Earnings down for Saskatoon uranium giant

Lower sales and lower prices drove Cameco's earnings down to $9 million in its first quarter of 2013.

Lower sales, lower prices and higher costs pushed down first quarter results at Cameco.

So far this year, the Saskatoon-based uranium company earned $9 million — down 93 per cent from the $129 million Cameco made in the first quarter of 2012.

"Our results this quarter are consistent with what we had projected," said Tim Gitzel, Cameco's president and CEO. "We remain on track with our annual outlook, and have increased our focus on streamlining and efficiency in order to remain competitive."

The company recently laid off a number of staff at its Saskatoon headquarters.

Cameco said most of the power utilities that buy its nuclear products are locked into contracts until 2016. 

Its Bruce Power arm is generating less power and faces higher operating costs. Cameco has a 31 per cent interest in Bruce Power and supplies it with nuclear fuel. 

Cameco faced higher administrative costs affiliated with last year's acquisition of Nukem, a German nuclear fuel broker and trading company.   

$1.4B tax dispute

A tax fight with the Canada Revenue Agency (CRA) has also chipped away at Cameco's bottom line.

The CRA disputes the way Cameco has kept its books for the past decade, for overseas marketing and sales.

The company said the CRA could issue a tax bill for up to $1.4 billion dollars in back taxes, for the years 2003 to 2012. In a news release, Cameco said, "We are confident we will be successful in our case," and expects to recover interest and instalment penalties it's already paid.   

Long term nuclear prospects 'strong'

Cameco said over the coming years, it expects changes to Saskatchewan's royalty regime will be positive, although the details are not yet finalized.

Production is up at Cameco's McArthur River and Key Lake mines in northern Saskatchewan, compared to this time last year. 

The company also believes reactors in Japan will go back online later this year, which should give a boost to the nuclear industry worldwide.

New reactors are also under construction in India and China. Gitzel said uncertainty continues to hamper the industry, but "the long term picture for nuclear continues to be strong."