Cameco’s earnings grow

Increased earnings from the gold business helped Cameco (CCO-T) boost fourth-quarter earnings by 36% despite flat revenues.

During the three months ended Dec 31, Cameco earned $30 million (or 53 per share) on revenue of $272 million, compared with year-ago net earnings of $22 million (40 per share) on $271 million. Earnings from operations rang in at $50 million versus $44 million.

Cameco said stronger gold earnings were offset by lower earnings in the uranium, conversion and electricity units. Earnings in 2003 were cut into further by convertible debenture charges, stock compensation expenses and a change in Ontario provincial tax legislation, which led to a $5-million increase in its provision for future taxes.

Fourth-quarter revenue from the gold business soared 77% to $39 million thanks to an 83% increase in sales volumes. The 67%-owned Kumtor mine in the Kyrgyz Republic produced 69,226 oz. of gold, up 46% from 2002 owing mostly to increased mill feed grade, which averaged 5.7 grams per tonne, up from 4 grams in 2002. Recovery rates also climbed to 83% from 80% while cash cost slipped US$40 to US$180 per oz. The company averaged US$375 for each ounce of gold sold during the quarter, up from US$304 in 2002.

Fourth-quarter revenue from the uranium business fell 7% to $186 million thanks in large to a 5% decrease in average realized price and a 2% drop in sales volume. Cameco attributes the lower selling price to a strengthening Canadian dollar and deliveries under lower fixed-priced contracts. Those factors more than offset any benefits from a rising uranium spot price, which increased 37% to US$ $13.62 from a year ago.

The uranium business produced 2.8 tonnes of U₃O₈ during the quarter, up from 1.8 tonnes.

Cameco also posted lower revenue from its uranium-conversion and electricity businesses.

For all of 2003, Cameco’s net earnings rang in at a record $205 million ($3.65 per share), compared with earnings of $44 million (78 per share) in 2002. This increase is thanks mostly to higher earnings from its share of Bruce Power and increased gold profits. Lower earnings were turned in by the uranium business.

Looking ahead, Cameco expects higher revenues in the first quarter of 2004 compared to the corresponding period of 2003, but says earnings will come in moderately lower. Earnings from Bruce Power are expected to be lower with higher unit costs expected during a planned, one-month maintenance outage at one of the Bruce A units towards the end of the first quarter. Cameco also predicts lower electricity spot prices.

The company expects to mine a total of 9,480 tonnes of U₃O₈ in 2004, up 12% from 2003.

Cameco has declared a regular quarterly dividend of 15 per share payable on Apr. 15, 2004, to shareholders of record at the close of business on Mar. 31, 2004.

At the end of 2003, Cameco’s long-term debt was $243 million, up $18 million from year-end 2002; the company also had $84.1 million in cash, up from $58.1 million.