Cameco raising US$650 million from bought deal

Cameco Corp. [CCO-TSX, CCJ-NYSE] is proceeding with a bought deal share offering that is expected to raise US$650 million.

The uranium mining giant said proceeds will be used to partially fund its share of the acquisition of Westinghouse Electric Co., one of the world’s leading nuclear services businesses, through a strategic partnership with Brookfield Renewable Partners, together with Brookfield Renewable’s institutional partners.

Cameco said a syndicate of underwriters have pledged to buy 29.6 million shares at US$21.95 per share on a bought deal basis. The offering is expected to close by October 17, 2022. The underwriters have been granted a green shoe option to purchase an additional 4.4 million common shares at the offering price, potentially adding another US$97.5 million in gross proceeds. That option is exercisable in whole or in part at any time up to 30 days after the closing date.

The announcement came after the close of trading on October 11, 2022, when Cameco shares closed at $35.62. The shares are currently trading in a 52-week range of $41.05 and $23.03.

Meanwhile, Cameco says it has been focused on agreeing to long term uranium contracts with customers to meet their increased demand.

Year to date, the company has added to its long-term contract portfolio more than 50 million pounds in its uranium segment. That’s up from the 45 million pounds when the company released its previous update in July, 2022.

On October 27, 2022, Cameco plans to release its 2022 third quarter results before markets open. The company said it expects to announce deliveries of between 5.0 and 5.5 million pounds of uranium.

Cameco is one of the largest global providers of the uranium fuel needed to energize a clean air world. The company’s competitive position is based on its controlling ownership of the world’s largest high-grade uranium reserves and low/cost operations.

Production in Cameco’s uranium segment for the quarter ended September, 2022, is expected to be two million pounds (its share) from the Cigar Lake operation in Saskatchewan.

Meanwhile, the company said restart activities at McArthur River and Key Lake continue to progress with first production coming from the mill expected later in the fourth quarter of 2022.

Located in northern Saskatchewan, McArthur River/Key Lake are the world’s largest high-grade uranium mine and mill. Due to low uranium prices, the operation was placed on care and maintenance in 2018.

Cameco has said it plans to produce 15 million pounds per year (100%) basis at McArthur River/Key Lake, starting in 2024. That is 40% below the licensed annual capacity of the operation.

At that time, the company said it plans to reduce production at Cigar Lake, to 13.5 million pounds per year (100% basis), 25% below its licensed capacity, for combined reduction of 33% of licensed capacity at its two operations.

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