Cameco Corp.
(CCO-T, CCJ-N) C$36.07 | US$26.61
Q1/23: 215Mlbs U3O8 Contracted Covering More Than a Decade Event
CCO reported adjusted Q1/23 EPS of $0.27, in line with TD at $0.29 and ahead of consensus at $0.22.
Impact: POSITIVE
We agree with CEO, Tim Gitzel's comments in the quarterly report that "I am not sure there’s ever been a better time to be a pure-play investment in the growing demand for nuclear energy". CCO reported that it now has 215 million pounds of uranium committed under LT contracts (an increase from 180 million pounds reported with Q4/22 results) and more than 70 million kgU of UF6 conversion services with deliveries spanning more than a decade. CCO noted that while it is having success adding to its contract portfolio, the overall industry has not yet achieved replacement- rate contracting, so future uncovered requirements continue to grow.
CCO reported Q1/23 uranium sales of 9.7Mlbs (TD 9.75Mlbs), and a realized uranium price of US$45.14/lb (TD US$43.35/lb).
In the uranium segment, CCO's attributable production was 4.5 million pounds during the quarter. Guidance for attributable production of 20.3 million pounds of production for 2023 is unchanged. CCO reported that the production ramp up at McArthur River/Key Lake is progressing well with 3.4 million pounds (2.4 million pounds CCO share) produced Q1/23.
In April, the second shipment containing 1.3 million pounds, representing the majority of CCO's share of Inkai’s remaining 2022 production, arrived at a Canadian port. CCO continues to work closely with JV Inkai and Kazatomprom to continue receiving its production share via the Trans-Caspian International Transport Route, which does not rely on Russian rail lines or ports.
On April 23, CCO received $86 million in cash from the CRA (CRA informed CCO that its previous calculation of $89 million was incorrect). CCO continues to expect the return of letters of credit (LoC) in the amount of $211 million. Assuming CCO receives the return of the LoC, it would have received $297 million of the $780 million in cash and LoC that it has provided to the CRA for transfer pricing adjustments for the years 2007-2013.