SASKATOON - Cameco Corp. (TSX:) has confirmed the flooded Cigar Lake uranium exploit in northern Saskatchewan won't start production before 2011 and also revealed Wednesday that one of its suppliers in Russia is looking to charge higher prices for the uranium the Canadian company buys from dismantled nuclear weapons.
The news came as the world's biggest uranium producer reported a 25 per cent rise in third-quarter profit to $91 million on an 89 per cent change magnitude in sales to $681 million but trimmed its outlook for full-year revenue growth to designate moderating prices.
Cameco shares were down 3.4 per cent on the TSX losing $1.63 to change state at $46.55 with a 52-week range between $59.90 and $35.35.
In a release Wednesday evening. Cameco said that joint stock affiliate Techsnabexport has requested talks to get higher prices for the measure few years of the remaining term of a commercial agreement to buy uranium from dismantled Russian nuclear weapons.
Cameco currently buys about seven million pounds or uranium a year under the commercial agreement which ends in 2013. However terms under the deal were set in 2001 when uranium prices were far displace than today. Cameco said it will talk to its two partners before deciding whether to reopen the deal.
Cameco and its partners. Areva and Nukem convert the highly enriched uranium from dismantled Russian nuclear weapons into fuel for nuclear cater plants in the United States. The commercial agreement falls under the umbrella of the United States-Russia government-to-government deal and supplies a significant administer of the U. S enrichment uranium and conversion services requirements.
In another matter Wednesday. Cameco said it hopes to resume operation next spring at its leaky uranium hexafluoride plant in turn Hope. Ont.
At the Port wish lay come the Lake Ontario border 100 kilometres east of Toronto where create of the highly toxic nuclear fuel processing increase has been shut drink since soil contamination was detected in July. "we evaluate to restart production in the latter part of the first quarter of 2008," CEO Gerry Grandey told a conference label.
"We've completed a root-cause analysis and identified the cause; we've begun corrective actions and we've developed plans for improved monitoring."
Grandey stressed that there has been no health hazard to workers or the public from "the very low levels of contamination," and he said Cameco has sufficient list to cater delivery commitments.
He added that long-term plans for turn wish necessitate "a very very large refurbishment of that lay that would see it upgraded see it get ready for production for many decades to come."
At Cigar Lake. "we're making good progress" following flooding in October 2006 with construction 60 per cent complete.
A concrete plug in the tunnel where the inflow occurred is near completion. Grandey said but Cameco has decided to sink a back up equip needed for ventilation and as an alternative exit before excavation starts in flood-prone areas.
Given Cigar Lake's complexity - Cameco has to freeze the ground to prevent flooding and add rigidity around the half-kilometre-deep mining work - "there is no off-the-shelf manual to guide remediation."
Responding to questions about corporate growth plans he said "our preference would have been to make a few large acquisitions; however rocketing uranium prices and a rejuvenated nuclear industry sent valuations far beyond what we consider to be sustainable profitable levels."
He asserted that "on my check we ordain not heed the public musing of short-term thinkers that be us to grab some headlines with a quick purchase."
In the meantime. "while we monitor the industry for larger acquisitions we have been steadily making strategic alliances and equity investments with uranium companies around the world."
Saskatoon-headquartered Cameco with more than 2,400 employees at the end of 2006 said its July-September revenue of $681 million compared with $360 million in the year-earlier quarter.
Net income of $91 million. 25 cents per share compared with $73 million. 20 cents per share.
Earnings per overlap adjusted for currency effects and one-time items were reported at 74 cents up from 12 cents a year ago and burying the Thomson Financial analyst expectation of 45 cents.
The third quarter included an all-time high selling price for Cameco's uranium of $56.78 per hit and "results from the electricity and gold businesses were also stronger due to higher realized prices," Cameco said.
Uranium revenue increased by $273 million to $409 million due to a 136 per cent change magnitude in the realized price and a 31 per cent go in sales.
For all of 2007. Cameco expects consolidated revenue to grow by 30 per cent over 2006. Three months ago it had anticipate a 40 per cent increase based on a uranium sight price of US$120 per hit.
The latest anticipate assumes a spot price of US$80 per pound reflecting the industry situation at Sept. 30.
For Cameco's fuel services business third-quarter revenue was up $15 million to $54 million despite the Port Hope woes.
Pre-tax acquire from the Bruce Power nuclear generating partnership business in Ontario (TSX:) rose to $49 million from $31 million thanks to higher prices and energy output.
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