100%) basis at Cigar Lake this year, which is 20% below licensed capacity.
“At the key Lake mill, we have encountered some challenges with respect to the availability of critical materials, equipment and skills for some of our critical automation, digitization and other projects,’’ the company said.
“In addition, after four years on care and maintenance, we have been experienced some normal commissioning issues as we work to safely and systematically integrate the existing and new assets with updated operating systems in the mill,” it said.
Cameco went on to say that the company has adjusted its schedule to accommodate these delays and anticipates that first production will be deferred to later in the fourth quarter. “As a result, we are expecting up to 2.0 million pounds production (100%) basis this year.’’ That’s down from a previously anticipated target of up to 5.0 million pounds.
Meanwhile, the company said 2022 has already been a contracting success with over 45 million pounds added to its portfolio of long-term contracts. That’s up from 40 million pounds previously. The company said it continues to have a significant and growing pipeline of contract discussions.
“Additionally, we are focusing our efforts on capturing conversion business as conversion prices are at record highs,’’ the company said.
Cameco shares advanced on the news, rising 8.4% or $2.52 to $32.32 on volume of 768,030. The shares are currently trading in a 52-week range of $41.05 and $19.68.