Cameco is one of the largest uranium suppliers in the world. It is also a leading provider of uranium refining, conversion and manufacturing services. Both uranium and nuclear fuel are used to generate electricity around the world. Cameco’s reporting segments are uranium, which accounts for 75% of total sales, and fuel services, which accounts for ~ 20%.

Cameco has offices in Canada and Kazakhstan with an annual production capacity of £ 53 million. In addition, the company has nearly 455 million pounds of mineral reserves and extensive resources on three continents, North America, Asia and Australia. Cameco is present across the entire nuclear fuel cycle from exploration to fuel production.

The company controls around 24% of the world’s primary conversion capacity and represented 7% of total world production last year. Cameco’s properties, including exploration, are approximately 1.7 million acres. The assets include a large portfolio of low-cost mining operations, extensive mineral reserves and resources, and exploration and development projects.

The company has significant stakes in tier-one operations including McArthur River (~ 70%), Cigar Lake (~ 50%) and Inkai (40%) in Kazakhstan. The Cigar Lake site is the second largest high grade uranium deposit in the world with grades 100 times the world average. Cameco sells uranium and fuel services to nuclear utilities in 12 countries. By region, America accounts for almost 45% of total sales, followed by Europe (~ 25%) and Asia (~ 30%).

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Investment data

Sales growth and market exposure

Cameco has been known for the safe and reliable manufacture of uranium and nuclear fuel for power generation for three decades. The company has an extensive base of mineral reserves and resources as well as diversified sources of supply. Cameco is in a good position to capitalize on the increasing global demand for nuclear fuels, which are touted as a safe and clean source of energy.

The company is a leading supplier of uranium, a key component of nuclear power plants around the world. Comprehensive industry knowledge and a long-term contract portfolio are Cameco’s most important competitive advantages.

Energy suppliers around the world are the largest buyers of Cameco’s nuclear fuel products. Customers trust the Cameco brand for their durable, world-class manufacturing capability with a proven operational track record. The role of nuclear energy in providing safe, reliable and affordable carbon-free electricity is increasingly recognized. The Cigar Lake Mine has an annual production capacity of 18 million pounds and accounts for 13% of the world’s uranium.

Pandemic disruptions to production at Cameco’s various manufacturing facilities, including the Cigar Lake Mine and McClean Lake Mill and all uranium mines in Kazakhstan, resulted in lower global uranium production in 2020 and an increase in spot market purchases by producers. Cameco produced 30.6 million pounds of uranium last year at an average annual realized price of $ 46.14 per pound. It has also withdrawn its 2020 outlook.

The company continues to retain its Tier 1 assets to be incorporated into a long-term contract portfolio. Although long-term procurement was delayed in 2020, Cameco successfully added £ 12.5 million to its portfolio of long-term uranium contracts and 17.1 million kilograms in the fuel services segment.


Cameco has consistently made dividend payments since 1991. The yield does not sound attractive at 0.39% and the company also has a high payout ratio. The company continues to take steps to improve its margin and cash flow, such as: B. dividend reduction in 2018 and restructuring activities to reduce operating, capital and G&A expenses. The company declared a dividend of $ 0.08 per share in 2020.

Cameco’s uranium segment is complemented by the Fuels Services segment, as the latter supports the growth of the uranium segment with its broad range of products and services. Prices are expected to rise as production slows. Cameco is well positioned to benefit from rising green energy prices and emerging trends supported by oil headwinds.

More than 40% of CCO’s total sales come from fixed-price contracts, which are usually based on a term price indicator at the time the contract is accepted and escalate over the term of the contract. Most of the fuel service contracts have a fixed price per kg. Cameco ended the quarter with $ 943 million in cash and an undrawn $ 1 billion credit facility that it does not want to draw on.

Nuclear power is preferred because of its carbon-free properties. In the current situation, nuclear is touted for its most important safety and reliability features in healthcare. The company assumes that the current order backlog represents a significant opportunity for long-term contracts. A portfolio of high-quality assets, long-term contracts, extensive industry knowledge and a strong balance sheet position Cameco is a good prerequisite for long-term value creation for shareholders.

Cameco (CCO) historical return
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Cameco likes to control ownership of the world’s largest high grade reserves and low cost operations and represented 7% of total world production last year. Other world-leading uranium producers are Kazatomprom, Uranium One, Orano, CNNC & CGN and ARMZ Uranium Holding.

In addition, a state-controlled trade policy could disrupt the uranium market, as almost 90% of uranium consumption occurs in countries with negligible primary production.

Bottom line

The COVID-19 pandemic has disrupted uranium production around the world. Investors are concerned about the Cigar Lake production shutdown and restricted trade policies. However, Cameco plans to resume production at Cigar Lake in April, and spot prices for uranium have also increased more than 35% since March through April 2020. Cameco should benefit from a growing uranium business pipeline. The company is confident of capitalizing on a market where the demand for nuclear power and the risk to uranium supplies are increasing.

CCO versus TSX versus SP500
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Cameco (CCO) historical PE
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