Sensing a weak uranium market, Canada- and Kazakhstan-based mining concern Cameco said in its second quarter statement that it would continue with a production halt at its McArthur River and Key Lake facilities “for an indeterminate duration.”
The company said that it would concede 700 jobs, including 550 at the two sites that were on temporary suspension. “This action will result in the permanent layoff” of those 550 employees, while leaving a reduced workforce of 200 at the McArthur River and Key Lake sites to keep the locations safe and secure and to keep up with maintenance assignments. An additional 150 employees would be let go from the company's corporate offices.
The company said it would cost between $5 million and $6 million per month to maintain the sites while production was suspended.
“We continue to expect to generate strong cash flow this year as we draw down inventory and focus on operating efficiently. However, we have not seen the improvement needed in the uranium market to restart McArthur River and Key Lake,” said Tim Gitzel, Cameco’s president and chief executive officer.
"As 2018 unfolds, we will continue to evaluate the market signals. However, we remain resolved in our efforts to maximise cash flow, while maintaining our investment-grade rating so we can self-manage risk and preserve the value of our tier-one assets," Gitzel noted.
Cameco's joint venture partner Orano has also agreed to extend the suspension. The deadline for Orano's repayment of up to 5.4m pounds of uranium concentrate to Cameco has been extended until 31 December 2023.
Cameco revised its annual outlook, now expecting revenue between $1,890 million (CAD) and $2,140 million (CAD). In its uranium division, delivery volumes would reach a high of 35 million pounds with revenue of between $1,550 million (CAD) and $1,640 million (CAD), over a realized price of $46.10 per pound “and our average unit cost between $40 per pound and $42 per pound.”
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