Quarterly Reports - 2019 - Q1

On May 1, 2019, Cameco reported its consolidated financial and operating results for the first quarter ended March 31, 2019 in accordance with International Financial Reporting Standards (IFRS).

“Our results reflect the outlook we provided for 2019 and the normal quarterly variation in contract deliveries, which are weighted to the second half of the year," said Tim Gitzel, Cameco’s president and CEO.

“2018 ended with a lot of moving pieces, and that hasn’t changed through the first quarter. In fact, a number of pieces have been added. Despite this, we continue to execute on our strategy to add long-term value, doing what we said we would do.

“We see growing support for nuclear, and with more than 50 reactors under construction, demand is certain and predictable. However, supply is uncertain and declining. We have seen meaningful production cuts, and reductions in producer inventories, which has led to increased demand for uranium in the spot market from producers and financial players.

“As a result of the uncertainty created by declining primary supply and all the other moving pieces, we are starting to have off-market conversations with some of our best and largest customers about what it takes to support the operation of our tier-one assets longer term. These customers are recognizing the risk overreliance on finite sources of supply poses to security of supply longer term and want first mover advantage. In light of market access and trade policy issues affecting our market, they are increasingly looking for stable, commercial suppliers with long-lived assets and a proven operating track record.

“And while we are encouraged by the contracting activity, make no mistake, there is still a long way to go before we decide to restart McArthur River/Key Lake.”

• Net loss of $18 million; adjusted net loss of $33 million: Results are as expected driven by normal quarterly variations in contract deliveries and in accordance with our 2019 outlook. Adjusted net earnings is a non-IFRS measure, see page 3.
• Updated outlook for 2019 average realized price and unit cost of sales: We have updated the outlook provided for 2019 average realized price, unit cost of sales, and average purchase price to reflect the change in the uranium spot price since we released our fourth quarter results. See Outlook for 2019 in our first quarter MD&A.
• Increased long-term commitments to sell uranium in uranium segment: Based on our recent contracting activity, our long-term commitments to sell uranium have increased by 25 million pounds. Including our 2019 deliveries, we now have about 150 million pounds under contract in our uranium segment (previously 125 million). See Strategy in action in our first quarter MD&A.
• CRA tax dispute: On April 30, 2019, we announced the decision of the Tax Court of Canada (Tax Court) in our application to recover costs in the amount of about $38 million ($20.5 million for legal fees and $17.9 in disbursements), which were incurred over the course of this case. The Tax Court awarded $10.25 million in legal fees incurred, plus an amount for disbursements, which is yet to be determined. The amount of the award for disbursements will be determined by an officer of the Tax Court, which we expect will happen before the end of the year. We are optimistic we will recover all, or substantially all, of the $17.9 million in disbursements. See Transfer pricing dispute in our first quarter MD&A.
• Updated technical report for McArthur River/Key Lake filed: The report filed under Canadian Securities Administrators’ National Instrument 43-101 reflects a significant improvement on the economics since the last report filed in 2012 and highlights the value this asset is expected to create when it comes back into operation. See McArthur River Operation Northern Saskatchewan, Canada National Instrument 43-101 Technical Report on our website at cameco.com, or Uranium 2019 Q1 updates in our first quarter MD&A.