Cameco Says Long-Term Uranium Market Will Remain Strong as Q1 Profits More Than Double

Source: Mineweb.com (5/13/08)

Cameco President and CEO Gerald Grandey noted that long-term market prices have only declined by $5 to $90 per pound. Meanwhile utility companies' uncovered uranium requirements are growing at the same time uranium suppliers are already heavily committed.

The world's largest uranium miner, Canada's Cameco, reported a 125% increase in first-quarter 2008 net earnings as President and CEO Gerald Grandey predicted that company will continue to generate "strong returns under any future spot price scenario."

While a $30 per pound discrepancy currently exists between spot and long-term markets, Cameco executives insisted that the difference will be substantially reduced in the long term. During a conference call Tuesday to discuss Cameco's quarterly results, Grandey noted that long-term market prices have only declined by $5 to $90 per pound. Meanwhile utility companies' uncovered uranium requirements are growing at the same time uranium suppliers are already heavily committed.

"The result is the long-term market price reflects the uncertainty associated with tight supply and uncovered requirements several years out in time," he explained.

Grandey suggested that utilities are willing to pay a premium for long-term uranium supplies for several reasons:

1) Concern uranium prices will rise over the long term

2) Some customers prefer price predictability for a portion of their long-term needs

3) Some customers are willing to pay a premium for long-term security of supply

To meet demand Cameco is targeted an 86% production increase over its 2007 level by 2016.

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