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$168-million Kintyre writedown slams Cameco shares

Miners work about 600 metres below the surface at Cameco Corp.’s McArthur River uranium mine in northern Saskatchewan, in a file photo. Cameco is one of the world’s largest uranium producers.


Shares in uranium producer Cameco Corp. were down 3.5 per cent Monday after the company posted an 83-per-cent drop in net earnings in its fourth quarter.

The massive earnings drop was largely due to a $168-million writedown on its Kintyre project in Australia and lower profits from its uranium business.

After markets closed Friday, the Saskatoon-based company reported revenues of $958-million for the period ended Dec. 31, down just 1 per cent from $971-million in the year-earlier period.

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Still, the writedown and downward pressure on uranium prices saw net earnings for the quarter come in at $45-million, or 11 cents per diluted share, a steep drop from $265-million, or 67 cents per diluted share, in the prior-year period.

The uranium producer, however, delivered a solid beat on analysts expectations on both revenue and adjusted earnings.

According to a Thomson Reuters poll, analysts were expecting revenue of $820.8-million for the quarter and adjusted earnings per share of 41 cents.

Cameco handed in an adjusted EPS of 60 cents.

Still, Cameco shares were down 76 cents at $20.95 at midday on the Toronto Stock Exchange.

For the full year, Cameco posted $2.32-billion in revenues, slightly lower than $2.38-billion in 2011. Net and adjusted earnings were $266-million and $447-million, respectively, sharply down from $450-million and $509-million year over year.

The $168-million writedown of the carrying value of its interest in Kintyre was due to several factors, the company said.

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"Due to the weakening of the uranium market since the asset was purchased in 2008, no increase in mineral resources in 2012 and the decision not to proceed with the feasibility study, we concluded it was appropriate to recognize an impairment charge for this asset," it said in a release Friday.

But Kintyre "remains an important asset in our portfolio," it added.

Cameco said the uranium market saw little improvement in 2012 over the year earlier, when demand for uranium fell off following the nuclear disaster in Japan, but that the long-term outlook remains positive.

"Nuclear remains an important part of the global energy mix and it is clear that new uranium supply will be needed."

The company, which is one of the world's largest uranium producers with mines, mills and conversion plants in Canada, the United States and elsewhere, says it will look at international markets like China and Japan for demand.

But it pointed out that there is "uncertainty" in the markets as new mine projects are being delayed or cancelled.

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In December, Cameco announced that it had completed a $430-million (U.S.) deal to buy one of Australia's largest undeveloped uranium deposits from BHP Billiton Ltd.

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