Cameco up 20% on nuclear power deal with U.S. government

Cameco Corp. [CCO-TSX, CCJ-NYSE] and Brookfield Asset Management Ltd. [BAM-TSX, NYSE] has entered into a binding term sheet with the U.S. Department of Commerce to form a strategic partnership to accelerate the global deployment of Westinghouse Electric’s nuclear reactor technologies.

Under the deal, the U.S. government will arrange financing and facilitate the permitting and approvals for new Westinghouse nuclear power reactors to be built in the U.S.

Each two-unit Westinghouse AP1000 project is expected to create or sustain 45,000 manufacturing and engineering jobs in 43 states and a national deployment will create more than 100,000 construction jobs.

The total investment value is at least US$80 billion for the construction of new Westinghouse nuclear power reactors.

“Our administration is focused on ensuring the rapid development, and use of advanced nuclear technologies,’’ said Howard Lutnick, Secretary for the U.S. Department of Commerce. “This partnership embodies the bold vision of President Trump – to rebuild our energy sovereignty, create high paying jobs, and drive America to the forefront of the nuclear renaissance.’’

Under the agreement, the U.S. government will be granted a participating interest entitling it to receive 20% of any cash distributions in excess of $17.5 billion made by Westinghouse.

For the participating interest to vest, the U.S. government must make a final investment decision and enter into definitive agreements to complete the construction of new Westinghouse reactors in the U.S with an aggregate value of at least $80 billion. If the participating interest has vested on or before January 2029, and if the valuation in an initial public offering of Westinghouse is expected to be $30 billion or more, the U.S. government will be entitled to require an IPO.

Prior to, or in connection with the IPO, the participating interest must be converted into a warrant with a five-year term to purchase equity securities equivalent to 20% of the public value of the IPO entity after deducting $17.5 billion from the public value.

The partnership is expected to reinvigorate U.S. and global supply chains and the nuclear power industry base. Once built, the reactors will help boost power grid reliability and power data centres to drive growth in artificial intelligence in the U.S.

Cameco shares jumped almost 20% or $24.08 to $145.34 and trade in a 52-week range of $137.30 and $49.75.

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.

Brookfield and Cameco formed a strategic partnership to acquire Westinghouse in October 2022.