UPDATE 1-Uranium producer Cameco scraps production target

Fri Feb 7, 2014 9:49pm EST
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By Rod Nickel

Feb 7 (Reuters) - Cameco Corp, the world's third-largest uranium producer, on Friday scrapped its lofty production target for the radioactive metal due to excess global supply in an uncertain market.

The Saskatoon, Saskatchewan-based company also reported an increase in fourth-quarter profit, but it fell short of Street expectations.

Uranium prices have been weak since an earthquake and tsunami struck Japan in March 2011, crippling the Fukushima-Daiichi atomic power plant, and leading it to shut down nearly all of its reactors.

Cameco said on Friday that challenges caused by the unclear pace at which Japan will re-start some of its reactors and by bloated global uranium supplies appear likely to persist for the near to medium term. In such a market, maintaining a fixed production target makes little sense, Cameco said, and it dropped its previous target of boosting supplies to 36 million pounds by 2018.

"That uncertainty has lasted for longer than had been expected," said Chief Executive Tim Gitzel, in a statement. "Although we still have an extensive portfolio of assets from which we can increase our production, the market incentive must be there."

Cameco, which owns the world's largest-producing uranium mine at McArthur River, Saskatchewan, forecast production of 23.8 to 24.3 million pounds of uranium in 2014, up modestly from 23.6 million pounds last year.

Even as it removed its production target, Cameco said it still expects to bring its high-grade Cigar Lake uranium mine in northern Saskatchewan into production in the first quarter, with ore processing to begin at Areva SA's McClean Lake mill by the end of the second quarter.   Continued...