By Rod Nickel
WINNIPEG, Manitoba May 1 Profit at Cameco Corp
, one of the world's biggest uranium producers,
plunged 93 percent in the first quarter as uranium sales fell
and prices were weaker, but the company said it expects Japan to
restart some nuclear reactors this year, pointing to better
The Saskatoon, Saskatchewan-based company, just trailing
KazAtomProm and Areva SA in uranium production, said
on Wednesday uncertainty in the short and medium term is
hampering the uranium sector's recovery. However, it said it
believes Japan will restart six to eight reactors this year,
adding to demand for nuclear fuel to generate electricity.
A rebound in Japanese demand is expected to eventually lift
depressed uranium prices, as are construction of new reactors in
China and India and the scheduled end this year of a program to
convert uranium from Russian warheads into low-enriched uranium
for reactor fuel.
"I know we've been waiting for such movement longer than
expected, but we are confident it will happen," Chief Executive
Tim Gitzel said on a conference call. "The fundamentals of the
industry, increasing demand and decreasing supply, require it.
The question remains 'when.'"
Cameco shares were almost unchanged in Toronto, at C$19.68,
recovering from a 5 percent drop earlier in the session.
Cameco's Toronto-listed stock has lost more than half of its
value since its 2011 peak.
The uranium market has been in a downward spiral since a
massive earthquake and tsunami struck Japan in March 2011,
crippling the Fukushima-Daiichi atomic power plant. Japan was
the third-largest global producer of electricity from nuclear
fuel in 2010, according to the World Nuclear Association.
Countries have reduced their dependence on nuclear power in
the aftermath, sending the spot price for uranium sharply lower.
Last week, Japanese media said reactor restarts might begin
in the autumn, giving Cameco shares a temporary lift.
Mining analyst Raymond Goldie of Salman Partners said he
expects up to 20 Japanese reactors to restart during the next
two years, representing an increase of about 4.5 percent in the
world's uranium consumption.
Analysts expected a big decline in Cameco's first-quarter
profit, although not quite so steep, as the company had signaled
that first-quarter shipments would likely be light. The timing
of Cameco's uranium sales can vary widely, as customers choose
when in the year they will accept deliveries.
"It's a slight miss, but it's not that big a deal," said
Cantor Fitzgerald analyst Rob Chang.
Cameco, which runs the world's largest-producing uranium
mine at McArthur River, Saskatchewan, reaffirmed its 2013
outlook for uranium sales and production and raised its outlook
for sales of fuel services, factoring in its acquisition of fuel
Cameco said it produced 5.9 million pounds of uranium during
the quarter and sold 5.1 million pounds. A year earlier, it had
output of 4.8 million pounds and sales of 8.2 million pounds.
The company's average realized price for uranium slipped 2
percent year over year to C$48.25 per pound.
Electricity revenue from Bruce Power, an Ontario company
nearly one-third owned by Cameco, dropped 14 percent.
First-quarter net earnings fell to C$9 million ($8.9
million), or 2 Canadian cents per share, from C$129 million, or
33 Canadian cents per share, a year ago. On an adjusted basis,
Cameco earned C$27 million, or 7 Canadian cents per share, down
from C$121 million, or 31 Canadian cents per share, in the
Revenue fell 5 percent to C$444 million.
Analysts expected the company to report earnings of 8 cents
per share and revenue of C$474 million.
Gitzel said Cameco continues to watch a sales process unfold
for Urenco, the world's second-largest vendor of nuclear fuel.
He declined to comment on Cameco's possible interest in a
stake in Urenco, which is owned by the governments of Britain,
the Netherlands and Germany - whose share is held by utilities
E.ON and RWE. The British government said
on April 22 it would sell some or all of its 33 percent stake