Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Cameco missed on the bottom line with a reported -$0.11/share adjusted loss compared to a consensus of -$0.03/share in its 2Q financial released today.
Cameco had net losses of $2 million and adjusted net losses of $44 million.
Cameco attributed the loss largely to the impact from the TEPCO contract cancellation, a change in the Saskatchewan corporate tax rate which impacted the deferred tax asset, and the write-down in value of NUKEM’s inventory. A revenue beat of $470M topped both our and consensus estimates totaling $409M and $383M, respectively, on higher than forecast uranium delivery volumes.
“We continue to face difficult market conditions, with the average year-to-date uranium spot price down 13% compared to the 2016 average. Our weaker outlook for 2017 compared to 2016 reflects the low uranium prices and the effects of the actions we have taken to address them. These actions are part of a very deliberate and disciplined strategy to strengthen the company in the long term,” said president and CEO, Tim Gitzel.
Cameco listed some of its cost cutting.
“For the first six months of the year, the average unit cost of sales (including depreciation and amortization) in our uranium segment was down 15%, our cash production costs were down 23%, exploration costs were down 41%, and direct administration costs were down 28%. Our planned capital expenditures for 2017 are also 20% lower than in 2016,” said Gitzel.
With material from Cantor Fitzgerald’s research note.
Creative Commons image by Mark Goebel
