Cameco reports first quarter results – well positioned in a strengthening uranium market
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TSX: CCO
NYSE: CCJ
website: cameco.com
currency: Cdn (unless noted)
2121 – 11th Street West, Saskatoon, Saskatchewan, S7M 1J3 Canada
Tel: 306-956-6200 Fax: 306-956-6201
Cameco reports first quarter results – well positioned in a strengthening uranium market
Saskatoon, Saskatchewan, Canada, May 1, 2020 . . . . . . . . . . . . . . . . .
Cameco (TSX: CCO; NYSE: CCJ) today reported its consolidated financial and operating results for the first quarter ended
March 31, 2020 in accordance with International Financial Reporting Standards (IFRS).
“We are living in unprecedented and challenging times.” said Tim Gitzel, Cameco’s president and CEO. “The impact of the
coronavirus (COVID-19) pandemic has changed the world.
“For more than 30-years protecting the health and safety of our employees, their families and their communities and
supporting local businesses has been a priority for us. That is why, consistent with our values, we have made a number of
proactive decisions to protect our employees and their communities, and to help slow down the spread of the virus.
“Despite the disruptions to our operations as a result of COVID-19 and the prudent decisions we have made, we expect our
business to be resilient. We will continue to provide the fuel required to power the nuclear reactors that will be part of the
critical infrastructure needed to ensure hospitals, care facilities and other essential services are available during this pandemic.
“We have the tools we need to deal with the current uncertain environment. We are well positioned to self-manage the risk
associated with the temporary suspension of production at Cigar Lake, Blind River, and in Port Hope. We have $1.2 billion in
cash and short-term investments on our balance sheet and a $1 billion undrawn credit facility, which we do not anticipate we
will need to draw on.
“Embedded in all our decisions is a commitment to addressing the environmental, social and governance risks and
opportunities that we believe will make our business sustainable over the long term. In these uncertain times, perhaps more
than ever, it will be critical that we continue to work together to build on the strong foundation we have already established.”
Net loss of $19 million; adjusted net earnings of $29 million: Results are driven by normal quarterly variations in
contract deliveries and our continued execution on all strategic fronts. Adjusted net earnings is a non-IFRS measure, see
page 3.
Withdrew outlook for 2020: Due to the rapidly developing COVID-19 pandemic and the number of moving pieces it has
created, on April 13, 2020 we withdrew our 2020 outlook. We do not expect to resume providing outlook information until we
have a sufficient basis to do so.
Cigar Lake production suspended for indeterminate period: Production at Cigar Lake has been suspended for an
indeterminate period as a precautionary measure due to the threat posed by COVID-19 to our workforce. The operation is
in a safe state of care and maintenance. Orano has also suspended production at its McClean Lake mill. Our share of the
cash and non-cash costs to maintain Cigar Lake during the suspension, and our contribution to the care and maintenance
costs at McClean Lake are expected to range between $7 million and $9 million per month.
Port Hope UF6 conversion plant and Blind River refinery temporarily suspended for four weeks: Due to the
increasing challenges of maintaining an adequate workforce as a result of COVID-19 screening protocols put in place to
align with the directives and guidance of government and public health authorities, we announced our plans to temporarily
shutdown our UF6 conversion plant for approximately four weeks. Since the majority of the UO3 produced at the Blind River
refinery is used to produce UF6 at the conversion plant, we also announced the temporary suspension of production at the
refinery for approximately four weeks.
Strong balance sheet: As of March 31, 2020, we had $1.2 billion in cash and short term investments and $1 billion in long-
term debt with maturities in 2022, 2024 and 2042. In addition, we have a $1 billion undrawn credit facility. We expect our
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cash balances and operating cash flows to meet our capital requirements during 2020, therefore, we do not anticipate
drawing on our credit facility.
Federal Court of Appeal hearing in transfer pricing dispute with Canada Revenue Agency held: The Federal Court of
Appeal hearing was held on March 4, 2020, and we anticipate that we will receive a decision in 2020. We believe there is
nothing in the Tax Court of Canada’s decision that would warrant a materially different outcome from the Federal Court of
Appeal or on further appeal.
Uranium market responding to unplanned supply curtailments: The COVID-19 pandemic has disrupted global uranium
production adding to the supply curtailments that have occurred in the industry for many years. The duration and extent of
these disruptions are still unknown, but the uranium market has started to respond. The uranium spot price has increased
by more than 35% since we announced the first disruption at Cigar Lake on March 23, 2020.
Consolidated financial results
THREE MONTHS
HIGHLIGHTS ENDED MARCH 31
($ MILLIONS EXCEPT WHERE INDICATED) 2020 2019
Revenue 346 298
Gross profit 35 17
Net losses attributable to equity holders (19) (18)
$ per common share (basic) (0.05) (0.05)
$ per common share (diluted) (0.05) (0.05)
Adjusted net earnings (non-IFRS, see page 3) 29 (33)
$ per common share (adjusted and diluted) 0.07 (0.08)
Cash provided by operations (after working capital changes) 182 80
The financial information presented for the three months ended March 31, 2019 and March 31, 2020 is unaudited.
