Cameco Corp. Q2 FY2024 earnings call

• Durable demand for nuclear energy is highlighted, with strong support from governments, industries, and the public driving full cycle demand. - MacArthur River and Key Lake operations are performing well, with production ahead of schedule, and there are licensing approvals to increase production to £25 million at both facilities. - Challenges in Kazakhstan include production issues due to sulfuric acid availability and significant tax increases starting in 2025, which impact global supply costs. - Financially, Cameco is in good shape, on track for 2024 outlook, with strong cash flow generation expected, focus on debt reduction, and refinancing plans. - Westinghouse investment performance is as expected, with adjusted EBITDA from Westinghouse expected to be between $445 million and $510 million in 2024. - Executive team changes: Alice Wong retired as Senior Vice President and Chief Corporate Officer, and Rachelle Girard was appointed to that role, with Cory Kos moving into Investor Relations.

The uranium segment: Production at MacArthur River, Key Lake, and Cigar Lake operations is on track with all pounds already sold. The fuel services segment: Experienced temporary operational issues impacting UF6 production, with expected UF6 production reduced to 11,000 to 11,500 tons this year, but the combined fuel services guidance range of 13,500 to 14,500 tons (including UF6, UO2, and fuel bundles) remains. Revenue contribution details weren't explicitly given in absolute terms with percentages, but the focus was on the performance of each segment.

• 2024 outlook remains on track with strong cash flow generation expected. - Focus on debt reduction and prudently executing refinancing plans, including repaying $100 million of the term loan for Westinghouse financing and refinancing $500 million of senior unsecured debentures. - Plan to file a new base shelf prospectus when the current one expires in October. - Westinghouse adjusted EBITDA expected to be between $445 million and $510 million in 2024, with expected adjusted EBITDA growth at a compound annual growth rate of 6% to 10% over the next five years.

• Uncertainty in Kazakhstan due to tax changes and sulfuric acid availability, which impacts global uranium supply costs. - Supply disruptions in regions like Niger and other areas, reducing primary supply and making the industry susceptible to interruptions. - Impact of the U.S. uranium import ban and waiver process, affecting U.S. utilities' procurement strategies and international utilities' contracting activity. - Market volatility and short-term factors like the summer doldrums and risk off factors affecting adjacent sectors.

Q: Alexander Pearce asked about the performance of MacArthur River and if there's a bottleneck to increase production higher than £18 million.

A: Tim Gitzel said the facilities are performing exceptionally well, ahead of schedule, and they're evaluating the mill and mine to be ready if the market calls for increased production.

Q: Neil Mehta asked about Inkai business in Kazakhstan and Westinghouse.

A: Tim Gitzel discussed concerns about Kazakhstan's tax changes and production issues, while Grant Isaac talked about Westinghouse's positive performance, including its core nuclear fuel and operating plant systems business and energy systems segment.

Q: Ralph Profiti asked about dialogue with Kazakhstan government and replacement rate contracting.

A: Tim Gitzel said they'll meet with Kazakhs to discuss tax changes, and Grant Isaac mentioned replacement rate contracting is delayed due to market uncertainty and U.S. uranium ban, but the market has durable demand.

Q: Andrew Wong asked about contracted volumes and Westinghouse IP dispute.

A: Grant Isaac talked about contracted volumes capturing constructive demand, and Tim Gitzel discussed the Westinghouse IP dispute and its potential impact on market participation.

Q: Orest Wowkodaw asked about contracted volumes creeping up and end game.

A: Tim Gitzel and Grant Isaac explained they capture quality demand, not a hard volume target, and are disciplined in terms and conditions.

Q: Lawson Winder asked about conversion market and M&A.

A: Grant Isaac discussed tight conversion market and Tim Gitzel said Cameco is focused on its own assets in the Athabasca basin.

Q: Gordon Johnson asked about nuclear news and price stuck.

A: Tim Gitzel and Grant Isaac discussed market factors like U.S. uranium ban and waivers, but emphasized strong demand fundamentals.

Q: Brian MacArthur asked about MacArthur River production and cost comparison with Kazakhstan.

A: Brian Reilly talked about MacArthur River's mill performance, and Grant Isaac discussed cost comparison assumptions between Kazakhstan and northern Saskatchewan.