See Spot. See Spot run. See Spot run up by 190% in a year and make Cameco
I'm talking, of course, about the spot price of uranium. While much of Cameco's U308 production is contracted at rates far below the spot price, these spot rates still influence the company's "market-related" contracts. Overall, the company's price realizations for uranium came in 61% above last year, in terms of Canadian dollars.
Utilities held off on purchases last quarter, but they couldn't dally forever. The quarter's orders flooded in like the water at Cameco's disastrous Cigar Lake project, now delayed until 2011. Sales volumes doubled those of the prior year's quarter, and they're back to even on a six-month basis. Thanks to improved pricing, the firm's year-to-date pretax earnings on uranium sales are up 120%. See Spot salivate.
While the price (shockingly) declined slightly, the appetite for spot uranium declined markedly in the quarter. Spot volume was cut fully in half for the quarter. This isn't too big a deal for Cameco, which primarily looks to secure long-term contracts with utilities. Still, it only managed to place three million out of the four million pounds it was looking to sell on the spot market.
Cameco's lateral businesses, gold and power production, were both hampered a bit this quarter, but uranium production is the key activity here. With Shaw Group