NET EARNINGS
The following table shows what contributed to the change in net earnings and adjusted net earnings (non-IFRS measure, see
page 3) in the first quarter of 2020, compared to the same period in 2019.
CHANGES IN EARNINGS THREE MONTHS
($ MILLIONS) ENDED MARCH 31
IFRS ADJUSTED
Net losses – 2019 (18) (33)
Change in gross profit by segment
(We calculate gross profit by deducting from revenue the cost of products and services sold, and depreciation and amortization (D&A), net of hedging benefits)
Uranium Higher sales volume (1) (1)
Lower realized prices ($US) (5) (5)
Foreign exchange impact on realized prices (3) (3)
Lower costs 17 17
Change – uranium 8 8
Fuel services Higher sales volume 1 1
Higher realized prices ($Cdn) 8 8
Change – fuel services 9 9
Other changes
Lower administration expenditures 2 2
Change in reclamation provisions 8 -
Higher earnings from equity-accounted investee 2 2
Change in gains or losses on derivatives (83) 10
Change in foreign exchange gains or losses 51 51
Change in income tax recovery or expense (7) (29)
Other 9 9
Net earnings (losses) – 2020 (19) 29
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ADJUSTED NET EARNINGS (NON-IFRS MEASURE)
Adjusted net earnings is a measure that does not have a standardized meaning or a consistent basis of calculation under IFRS
(non-IFRS measure). We use this measure as a meaningful way to compare our financial performance from period to period.
We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information
to evaluate our performance. Adjusted net earnings is our net earnings attributable to equity holders, adjusted to reflect the
underlying financial performance for the reporting period. The adjusted earnings measure reflects the matching of the net
benefits of our hedging program with the inflows of foreign currencies in the applicable reporting period, and has also been
adjusted for reclamation provisions for our Rabbit Lake and US operations, which had been impaired, and income taxes on
adjustments.
Adjusted net earnings is non-standard supplemental information and should not be considered in isolation or as a substitute
for financial information prepared according to accounting standards. Other companies may calculate this measure differently,
so you may not be able to make a direct comparison to similar measures presented by other companies.
The following table reconciles adjusted net earnings with net earnings for the first quarter and compares it to the same period
in 2019.
THREE MONTHS
ENDED MARCH 31
($ MILLIONS) 2020 2019
Net losses attributable to equity holders (19) (18)
Adjustments
Adjustments on derivatives 70 (23)
Reclamation provision adjustments (6) 2
Income taxes on adjustments (16) 6
Adjusted net earnings (losses) 29 (33)
Every quarter we are required to update the reclamation provisions for all operations based on new cash flow estimates,
discount and inflation rates. This normally results in an adjustment to an asset retirement obligation asset in addition to the
provision balance. When the assets of an operation have been written off due to an impairment, as is the case with our Rabbit
Lake and US ISR operations, the adjustment is recorded directly to the statement of earnings as “other operating expense
(income)”. See note 7 of our interim financial statements for more information. This amount has been excluded from our
adjusted net earnings measure.
Selected segmented highlights
THREE MONTHS
ENDED MARCH 31
HIGHLIGHTS 2020 2019 CHANGE
Uranium Production volume (million lbs) 2.1 2.4 (13)%
Sales volume (million lbs) 6.0 4.8 25%
Average realized price ($US/lb) 31.39 32.05 (2)%
($Cdn/lb) 41.44 42.80 (3)%
Revenue ($ millions) 248 207 20%
Gross profit ($ millions) 5 (3) (267)%
Fuel services Production volume (million kgU) 3.7 3.8 (3)%
Sales volume (million kgU) 3.1 3.0 3%
Average realized price ($Cdn/kgU) 29.91 27.26 10%
Revenue ($ millions) 94 83 13%
Gross profit ($ millions) 30 20 50%
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Management's discussion and analysis and financial statements
The first quarter MD&A and unaudited condensed consolidated interim financial statements provide a detailed explanation of
our operating results for the three months ended March 31, 2020, as compared to the same period last year. This news
release should be read in conjunction with these documents, as well as our audited consolidated financial statements and
notes for the year ended December 31, 2019, annual MD&A, and our most recent annual information form, all of which are
available on our website at cameco.com, on SEDAR at sedar.com, and on EDGAR at sec.gov/edgar.shtml.
Caution about forward-looking information
This news release includes statements and information about our expectations for the future, which we refer to as forward-
looking information. Forward-looking information is based on our current views, which can change significantly, and actual
results and events may be significantly different from what we currently expect.
Examples of forward-looking information in this news release include: our expectation that we are well positioned in a
strengthening uranium market; our expectations regarding our business resiliency and ability to self-manage risk, including our
financial capacity to manage the disruptions to our operations caused by COVID-19 and to fund 2020 capital requirements
without drawing on our credit facility; our expectation that we will continue to provide the fuel required to power nuclear
reactors to ensure essential services are available during this pandemic; our expectation to resume providing outlook
information when we have a sufficient basis to do so; our expected monthly share of Cigar Lake and McClean Lake care and
maintenance costs during the suspension; the expected four-week Port Hope UF6 conversion plant shutdown and Blind River
refinery production suspension; our views on the Tax Court of Canada’s decision and our expectation we will receive a Federal
Court of Appeal decision in 2020; our view on the uranium market response caused by the COVID-19 pandemic; and expected
dates for future announcements of financial results.
