- Miner suspends output at Rabbit Lake operation in Saskatchewan
- Company cites `depressed market conditions' in shutting site
Canadian uranium producer Cameco Corp. rose the most in a year in Toronto on speculation suspending operations at its Rabbit Lake mine will support sagging prices for the raw material in nuclear reactor fuel.
Cameco climbed 6.8 percent to C$16.73 at 1:56 p.m. after rising 7.5 percent, the most intraday since April 22, 2015. The shares have declined 19 percent in the past 12 months.
Cameco plans to shutter operations at the site in the north of the province, eliminating 500 jobs in Canada, and to slow development in the U.S., the Saskatoon, Saskatchewan-based company said Thursday in a statement. The decision comes as global uranium prices have slumped since the March 2011 earthquake and tsunami at Fukushima, which led to a meltdown at the Dai-Ichi nuclear plant and the subsequent halt of reactors in Japan and elsewhere.
The decision to shutter Rabbit Lake could add some support to the global uranium market, according to the Bank of Montreal.
“This reduces its production outlook for 2016 by 14 percent but it may provide support for the uranium price,” Edward Sterck, a London-based BMO analyst, said in a research note. Cameco has the ability to quickly restart production if uranium prices increase sufficiently, he said.
The deferral of wellfield development at its U.S. operations will result in 85 job cuts, Cameco said.
“Continued depressed market conditions do not support the operating and capital costs needed to sustain production at Rabbit Lake and the U.S. operations,” Cameco Chief Executive Officer Tim Gitzel said in the statement.
Uranium futures on the New York Mercantile Exchange have dropped 31 percent in the past year to $26.75 a pound.