So much for the Western Australian government’s approval of a new uranium mine for Canadian miner, Cameco.
It’s shares slid on Tuesday after it issued a profit downgrade in Canada.
The WA Government’s decision had no positive impact on Cameco’s share price with investors more focused on yet another downgrade.
The WA government reversed itself and this week granted environmental approval for Cameco’s Yeelirrie uranium mine. The decision followed one in 2016 which saw the mine knocked back by WA’s environmental watchdog.
The Government said it granted approval for the mine, subject to 17 “strict conditions” and State Development Minister Bill Marmion said uranium was an important industry for Western Australia.
"Clearly, this project has the potential to deliver significant economic benefits to the state should it proceed," Mr Marmion said.
The Yeelirrie uranium deposit is said to be one of the highest quality uranium deposits in WA.
Canadian company Cameco sought to mine up to 7,500 tonnes of uranium oxide concentrate per year from the Yeelirrie deposit, about 420 kilometres north of Kalgoorlie-Boulder and transport it by road for export through the Port of Adelaide.
But that news came and went for investors in Cameco who were focused on the surprisingly large downgrade.
That saw Cameco Corp shares fall in after hours trading on Tuesday after the uranium miner said it would cut 10% of its workforce and that the continuing weak market for uranium will slash earnings.
Cameco shares dropped 8.7% to $C12.11.
“We expect our adjusted net earnings for 2016 will be significantly lower than analysts’ earnings estimates," Cameco said in a statement.
“In presenting our adjusted net earnings, we expect to make total adjustments to net earnings between approximately $C180 million and $C220 million after-tax. In fact according to analysts, an adjustment above $C200 million could see the company incur a loss for 2016.
At the end of the third quarter in November, Cameco said it had earnings for the nine months totalling $C83 million on revenues of $C1.54 billion – both sharply lower than year earlier figures. Its full financial results will be released Feb. 9.
Cameco said it will lay off 120 employees to improve efficiency at its three main Canadian uranium mining operations.
Cameco’s announcement comes less than two months after it unveiled a series of temporary mine closures in its northern Canadian mines and mill for a month in the coming northern summer. Now it is slashing jobs and other costs.
“These are necessary actions to take in a uranium market that has remained weak and oversupplied for more than five years,” Cameco president and CEO Tim Gitzel said in a statement Tuesday afternoon.
“These operational changes are part of our strategy to help us effectively manage the company through these low times and remain competitive, while positioning the company to benefit as the market improves.”
The changes announced Tuesday are the latest in a long string for the company, which closed its Rabbit Lake mine at the cost of about 500 jobs and cut 9% of its corporate workforce last year.
And the new mine in WA? “We are advancing Yeelirrie through the environmental assessment process so that we are ready to respond when the market signals a need for more uranium,” managing director of Cameco’s Australian subsidy Brian Reilly said in a statement this week – in other words, don’t wait up for a go ahead for what will be a multi-billion dollar mining project. If the market for uranium oxide doesn’t improve, Yeerilee won’t happen.
Cameco bought the Yeelirrie project from BHP Billiton for US$430 million in 2012. The WA government has said the mine will have operating and capital costs of around US$3.7 billion over its 18-year lifespan.
Cameco must submit detailed construction and infrastructure plans for the mine to the Western Australian government by June 20, 2018 to retain the title to the property.
