Cameco Says Its Future Looks Bright

The world’s largest producer of fuel for nuclear power plants, Cameco [CCJ], says it is steadily gaining more exposure to higher spot prices for uranium as long-term contracts come up for renewal. Only 10% of the Canadian company’s production benefits from prices higher than $20/lb this year, but that exposure rises to 35% in 2006 and 57% in 2008 presaging much improved profits.

Cameco chief financial officer Kim Goheen said the company was well placed to take advantage of the emerging “nuclear renaissance”. He was addressing delegates to BMO Nesbitt Burns 2005 Global Resources Conference ongoing in Tampa, Fla.

Uranium oxide prices have doubled in the past 2 years as stockpiles and scrap supplies have dried up. On the demand side, more material will be needed to fuel a new wave of environment friendly nuclear power generators are permitted to satisfy global energy demand. According to the company, more than 6,000 new MW of new nuclear generation capacity was added worldwide in 2004.

While some might fret about higher Uranium prices, we need to remember that higher prices also stimulate new sources of production.

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