Inkai

2024 Q2 Update

Production

Production on a 100% basis was 1.9 million pounds for the quarter, and 3.5 million pounds for the first six months of this year, compared to 2.4 million pounds and 4.3 million pounds in the same periods last year. The lower production for the quarter and the first half of the year is attributed to challenges with acid supply in the early part of the year.  

Supply chain

JV Inkai continues to experience procurement and supply chain issues, most notably, related to the stability of sulfuric acid deliveries. JV Inkai’s current production target for 2024 is 8.3 million pounds of U3O8 (100% basis). However, this target is tentative and contingent upon receipt of sufficient volumes of sulfuric acid. Our allocation of the planned production from JV Inkai remains under discussion, which is now further complicated by taxation changes that are expected to take effect beginning in 2025. 

In addition to the issue of availability of sulfuric acid, achievement of JV Inkai’s 2024 production target requires it to successfully manage several other ongoing risks, including other procurement and supply chain issues, transportation challenges, construction delays and inflationary pressures on its production costs. 

Transportation

The geopolitical situation continues to cause transportation risks in the region. The second shipment containing the remainder of our share of Inkai's 2023 production arrived in February 2024. We continue to work closely with JV Inkai and our joint venture partner, Kazatomprom, to receive our share of production via the Trans-Caspian International Transport Route, which does not rely on Russian rail lines or ports. We could experience further delays to our expected Inkai deliveries this year if transportation using this shipping route takes longer than anticipated.

To mitigate the risk of production shortfalls or transportation delays, we have inventory, long-term purchase agreements and loan arrangements in place we can draw on.

Earnings

Due to equity accounting, our share of production is shown as a purchase at a 5% discount to the spot price and included in inventory at this value at the time of delivery. Our share of the profits earned by JV Inkai on the sale of its production to the JV partners is included in “share of earnings from equity-accounted investee” on our consolidated statement of earnings. Excess cash, net of working capital requirements, is distributed to the partners as dividends once declared.

Depending on cost inflation impacts, actual production volumes and when we receive shipments of our share of Inkai’s 2024 production, our share of earnings from this equity-accounted investee and the timing of the receipt of our share of dividends from the joint venture may be impacted.

Subsequent to the end of the quarter, our JV partner, Kazatomprom, issued a news release indicating that at the end of June, the government of the Republic of Kazakhstan introduced amendments to the country’s Tax Code, including significant increases to the MET rate paid by mining entities on uranium production, beginning in 2025. We are evaluating the new MET and if it remains as currently formulated, preliminary conclusions indicate that production costs in Kazakhstan would be similar to northern Saskatchewan operations, depending on the assumptions used for uranium price, production profile, and exchange rate.

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Environment & Safety

Worker safety, environmental monitoring and proper decommissioning after project completion are of the utmost importance to Cameco.

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Reserves & Resources

Our mineral reserves and resources are the foundation of our company and fundamental to our success.

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