CAMECO CORP. (Toronto symbol CCO; www.cameco.com) is the world’s largest uranium producer. It supplies 14% of global mine production and has large, high-grade reserves, low-cost operations, significant market share and many mines.
Cameco also owns 31.6% of Ontario’s Bruce Power partnership, which operates four of the eight reactors at the Bruce plant, North America’s largest nuclear complex. As well, it owns NUKEM, a trader and broker of nuclear fuel products and services.
In the three months ended September 30, 2013, Cameco’s revenue jumped 101.7%, to $597 million from $296 million a year earlier. It sold more uranium in the latest quarter, and its selling prices also rose. Earnings per share climbed to $0.53 from $0.12.
Cameco aims to nearly double its uranium output, to 40 million pounds, by 2018. Its Cigar Lake mine, which starts up next year, will contribute much of that increase.
Mining stocks: End of uranium supply from converted Russian nuclear weapons a plus for Cameco
There are currently 72 nuclear reactors under construction globally, mostly in China and India, with plans to build another 162.
Another plus is that the supply of uranium converted from Russian nuclear weapons ended with the recent conclusion of the 20-year Megatons to Megawatts program.
Cameco’s exploration efforts are now focused in Canada, Australia, Kazakhstan and the U.S. However, it may now consider Greenland for potential uranium exploration projects.
Greenland’s parliament has agreed to remove a 25-year-old ban on uranium mining. Greenland wants to promote the mining of rare earths. The country has the potential for some very large rare-earth mines. But rare earth deposits often hold uranium as well, so the ban on uranium mining effectively blocked exploration for rare earths.
In the latest edition of Stock Pickers Digest, we look at both the near-term and long-term outlook for uranium prices. We also consider the potential for further development of nuclear reactors with hundreds of millions around the globe still living without electricity. We conclude with our clear buy-hold-sell advice on the stock.
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