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« Denison Mines Corporation: Revisited | Main | Sub-Prime Crisis: What If? »
Wednesday
Feb062008

Cameco Corporation: Port Hope Clean Up Impacts Bottom Line

Cameco logo 07 Feb 08




The world's number one uranium producer reported earnings of 17 Canadian cents a share, for the quarter, up from 11 Canadian cents a share a year earlier, however fell short of analysts expectations.

In a statement Cameco said that the:

Port Hope fuel services production and SFL supply totalled 1.7 million kgU in the fourth quarter of 2007 compared to 5.2 million kgU in the fourth quarter of 2006. Suspension of UF6 production at Port Hope continued in the fourth quarter as work progressed to determine the extent of subsurface contamination, assess possible methods of managing it, and determine how to prevent future contamination”.

Although revenue was down to C$494 million from $512 million, Cameco's results were helped by a 49 percent rise in realized uranium prices, which offset the impact of a 39 percent drop in uranium sales volumes. The sales of uranium dropped to 5.5 million pounds from 9.0 million pounds for the quarter, however sales were at an average price of $38.92 a pound, up from a year-before $22.35.

The news did not do much for the stock price as it closed down $0.13 to $32.19 on a volume of 3.9 million shares traded. Set in the context of a drifting uranium price it is difficult to see a recovery in the near term. However, Cameco is the giant of the uranium industry and could be now approaching levels that are attractive to both investors and fund managers.

Taking a quick look at the chart we can see that it has come off a fair way since the heady days of $50 plus for this stock. But also note that the Technical indicators are at the bottom of their respective ranges and the stock price is a long way below its 200dma, which tells us that a sharp snap back is a possibility. We are not buyers at the moment but this situation will be monitored closely as an entry point would appear to be getting closer.

Cameco Chart 07 Feb 08

Have a good one.

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