Material risks that could lead to different results include: that we may be required to draw on our credit facility to manage
disruptions to our business caused by COVID-19 and to fund 2020 capital requirements; that we may be unable to
successfully manage the current uncertain environment resulting from COVID-19 and its related operational, safety, marketing
or financial risks successfully, including the risk of significant disruption to our operations, workforce, required supplies or
services, and ability to transport and deliver uranium; that our business may not be as resilient in recovering from the
disruptions caused by the COVID-19 pandemic as we expect; that our Cigar Lake mine or Blind River refinery suspension or
Port Hope UF6 conversion plant shutdown may continue for an extended period; that we may face significant delays in
resuming production at our Cigar Lake mine, Blind River refinery or Port Hope UF6 conversion plant once we decide to do so;
there may be significant delays in restarting processing at the McClean Lake mill once a decision is made to do so; that our
views on the uranium market (including our positioning), providing fuel required to power nuclear reactors during this
pandemic, expected monthly share of Cigar Lake and McClean Lake care and maintenance costs during the suspension, or
timing of a Federal Court of Appeal decision, prove to be inaccurate; we are unsuccessful in an appeal of the Tax Court of
Canada’s decision or a subsequent appeal of that decision; we will be unable to resume providing outlook information for an
extended period; unexpected changes in uranium supply, demand, contracting, and prices; a major accident at a nuclear
power plant; changes in government regulations or policies; the risk of litigation or arbitration claims or appeals against us that
have an adverse outcome; the risk our strategies may change, be unsuccessful or have unanticipated consequences; the risk
our estimates and forecasts prove to be incorrect; and the risk that we may be delayed in announcing future financial results.
In presenting this forward-looking information, we have made material assumptions which may prove incorrect, including
assumptions regarding our ability to successfully manage the current uncertain environment resulting from COVID-19 and its
related operational, safety, marketing and financial risks successfully; the ability of our business to recover from the disruptions
caused by COVID-19; our ability to manage disruptions to our business caused by COVID-19 and to fund our 2020 capital
requirements without drawing on our credit facility; our ability to resume providing outlook information in the future;
assumptions regarding our ability to resume production at Cigar Lake and Orano’s ability to resume processing at their
McClean Lake mill after the period of suspension; assumptions regarding the period of temporary suspension of our Port Hope
UF6 conversion plant and our Blind River refinery and our ability to resume production; our expectations about the outcome of
our dispute with Canada Revenue Agency, including that the Tax Court of Canada ruling will be upheld on appeal and timing
of a Federal Court of Appeal decision; that our monthly share of Cigar Lake and McClean Lake care and maintenance costs
during the suspension will be as expected; our assumptions about uranium supply, demand, contracting and prices; the market
conditions and other factors upon which we have based our future plans and forecasts; our positioning in the uranium market;
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the absence of any adverse government regulations, policies or decisions; the successful outcome of any litigation or
arbitration claims or appeals against us; and our ability to announce future financial results when expected.
Forward-looking information is designed to help you understand management’s current views of our near-term and longer-term
prospects, and it may not be appropriate for other purposes. We will not necessarily update this information unless we are
required to by securities laws.
Conference call
We invite you to join our first quarter conference call on Friday, May 1, 2020, at 8:00 a.m. Eastern.
The call will be open to all investors and the media. To join the call, please dial 1-800-319-4610 (Canada and US) or 1-604-
638-5340. An operator will put your call through. The slides and a webcast of the conference call will be available from a link at
cameco.com. See the link on our home page on the day of the call.
A recorded version of the proceedings will be available:
on our website, cameco.com, shortly after the call
on post view until midnight, Eastern, June 1, 2020, by calling 1-800-319-6413 (Canada and US) or 1-604-638-9010
(Passcode 4314)
2020 quarterly report release dates
We plan to announce our 2020 second and third quarter results as follows:
second quarter consolidated financial and operating results: before markets open on July 30, 2020
third quarter consolidated financial and operating results: before markets open on November 6, 2020
The 2021 date for the announcement of our fourth quarter and 2020 consolidated financial and operating results will be
provided in our 2020 third quarter MD&A. Announcement dates are subject to change.
Profile
Cameco is one of the largest global providers of the uranium fuel needed to energize a clean-air world. Our competitive
position is based on our controlling ownership of the world’s largest high-grade reserves and low-cost operations. Utilities
around the world rely on our nuclear fuel products to generate power in safe, reliable, carbon-free nuclear reactors. Our shares
trade on the Toronto and New York stock exchanges. Our head office is in Saskatoon, Saskatchewan.
As used in this news release, the terms we, us, our, the Company and Cameco mean Cameco Corporation and its
subsidiaries unless otherwise indicated.
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Investor inquiries:
Rachelle Girard
306-956-6403
Media inquiries:
Jeff Hryhoriw
306-385-5221