Today we will continue talking about the uranium industry and specifically we will talk about Cameco.
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Cameco name comes from: – Canadian Mining and Energy Corporation” and company was formed in 1988 by the merger and privatization of two corporations owned by local provincial government and federally owned company: Eldorado Nuclear Limited (known previously as Eldorado Mining and Refining Limited) and Saskatchewan Mining Development Corporation (SMDC).
The new company was initially owned 62% by the provincial government and 38% by the federal government. The initial public offering (IPO) for 20% of the company was conducted in July, 1991. Government ownership of the company decreased over the next eleven years, with full privatization occurring in February, 2002.
In 1996, Cameco acquired Power Resources Inc., the largest uranium producer in the United States. This was followed in 1998 by the acquisition of Canadian-based Uranerz Exploration and Mining Limited and Uranerz U.S.A., Inc.
In 2011, Cameco signed an agreement with Talvivaara Mining Company where Cameco would pay US$60 million to construct a uranium extraction circuit at the Talvivaara nickel-zinc mine in Sotkamo. Talvivaara would then pay back the initial construction costs in the form of uranium concentrate; once the initial costs were paid Cameco would continue to purchase the uranium concentrate at a pricing formula based on market price on the day of delivery.
In 2012, it acquired a nuclear fuel intermediary Nukem Energy.
In 2016, Cameco suspended operations at its Rabbit Lake mine, due to low uranium prices. In 2017, it suspended operations for at least 10 months at its McArthur River mine and Key Lake mill, converting that to an shutdown in 2018 involving the layoff of about 700 employees.
This year in 2020 in September Cameco is planning to reopen some of those mines. It all depends on the prices of uranium on the market.
Most of Cameco’s operating experience is in the Athabasca Basin of northern Saskatchewan Canada. It is a home to the world’s largest, high-grade uranium deposits with ore grades up to 100 times the world average. Cameco’s operations here include the two highest grade mines in the world: Cigar Lake and MC Arthur river.
Cameco right now is suffering because of the extensive bear market in the uranium industry. All the companies processing and mining uranium are suffering right now. Bear market in the uranium industry started in 2011 after the Fukushima accident. But for the past 3 years we have seen prices of uranium moving up from $20 lb spot price in 2017 to $30 per lb right now in 2020.
You may call this a stealth rally because nobody is talking about this. This stealth rally indicates that demand is picking up and due to the temporary closing some of the biggest uranium production mines like Cigar Lake and McArthur River it’s just a matter of time when we’ll eventually see prices of uranium increasing more and more.
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