This morning before the market opened, uranium producer Cameco Corporation (NYSE: CCJ) reported Q1 2018 results which should be looked over by investors in other potentialuranium players like small cap Azincourt Energy Corp (TSX-V: AAZ; OTCMKTS: AZURF) as CCJwould be one of the worlds largest uranium producers, a significant supplier of conversion services and one of two Candufuel manufacturers in Canada. Cameco Corporation alsosays itscompetitive position is based oncontrolling ownership of the worlds largest high-grade reserves and low-cost operations.
Q1 revenue was $439 million versus $393 millionand net income was $55 million versus a net loss of $18 million. Earnings were higher largely due to the gain realized on the restructuring of JV Inkai and higher realized prices and deliveries inthe uranium segment.Otherwise, the market was at a stand-still in the first quarter as utilities digest changing market dynamics whilemarket prices and contracted volumes remained low. President and CEO Tim Gitzel commented:
We continue to focus on what we can control. In the first quarter we generated significant cash flow, which is due to our portfolio optimization activities, the benefits of our cost saving measures, and by pulling back on our production lever and drawing down inventory. While our average unit cost of sales was higher than a year ago, this was expected due to the care and maintenance costs incurred while production is suspended at the McArthur River and Key Lake operation.
Today the market remains quiet. There are a lot of moving pieces, and utilities continue to evaluate the implications of what is perhaps best described as unprecedented noise in the political economy. Things like the possible trade action under section 232 of the Trade Expansion Act, the suspension of US Department of Energys excess uranium sales for the remainder of 2018, review of the Russian Suspension Agreement, and a potential Russian ban on all trade with US nuclear power companies. On the demand front, news remains mixed with additional Japanese reactor restarts, new construction announcements in China, India and the Middle East, further potential retirements in the US, and an announced phase out of nuclear power in Belgium.
As 2018 unfolds we will continue to evaluate the market signals, however we remain resolved in our efforts to focus on what we can control and deliver long-term value to our shareholders.
Cameco Corporations shares are approaching a key resistance level:
The above technical chart could be a good sign for the overall uranium market along with other players or potential players in it.
Nevertheless, Cameco Corporation is synonymous with uranium as the Company largely has all of its eggs in one basket. On the other hand, small cap Canada based Azincourt Energy Corp is seeking to build a value-based portfolio of critical clean energy elements such as lithium, uranium and cobalt to capitalize on macro trends towards cleaner and greener energy. Core projects are located in mining friendly Canada and include a 5-property lithium project in Manitoba and two uranium exploration projects in the Athabasca Basin (the world’s preeminent uranium ground) of Saskatchewan.
The Preston Project in theAthabasca Basin would beone of the largest tenure land positions in the Paterson Lake region thats strategically located near NexGen Energy Ltds high-grade Arrow deposit, Fission Uranium Corps Triple R deposit and theAREVA/Cameco/Purepoints joint venture (Spitfire):
In late March, Azincourt Energy Corpannounced positive outcomes forits recent exploration program at the East Preston project with the President & CEO Alex Klenman adding:
Were happy to move forward at East Preston. As previously stated, the recent work we completed established numerous high-quality drill targets. Were going to prioritize the best locations and get to work furthering the development of East Preston. We are eager to advance the uranium side of our business and East Preston is a great project. Many feel the uranium market overall is heading in a positive direction and we believe our timing here is excellent.
In addition, Azincourt Energy Corps Chairman Ian Stalker has already put eight mines into production and was president of UraMin, a Uranium company that sold to Areva for $2.5 billion (the largest uranium deal at the time).