Second quarter financial results are in and it appears to be a pretty good year so far for Cameco.
For the six months ending June 30, the Saskatchewan uranium mining company recorded a gain of six per cent in revenue, an increase of 25 per cent in gross profit and a gain of 502 per cent in net earnings.
Cameco says the improved financial picture is due to a number of factors including higher sales volumes, higher Canadian dollar average realized prices and the settlement of a dispute regarding a long-term supply contract.
The company also realized an after tax gain of $127 million from the sale of its interest in Bruce Power in March.
Cameco CEO Tim Gitzel says overall the long-term market appears bright for uranium including some positive recent developments in Japan.
“There have been developments out of Japan this quarter supporting a more positive long term outlook,” he says. “In total, Japan’s new regulator has received restart applications from nine utilities for 19 reactors.”
A number of nuclear reactors in Japan remain offline as the result of a tsunami followed by an earthquake in 2011.
Gitzel also says the company remains confident it is pursuing the right strategy in an ongoing tax dispute with the Canada Revenue Agency.
“We think we are in a very solid position as far as the CRA case goes. We have received the 2009 assessment, we may get the 2010 assessment this year but I can tell you that hasn’t changed our position at all. We think we are in a very solid position legally and we are going to see it through.”
The tax dispute revolves around a subsidiary company Cameco set up in Switzerland in 1999 in which it has a 17-year deal to sell the uranium it produces in Canada to Cameco Europe before it reaches the end customer.
As a result, Cameco is able to sell uranium to Cameco Europe at lower prices reflective of 1999 while recording little or no profit in Canada.
Instead, profits are recorded in Zug, Switzerland where tax rates are lower.
Cameco remains adamant that it has filed its taxes properly.
The second quarter report also notes the Key Lake extension project’s environmental assessment has been approved by the Canadian Nuclear Safety Commission allowing for increased future production.
The extension project is expected to increase the mine’s annual production rate to 25 million pounds per year.