Even the most immovable of miners are suddenly facing some tough times. Once-mighty Teck Cominco
A lot of folks were downright shocked when the uninterrupted, multiyear uranium-price parabola pulled back a bit last summer. Well, the price for U308's been headed down ever since. This quarter, Cameco registered 30% lower realized prices than in the prior-year period. The comparison is exaggerated by a spot market sale at the market's 2007 peak, but lower prices are certainly unwelcome in the face of rising unit costs.
Cameco's now calling for 15%-20% higher costs this year, rather than a 10%-15% bump. The main culprit has to be production, which is looking bedraggled across the board. Through the first nine months of the year, commercial production is down 19% or so. For the full year, guidance has been lowered by about 10%. That includes volumes at the troublesome Inkai project, which retains its pre-commercial status.
Fans of this firm have to keep an eye on those pounds of production. The gap between Cameco's sales and production, noted by a fellow Fool at this time last year, has widened further, to 12 million pounds. I suppose one upshot of lower spot prices is that the Russians may have less leverage to rejigger their long-term contracts concerning converted nuclear weaponry. But still, we need to see Cameco wean itself off this waning above-ground stockpile.
Much like fellow Saskatchewan slugger PotashCorp
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