Cameco profit falls after write-down on Australia project

Fri Feb 8, 2013 8:52pm EST
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* Q4 EPS C$0.11 v C$0.67 year ago

* Uranium market weakened since purchase of Kintyre asset

Feb 8 (Reuters) - Cameco Corp, the world's biggest publicly traded uranium producer, reported sharply lower quarterly profit on Friday after taking a C$168 million ($168 million) write-down on an Australian exploration project, and said the current quarter would likely produce weaker earnings as well.

The Saskatoon, Saskatchewan-based company, which produces 16 percent of the world's uranium, took the charge on its Kintyre project because of a weakened uranium market since Cameco bought the asset in 2008. Cameco also noted that there was no increase in the project's mineral resources in 2012, and that it has decided not to conduct a feasibility study.

Fourth quarter profits were hurt further by a lower year over year uranium spot price, Cameco said.

The uranium market has been in a downward spiral since a massive earthquake and tsunami struck Japan in March 2011, crippling the Fukushima-Daiichi atomic power plant.

Countries from Japan to Germany have reduced their dependence on nuclear power in the aftermath of the worst meltdown since Chernobyl, sending the spot price for uranium, the material that fuels reactors, sharply lower.

Cameco said it expects to produce 23.3 million pounds of uranium in 2013, up from 21.9 million in 2012, and sell 31 to 33 million pounds in 2013, after adding in planned purchases. Last year, Cameco sold 32.5 million pounds of uranium.

The company's volumes will see a modest boost if it produces, as it expects, its first pounds at the Cigar Lake project in northern Saskatchewan. Cigar Lake is the world's largest undeveloped high-grade uranium deposit.   Continued...