Canada’s top uranium producer Cameco (TSX:CCO) (NYSE:CCJ) logged Friday a surprise quarterly loss and cut its full-year production outlook, due mostly to weak prices for the radioactive metal and issues at two of its operations.
The Saskatoon, Saskatchewan-based miner said it now expects to produce 24.0 million pounds this year, down from an earlier forecast for 25.2 million pounds. It partly attributed the downward review to delays at its Key Lake mine and lower-than-expected production at its Smith Ranch-Highland operation.
Weak uranium prices continue to weigh on Cameco’s and the whole industry. They have fallen more than 50% since the Fukushima disaster in 2011 and have since remained low, mainly due to oversupply and excess inventory in the industry.
“There has been little change to the market and we continue to face difficult conditions, with the average year-to-date uranium spot price down about 20% compared to the 2016 annual average,” Cameco president and CEO Tim Gitzel confirmed in the statement.
Gitzel noted the company has taken actions taken to address the situation, especially on the way global marketing activities are organized. As a result, Cameco incurred $5 million in one-time costs, but said it expected to save between $8 million and $10 million per year once fully implemented.
The company is also trimming capital spending guidance to $160 million for the year, compared with earlier expectations for $175 million.
The revised outlook came as Cameco says it lost $124 million or 31 cents per share in the three months to Sept. 30, compared with a profit of $142 million or 36 cents per share a year ago.
On an adjusted basis, the uranium miner said it lost $50 million or 13 cents per share its latest quarter, compared with a profit of $118 million or 30 cents per share in the same period last year. Revenue fell to $486 million compared with $670 million.
“We can’t control the timing of a market recovery, so we continue to focus on our tier-one strategy; on being as streamlined and efficient as possible; responsibly managing our production, inventory and purchases; protecting and extending the value of our contract portfolio, and maximizing cash flow while maintaining our investment-grade rating,” Gitzel said.
Cameco’s most immediate goal, he added, is to remain competitive and in a position to be among the first to respond when the market calls for more uranium.
The company’s US-listed shares fell by 5.7% at $8.34 in premarket trading. Year-to-date, they are down more than 20%.