At a time when the worst appears to be over in the uranium industry, Eldorado Nuclear finds itself unable to enjoy the benefits of a firming market for its product. The banks, which financed Eldorado’s expansion, appear to be getting in the way.
As at Dec 31, 1986, Eldorado had long-term debt of $547 million up from $513 million at the same time in 1985. The debt load is so great that in 1986, almost 50% of the company’s sales revenue of $202.2 million, went to servicing debt costs. Coming as no surprise then, is a loss of $64 million compared to a loss of $57 million in 1985.
The poor financial performance comes when the much-troubled uranium sector happens to be improving in terms of price and demand. At Eldorado, the company’s order book for uranium concentrates and conversion services is at a 20-year high. Also, 80% of planned uranium production for 1987 has been committed for sale, the company says in its annual report.
In Saskatchewan, where Eldorado operates the Rabbit Lake mill and holds an interest in the big Key Lake mine, uranium production increased by 33% to 2,032 tonnes compared to 1,536 tonnes in 1985. The Rabbit Lake mill upped its output by 48% to 1,227 tonnes last year. The large increase is attributable to the Collins Bay-B orebody, which is being mined via open pit.
Uranium operations generated earnings of $43.6 million, down from $64 million in 1985. This fact is expected to be of interest to any prospective buyer of the company. The major shareholder, the Canadian government, intends to privatize Eldorado in the future. The Canada Development Investment Corp., another crown agency, is working towards this end.
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