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The Q2 results for a slew of major and junior uranium companies are in, and most show that while production has increased, profits and sales have not followed suit.
Several uranium companies, both major and junior, released second quarter reports this past month. Most show that profits and sales are down while production is up, a situation that reflects falling U308 prices in a post-Fukushima market. This week, the uranium spot price fell even further, to $49 per pound.
“The uranium spot market continues to show little activity with very few parties holding on to expectations for a turnaround before the end of August and summer vacations,” said TradeTech, an industry consulting firm.
Cameco profits down, but production on target
Cameco (TSX:CCO,NYSE:CCJ), one of the world’s largest publicly-traded uranium companies, reported an 85 percent drop in profits for the second quarter of 2012. Net earnings for the quarter reached $8 million (2 cents per share) compared to the $55 million (14 cents per share) seen during the same quarter last year. The company cited lower sales — which fell 16 percent — a canceled sales contract charge, depressed uranium prices, lower production at the McArthur River mine, and heavy exploration and administration costs as contributing to the disappointing figure.
However, management is still confident that Cameco will sell between 31 and 33 million pounds of U308 this year and meet its production target of 40 million pounds annually by 2018.
“Our operations performed well and we are pleased with the continued progress we see, particularly the productivity improvements we made in our 2013 production plan at McArthur River and our success in further advancing our Cigar Lake project toward first production,” said Tim Gitzel, Cameco’s CEO and president. “So we continue to pursue our growth plans with an eye to the demand growth we see on the horizon.”
On Tuesday, Cameco shares were trading at $20.44 on the TSX, down from $23.36 this time last year.
Denison revenues down, but development and exploration on track
Denison Mines (TSX:DML,AMEX:DNN), which holds a 22.5 percent interest in the McClean Lake uranium mill, one of the world’s largest uranium processing facilities, recently reported a net loss from continuing operations of nearly $1.7 million, or 1 cent per share for the second quarter, compared with a net loss of more than $9.9 million, or 3 cents per share, for the same period in 2011. Total revenues for the second quarter declined to $2.4 million from $11.8 million in the second quarter of last year.
The company’s US mining division, which includes the White Mesa uranium mill and producing mines in the Western United States, was acquired by Energy Fuels (TSX:EFR) at the end of June 2012.
“Denison’s plans for Canada, Zambia and Mongolia are not anticipated to change for 2012 as a result of the Transaction,” a recent press release states. “Total expenditures on development and exploration projects in 2012, excluding the U.S., are estimated at $22.3 million.”
On Tuesday, Denison shares were trading at $1.31 on the TSX, down from $1.68 this time last year.
Uranium One profits down, but production rising
Uranium One (TSX:UUU), which is 51 percent owned by Russia’s ARMZ, reported this week that its second quarter profits fell 2 percent from the same period last year to 29.2 million, or 3 cents a share. Adjusted earnings were $8.8 million or 1 cent per share, half the amount that analysts polled by Thomson Reuters projected, and down significantly from the $27.5 million seen a year ago. Revenue for the quarter declined 14 percent to $96.8 million while sales volumes dropped 5 percent to 1.9 million pounds in the second quarter alongside a 28 percent rise in production to 3 million pounds.
On Tuesday, Uranium One shares were trading at $2.23 on the TSX, down from $3.06 this time last year.
Paladin production curtailed, but sales reach record high
Paladin Energy (TSX:PDN,ASX:PDN), which had to curtail operations at its Kayelekera mine in Malawi, reported increased production of 21 percent year-on-year to 6.89 million pounds of uranium oxide from both its Kayelekeara and Langer Heinrich mines. “Paladin has now surpassed our production forecast for the third consecutive quarter. This compares very favorably to recent history where the company missed ten of eleven quarters,” said the company.
Sales for the second quarter reached a record 2,241,213 pounds of U308 at an average sales price of $56.16 per pound, creating revenue of $125.8 million.
Last week, the mid-tier uranium company publicly decried Kamuzu Chibambo’s suggestion that the deal between Paladin and the Malawi government be reworked to reflect a 40 percent equity stake for the government rather than the current 15 percent. Chibambo is the president of the People’s Transformation Party.
The company’s general manager for international affairs, Greg Walker, warned against such a measure in an emailed response to Malawi’s two leading newspapers, The Nation and Daily Times, saying, “[a] key prerequisite of the very substantial foreign investment in Kayelekera was the signing of the Kayelekera Development Agreement, [which] provided a 10-year stability period to provide comfort to project lenders and shareholders, given Malawi’s lack of track record as a host nation for a major resource investment,” wrote Walker.
“It was to protect against the risk that government in an untested jurisdiction would seek to change the rules once a substantial investment has been made [and] this is now precisely what some people are suggesting, which sends a very negative message to potential foreign investors in the country.”
On Tuesday, Paladin shares were trading at $1.30 on the TSX, down from $2.34 this time last year.
Uranerz reporting net loss, but no long-term debt
Uranerz Energy (TSX:URZ,AMEX:URZ), a US-based miner nearing production at its Nichols Ranch ISR uranium project in Wyoming, released its financial results for the second quarter, reporting a net loss of over $1.6 million compared to a net loss of above $4.2 million for the same period in 2011. The company also reported cash and cash equivalents of more than $19.2 million with working capital of nearly $16.9 million and no long-term debt.
On Tuesday, Uranerz shares were trading at $1.39 on the TSX, down from $2.47 this time last year.
Uranium Resources sufficiently funded for operations
Uranium Resources (NASDAQ:URRE) reported that cash holdings at the end of the second half of 2012 were at $2.8 million compared to $2.9 million during the half ended December 31, 2011. Cash expenditures for operating and investing activities during the first two quarters of this year totaled $11.5 million. “With current cash on hand, the RCF option and the ATM agreement, the Company expects it has sufficient funding for approximately twelve months of operations,” the company said in its press release.
On Tuesday Uranium Resources shares were trading at 0.51 cents on the NASDAQ, down from $1.43 this time last year.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.