TIDMAURA
Aura Energy Limited
09 November 2017
9 November 2017
AURA ENERGY LIMITED
("Aura" or the "Company")
CAMECO ANNOUNCES SIGNIFICANT URANIUM
PRODUCTION CUT-BACK
REMOVES 10% OF GLOBAL SUPPLY IN 2018
Aura Energy Limited (AEE; ASX, AURA; AIM) wishes to inform
shareholders that a significant market release has been made by
Cameco.
In the release Cameco, one of the largest producers in the
world, has stated that due to continued uranium price weakness it
will temporarily suspend production from the McArthur River mining
and Key Lake milling operations in northern Saskatchewan by the end
of January 2018.
Aura expects this will have a significant impact in the uranium
market and the uranium equities market.
The full Cameco release is shown below.
For further information please contact:
Aura Energy Limited Telephone: +61 (3) 9516
Peter Reeve (Executive 6500
Chairman and CEO) Email: info@auraenergy.com.au
WH Ireland Limited Telephone: +44 (0) 207
Adrian Hadden 220 1666
James Bavister
Yellow Jersey PR Limited Telephone:
Charles Goodwin +44 (0) 7769 325 254
Joe Burgess
Cameco to suspend production from McArthur River and Key Lake
operations
SASKATOON, SASKATCHEWAN--(Marketwired - Nov. 8, 2017) -
Currency: Cdn (unless noted)
Cameco (TSX:CCO)(NYSE:CCJ) announced today that due to continued
uranium price weakness, production from the McArthur River mining
and Key Lake milling operations in northern Saskatchewan will be
temporarily suspended by the end of January 2018 and that the
company's annual dividend will be reduced to $0.08 per common share
in 2018.
"With the continued state of oversupply in the uranium market
and no expectation of change on the immediate horizon, it does not
make economic sense for us to continue producing at McArthur River
and Key Lake when we are holding a large inventory, or paying
dividends out of proportion with our earnings," said Tim Gitzel,
Cameco's president and CEO. "We regret the impact these actions
will have on our workforce and other stakeholders and are doing
what we can to cushion it while ensuring the long-term
sustainability of the company. We believe these actions will help
shield the company from the nearer term risks we face and will
benefit all our stakeholders for their continued patience and
support of our strategy to build long-term value."
As a result of the suspension, the workforce at the operations
will be reduced temporarily by about 845 workers (560 employees and
285 contractors). About 210 workers (160 employees and 50
contractors) will be retained to maintain the facilities in safe
shutdown state.
We expect our share of the costs to maintain both operations
during the suspension to range between $6.5 and $7.5 million per
month. However, some of the items affecting these costs won't be
known until the operations are actually shutdown. More details will
be provided in our fourth quarter results which will be released in
February 2018.
Cameco plans to meet its commitments to customers from inventory
and other supply sources during the suspension, which will be
reviewed on an ongoing basis until inventory is sufficiently drawn
down or market conditions improve. The duration of the suspension
and temporary layoff is expected to last 10 months.
As we have previously indicated, we will continue to evaluate
the optimal mix of our sources of uranium supply to feed into our
contract portfolio, which could see us make further changes to our
inventory position, production profile or purchasing activity.
Cameco will also review its corporate support activities for
McArthur River and Key Lake operations, which may result in
temporary workforce reductions at corporate office.
Uranium prices have fallen by more than 70% since the Fukushima
accident in March 2011 and remain at unsustainably low levels.
Cameco has been partially sheltered from the full impact of weak
prices by its portfolio of long-term contracts, but those contracts
are running out and it is necessary to position the company today
to generate cash flow if prices do not improve.
Cameco has committed sales volumes of 28 to 30 million pounds in
2018. Using inventory to help meet contract commitments now allows
Cameco to draw down its inventory without suffering a loss by
selling at low market prices. It also avoids the risk of holding
excess inventory valued above market prices on its balance sheet if
prices remain low.
This measure is consistent with other actions Cameco has
implemented over the past five years as part of a deliberate and
disciplined strategy to strengthen the company in the long term. We
have reduced supply, avoided selling into a weak spot market,
resisted locking-in long-term sales commitments at low prices, and
significantly reduced costs.
To decrease costs, we suspended production at the Rabbit Lake
operation, stopped development and curtailed production at our US
operations, reduced workforce across all our sites including head
office, changed air commuter services for operations in
Saskatchewan, changed shift schedules at two Saskatchewan sites,
and downsized corporate office functions including a consolidation
of our global marketing activities.
As discussed in our third quarter 2017 MD&A, year over year,
average unit cost of sales (including depreciation and
amortization) is down 13%, our cash production costs are down 10%,
and direct administration costs are down 20%. Planned capital
expenditures for 2017 are expected to be 26% lower than in
2016.
"To date, we have made good progress in reducing costs but
unfortunately given the continued market weakness, more needs to be
done," said Gitzel. "We can't control the market so our focus is on
positioning the company to weather the continued low uranium prices
and have uncommitted, low-cost supply to deliver into a
strengthening market."
In addition, Cameco's board of directors has determined that the
company's annual dividend in 2018 will be $0.08 per common share, a
reduction of $0.32 per common share on an annual basis. Further,
the board has approved a change in the dividend payment schedule to
an annual payment instead of quarterly. This change does not impact
the quarterly dividend, announced on October 27, 2017, of $0.10 per
common share payable on January 15, 2018, to shareholders of record
at the close of business on December 29, 2017.
Cameco is the operator of both McArthur River mine and the Key
Lake mill that processes all of the ore from McArthur River to
uranium concentrate. Cameco owns 70% of McArthur River and 83% of
Key Lake. AREVA Resources Canada Inc. owns the remainder. Together,
the operations produced 11.1 million pounds of uranium in the first
nine months of 2017 (Cameco's share 7.8 million pounds).
This information is provided by RNS
The company news service from the London Stock Exchange
END
NRAEAXFNEFDXFEF
(END) Dow Jones Newswires
November 09, 2017 02:17 ET (07:17 GMT)
Aura Energy (LSE:AURA)
Historical Stock Chart
From Apr 2024 to May 2024
Aura Energy (LSE:AURA)
Historical Stock Chart
From May 2023 to May 2024