SASKATOON – Cameco (TSX:CCO) reassured nervous investors Wednesday morning after deep cuts in Saskatchewan last month.
“We had anticipated things would get better sooner,” CEO Tim Gitzel told the annual general meeting.
On April 21, Cameco cut 500 jobs and suspended operations at its Rabbit Lake mine.
In the release on their website the same day, the company also said production was curtailed at Cameco Resources’ U.S. operations by deferring wellfield development, resulting in an additional 85 positions reduced.
“What we regret most about those decisions is the effect it has on our people and communities, but we know these decisions are necessary for the long-term health of the company.”
Gitzel acknowledged the uranium market has been depressed for more than five years with low prices, very few long-term contracts and more supply than the market needs.
“In those years, we anticipated things would get better, sooner,” he said, adding the company has responded by pulling back in some areas and doing more with less.
“We know that these challenges are temporary. The reality is that the world needs more energy.”
The CEO said the next ten years brings the promise of a higher demand for uranium, partially based on the expected world population boom.
According to Gitzel, growth in global reactor construction is also up; 60 are currently being built with 10 brought online in the last year alone.
He said it opens the door for Saskatchewan to keep producing.
“Three to four more Cigar Lakes being required over the next ten years – not an easy task, as we know by experience,” he said.
While most of its sites are expected to produce less in 2016, Cigar Lake continues to ramp up with plans to produce 16 million pounds of uranium this year.
Rabbit Lake, located around 800 kilometres north of Saskatoon, is the second-largest uranium milling facility in the western world and longest operating facility of its kind in Saskatchewan.
Previously, the company said the mine closure will take several months for all the changes to take effect.
The Rabbit Lake operation will be placed in a safe care and maintenance state, so Cameco has the ability to reuse the mine if there is a “significant improvement” to market conditions.