SASKATOON (CP) -- Cameco Corp. [TSX:CCO; NYSE:CCJ] says it's ready to seek out potential acquisitions now that falling uranium spot prices have made the possibility of a purchase "more reasonable."
The world's biggest uranium miner, based in Saskatoon, said it was "unfairly criticized" for not joining the merger and acquisition frenzy sweeping the industry last year.
But "with the decline in the uranium spot price since June of 2007, the cost of potential acquisitions are coming into a much more reasonable range," Jerry Grandey, Cameco's president and CEO, told shareholders during the company's annual meeting.
"Cameco is well-positioned to take advantage of emerging opportunities that will expand and diversify our business. When the right opportunities appear your company will be actively building on its impressive asset base."
Among last year's mergers, SXR Uranium One completed the takeover of UrAsia Energy transaction in a C$3.4-billion all-stock deal and the acquisition of the uranium assets of U.S. Energy Corp.
But the drop in the spot price of uranium has shaken some investors, while some analysts predict the uranium price will stabilize in the US$60-a-pound range, after falling sharply from a recent spot peak of nearly $140.
Increasingly difficult to finance new nuclear plants, a lack of qualified personnel to build and operate them, and the large number of reactors start up after 2015 will make higher prices difficult, analysts say.
Still, Grandey maintained uranium prices will be high over the long-term, arguing that the need for nuclear energy means consumption will outpace demand within the next 10 years.
"It's clear that nuclear energy is gaining momentum around the world, and as consequence, demand for uranium will continue to grow," he said.
"But even with production from new mines and development, such as ours at Cigar Lake and Inkai, the gap between production and consumption is not expected to close within the next 10-year period."
Cameco said Tuesday its first-quarter profit more than doubled to C$133 million, up from up from $59 million a year ago, boosted by higher uranium prices, but missing analyst expectations.
Revenue rose to C$593 million from $409 million, with the average realized price for uranium rising to US$40.85 a pound, up from $24 a year earlier.
The company has experienced problems at its Cigar Lake project and said this week that delays at its McArthur River mine in Saskatchewan may affect 2009 production. As a precaution, the company may mine from different areas.
Cameco is an uranium producer and a supplier of conversion services. The company explores for uranium in North America, Australia and Asia, and generates clean electricity through its 31.6% interest in Bruce Power Limited Partnership.
It also owns about 53% of Centerra Gold Inc. [TSX:CG], which operates mines in the Kyrgyz Republic and Mongolia. The two companies are involved in a three-way deal with Kyrgyzstan, aimed at reducing Cameco's majority stake in Centerra and increasing Centerra's concession in that country by more than 250 square kilometres.
On the TSX Thursday, Cameco shares closed at C$40, up 90 cents or 2.3%. Centerra stock rose 20 cents to C$10.05.
(c) The Canadian Press 2008
