SASKATOON - Cameco Corp. (TSX:CCO) says its first-quarter profit more than doubled to $133 million, boosted by higher uranium prices, but warned Tuesday that there could be more delays at two of its projects.
Net income at the world's biggest producer of uranium, used primarily to fuel nuclear power plants, was 37 cents per share - up from $59 million or 17 cents per share in the year-earlier period, when revenue was $409 million.
That compared with revenue of $593 million for the 2008 first quarter, when the average realized price for its uranium was US$40.85 a pound, up from $24 a year earlier.
The results fell short of expectations, as analysts surveyed by Thomson Financial were expecting earnings of 40 cents per share.
Jerry Grandey, Cameco's president and CEO, said the company was happy with the results, and expected to benefit from growing demand for uranium in the future, despite a recent decline in spot prices.
"While others cast a worried eye on the movements of the uranium spot price, we expect to generate strong returns under any future spot price scenario," Grandey said during a call with analysts.
"Looking beyond the next few years, utilities' uncovered requirements are growing at the same time suppliers are heavily committed."
Tuesday's earnings release coincided with an analyst report pointing to cracks in the so-called nuclear renaissance.
Desjardins Securities analysts John Redstone and John Hughes predict the uranium price will stabilize in the US$60-a-pound range, after falling sharply from a recent spot peak of nearly $140.
They observed it is increasingly difficult to finance new nuclear plants and there is a lack of qualified personnel to build and operate them.
Additionally, they write, even if a large number of reactors start up after 2015, "there also is an excess of 80,000 metric tons per year of planned and prospective new uranium mines that could onstream between 2015 and 2025."
Cameco also said Tuesday that delays at its McArthur River mine in Saskatchewan may affect 2009 production, and as a precaution, the company may mine from different areas.
Its efforts to bring its Inkai operation in Kazakhstan to full production have also been slowed by shortages in the acid needed for the uranium-extraction process. Cameco said the acid shortage may reduce Inkai's planned uranium production of 1.2 million pounds by up to 50 per cent this year.
Cameco's shares were battered last year at least in part because of increased costs at its Cigar Lake mine, which escalated since two massive bulkheads failed to hold back water from a flood following a rock slide in an underground shaft. The problems delayed the planned startup of until 2011.
The company has since completed pouring a concrete barrier in the flood area, and was working to ensure it was up and running.
"We continue to progress toward de-watering the mine," Grandey said. "The improvements we have made and continue to make are fundamentally changing the way we work at Cigar Lake."
In reporting its results, Cameco said revenue from its gold business increased by $17 million to $113 million, as higher gold prices offset lower sales.
Cameco owns about 53 per cent of Centerra Gold Inc. TSX:CG), which operates mines in the Kyrgyz Republic and Mongolia. The two companies are involved in a three-way deal with Kyrgyzstan, aimed at reducing Cameco's majority stake in Centerra and increasing Centerra's concession in that country by more than 250 square kilometres.
The quarter included interest and other charges that were $36 million higher than in the first quarter of 2007, due primarily to $34 million in mark-to-market losses on hedge contracts. It also included an income tax expense of $17 million, compared to net recovery of $16 million the year before. Administration costs were $30 million lower than the previous year as a decline in Cameco's share price reduced stock-based compensation expenses.
Saskatoon-based Cameco is the world's largest uranium producer.
Its shares were trading at $40.18 Tuesday on the TSX, down 10 cents.
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