Cameco Corp. takes another hit, but production cuts positive for uranium market – by Jonathan Ratner (Financial Post – November 9, 2017)

http://business.financialpost.com/

The patience of Cameco Corp. shareholders is being tested yet again, as the Saskatchewan-based uranium producer’s latest round of quarterly earnings fell short of expectations, and now the company is cutting its dividend and temporarily suspending work at two operations.

The news sent Cameo shares higher, as the production cut is expected to be beneficial to a global uranium market that is widely forecast to be oversupplied by approximately 20 million pounds in 2018.

“This is the type of supply side shock that is positive for the market, but negative for Cameco in the short term,” said Rob Chang, an analyst at Cantor Fitzgerald. “…These are necessary moves that reduce losses and actively help fix the global supply situation.”

Cameco’s Toronto-listed shares rose nearly five per cent, or 56 cents, to $12.06 in morning trading on Thursday. The stock is down more than 12 per cent so far in 2017 as investors remain cautious about the supply-demand imbalance for uranium.

Suspending production at the flagship McArthur River mining and Key Lake milling operations in northern Saskatchewan for 10 months may dampen the positive market reaction given the impact it will have on earnings. It also results in about 845 temporary job losses.

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