Uranium giant helped by gold

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

During the three months ended Dec. 31, 2003, Cameco earned $30 million (or 53 per share) on revenue of $272 million, compared with year-earlier profits of $22 million (40 per share) on $271 million. Earnings from operations rose to $50 million from $44 million.

Cameco’s stronger gold earnings were offset by lower earnings in its uranium, conversion and electricity units. Earnings in 2003 were dampened by convertible-debenture charges, stock-compensation expenses, and a change in Ontario provincial-tax legislation, which led to a $5-million increase in provisions 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. 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 costs slipped US$40 to US$180 per oz. The company realized an average 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, largely as a result of a 5% decrease in average realized prices 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 earlier.

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

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

For all of 2003, Cameco earned a total of $205 million ($3.65 per share), compared with earnings of $44 million (78 per share) in 2002. This increase is chiefly attributable to higher earnings from its share of Bruce Power and increased gold profits. Again, lower earnings were turned in by the uranium business.

Looking ahead, Cameco expects higher revenues in the first quarter of 2004, but cautions that earnings will be moderately lower. Revenues and earnings from Bruce Power are expected to be lower as a result of a planned, 1-month maintenance outage at one of the Bruce A units, near 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 April 15 to shareholders of record at the close of business on March 31.

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