Outlook for 2015

Our strategy is to profitably produce at a pace aligned with market signals, while maintaining the ability to respond to conditions as they evolve.

Our outlook for 2015 reflects the expenditures necessary to help us achieve our strategy. We do not provide an outlook for the items in the table that are marked with a dash.

See 2014 Financial results by segment for details.

2015 financial outlook

  Consolidated Uranium 1 Fuel Services NUKEM 1
  1. 1 Our 2015 outlook for sales volume in our uranium and NUKEM segments does not include sales between our uranium, fuel services and NUKEM segments.
  2. 2 For comparison of our 2015 outlook and 2014 results for revenue in our uranium and NUKEM segments, we do not include sales between our uranium, fuel services and NUKEM segments.
  3. 3 Based on a uranium spot price of $37.50 (US) per pound (the Ux spot price as of February 2, 2015), a long-term price indicator of $49.00 (US) per pound (the Ux long-term indicator on January 26, 2015) and an exchange rate of $1.00 (US) for $1.10 (Cdn).
  4. 4 This increase is based on the unit cost of sale for produced material and committed long-term purchases. If we make discretionary purchases in 2015, then we expect the overall unit cost of sales may be affected.
  5. 5 Direct administration costs do not include stock-based compensation expenses. See Corporate expenses for more information.
Production — 25.3 to 26.3
million lbs		 9 to 10
million kgU		 —
Sales volume 1 — 31 to 33
million lbs		 Decrease
5% to 10%		 7 to 8
million lbs U3O8
Revenue compared to 2014 2 Decrease
0% to 5%		 Decrease
5% to 10% 3		 Decrease
0% to 5%		 Increase
5% to 10%
Average unit cost of sales
(including D&A)		 — Increase
5% to 10% 4		 Increase
5% to 10%		 Increase
0% to 5%
Direct administration costs
compared to 2014 5		 Increase
0% to 5%		 — — Decrease
0% to 5%
Exploration costs compared to 2014 — Decrease
5% to 10%		 — —
Tax rate Recovery of
60% to 65%		 — — Expense of
30% to 35%
Capital expenditures $370 million — — —

Revenue and earnings sensitivity analysis

For 2015, a change of $5 (US) per pound in each of the Ux spot price ($37.50 (US) per pound on February 2, 2015) and the Ux long-term price indicator ($49.00 (US) per pound on January 26, 2015) would change revenue by $93 million and net earnings by $55 million.

Price sensitivity analysis: uranium segment

The table and graph below are not forecasts of prices we expect to receive. The prices we actually realize will be different from the prices shown in the table and graph. They are designed to indicate how the portfolio of long-term contracts we had in place on December 31, 2014 would respond to different spot prices. In other words, we would realize these prices only if the contract portfolio remained the same as it was on December 31, 2014, and none of the assumptions we list below change.

We intend to update this table and graph each quarter in our MD&A to reflect deliveries made and changes to our contract portfolio. As a result, we expect the table and graph to change from quarter to quarter.

Expected realized uranium price sensitivity under various spot price assumptions

(rounded to the nearest $1.00)
Spot Prices ($US/lb U3O8) $20 $40 $60 $80 $100 $120 $140
2015 41 46 55 63 72 80 87
2016 41 47 57 68 78 87 95
2017 41 46 57 67 78 87 94
2018 42 48 58 69 79 87 93
2019 43 49 59 69 78 85 91

The table and graph illustrate the mix of long-term contracts in our December 31, 2014 portfolio, and are consistent with our marketing strategy. Both have been updated to reflect deliveries made and contracts entered into up to December 31, 2014.

Our portfolio includes a mix of fixed price and market-related contracts, which we target at a 40:60 ratio. Those that are fixed at lower prices or have low ceiling prices will yield prices that are lower than current market prices.

Our portfolio is affected by more than just the spot price. We made the following assumptions (which are not forecasts) to create the table:

Sales

  • sales volumes on average of 27 million pounds per year, with commitment levels in 2015 through 2018 higher than in 2019
  • excludes sales between our uranium, fuel services and NUKEM segments

Deliveries

  • deliveries include best estimates of requirements contracts and contracts with volume flex provisions
  • we defer a portion of deliveries under existing contracts for 2015

Annual inflation

  • is 2% in the US

Prices

  • the average long-term price indicator is the same as the average spot price for the entire year (a simplified approach for this purpose only). Since 1996, the long-term price indicator has averaged 18% higher than the spot price. This differential has varied significantly. Assuming the long-term price is at a premium to spot, the prices in the table and graph will be higher.