Cameco benefits from Chinese investment

Updated: 2012-02-11 15:37


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VANCOUVER - Canadian mining giant Cameco, which has been the beneficiary of considerable Chinese investment, saw earnings soar 29 percent during its fourth quarter compared to the same period last year.

In a newly released financial statement, the company reported $265 million in net income in the final quarter of 2011, up from $206 million in the fourth quarter of 2010.

Along with the fourth quarter financial summary, Cameco also released its year-ending report, which saw net income increase compared to 2010.

"2011 was also strong from a financial and operational perspective,"  Cameco CEO Tim Gitzel said. "We saw high uranium sales volumes and record realized prices, which combined to generate almost $2.4 billion in revenue for our nuclear business - 12 percent higher than in 2010 and a record for the company. $1.6 billion of that was from our uranium segments."

Cameco, one of the world's largest uranium producers, signed an agreement in 2010 to supply China's Guangdong Nuclear Power with 29 million pounds of uranium through to 2025.

Canadian Prime Minister Stephen Harper has been touring China this week and managed to secure a deal that would see business between the two countries increase even more.

"(February 9) it was announced that Canada and China have agreed on a protocol to allow deliveries of Canadian uranium concentrate to the world's fastest-growing nuclear market," Gitzel said.

"Once ratified, this will help us build our position as a key uranium supplier to China and grow employment and investment in Canada's uranium mining industry. We commend the governments of both countries for getting this done."

The protocol will allow the shipment of Canadian uranium directly into China. Some 50 million pounds of uranium is expected to ship from Cameco's operations to China over the next 15 years.

Despite challenges such as lower uranium prices and the Fukushima nuclear meltdown that rocked Japan last year, Gitzel said "it was also a year of record performance for us at Cameco."

Revenue went from $673 million in the fourth quarter of 2010 to $977 million in the final quarter of 2011 - a jump of 45 percent. Gross profits in the fourth quarter also climbed to $353 million, up from 252 million compared to the same time last year.

Cameco managed to generate 13.8 million pounds of uranium in terms of sales volume. Gitzel said the company benefited from a good safety record and stronger than expected production at a number of its facilities.

"For us it's been business as usual and in some ways, even a little better than usual," he said. "Looking forward, we remain confident in the long-term fundamentals of the nuclear industry. With our extraordinary assets, contract portfolio, employee expertise, industry knowledge and financial strength, we are well positioned to meet the growing demand for uranium and add value for our shareholders."