Case Study: Cameco Corporation

Cameco
Cameco Corporation (CCJ) has performed well this year up to now. The company’s revenue increased by 13 % in the second quarter and by 23 % in the first half of 2015. Gross profit also increased by 13 % in the second quarter and 16 % in the first half. The increase in gross profit of the company was led by a 50 % increase in the metric in the Fuel Services segment and 120 % increase in the NUKEM segment compared to the six month period of last year. Earnings after adjustments remained unchanged for the first six month period at US$ 0.29 per common share. The company generated an operating cash flow of US$ 68 million in the first half compared to -18 million in the same period last year.

In the Uranium Segment, production was 8
China is rapidly building new nuclear power plants. At present there are 26 operating nuclear reactors in China and 24 are planned or are under construction. India is also emerging as a nuclear superpower and has a definite and aggressive plan towards developing its nuclear fleet. It is operating 27 reactors with a total capacity of about 10,300 megawatts. At present India have 6 new reactors under construction and many more have been planned in the due course to cater to the fastest growing population in the world. The country expects to boost that number to 45,000 megawatts in the next two decades. Cameco has long term contracts in place with the nuclear operating companies of both these countries. The company has recently signed an important deal to provide India with seven million pounds of uranium over the next five years. Thus Cameco’s business is going to grow at the pace of these emerging economies.
From the already established nuclear power generating nations like France, US, Japan and Germany, some have diverted attention away from their nuclear programs to other energy sources. But Japan has again decided to start up most of its reactors and that number is more than 40. Round the globe, Cameco expects, more than 80 new reactors to go into service in the next 10 years boosting annual Uranium demand from 155 million pounds today to about 230 million pounds by the end of
Towards the exhaustion of their built up inventory, the hungry reactors will need uranium and The World Nuclear Association (WNA) projects supply side growth to be considerably lower than demand. As a result Uranium prices have already begun reversing their fall and this will induce the big buyers to start signing new contracts further increasing the price. And Cameco being one of the largest Uranium producers is bound to get huge benefits of the improving situation and bring more cheers for its shareholders in the long