Cameco profit falls despite higher revenue

Sat Feb 14, 2009 12:11am EST
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NEW YORK (Reuters) - Canada's Cameco Corp said on Friday its fourth-quarter profit nearly halved despite higher sales and earnings from its gold and uranium business.

The world's top uranium producer earned C$31 million ($25 million), or 8 cents a share, in the three months ending December 31. That was down from C$61 million, or 17 cents a share, in the year-earlier period.

Quarterly revenue rose to C$918 million from C$494 million, and earnings excluding items such as unrealized losses on financial instruments and restructuring costs rose to 49 cents from 15 cents.

Uranium spot prices have weakened from record highs of $136 a pound hit in 2007, and were at $47 a pound this week. But Cameco sells most of its uranium through long-term contracts that do not closely follow spot prices.

For the year, Cameco missed its uranium production forecast of 17.7 million pounds by 0.7 million pounds.

The company said it expects to produce 20.1 million pounds of uranium this year. Cameco produces the bulk of its uranium at the McArthur River mine in northern Saskatchewan.

The company's main development asset is the Cigar Lake project, located just up the road from McArthur River, which was originally supposed to come to production in 2007, but has been repeatedly delayed following a flood in 2006.

Cameco said in November it would look to cut costs and defer projects due to the credit crunch. The company has to rely on short-term debt to fund fluctuations in working capital due to the uncertain timing of contract uranium sales.

(Reporting by Ritsuko Ando; Editing by Jan Dahinten)