Production Suspension at JV Inkai

Rhea-AI Summary

Cameco (TSX: CCO; NYSE: CCJ) announced that Joint Venture Inkai (JV Inkai) has suspended production operations as of January 1, 2025, due to not receiving an expected extension for submitting updated Project Documentation. The suspension came as a surprise, as Kazatomprom, the majority owner (60%) of the joint venture, directed the halt to avoid violating Kazakhstan legislation.

The suspension was unexpected by Cameco (40% owner), as reports received as recently as December 26, 2024, did not mention any production suspension risks. The delay in extension was attributed to delayed submission of necessary documentation to the Ministry of Energy. Cameco is seeking clarification on the situation and potential impacts on 2025-2026 production, financial outcomes, and future dividends.

Positive

• None.

Negative

• Unexpected suspension of uranium production at JV Inkai operation
• Potential negative impact on 2025-2026 production and financial performance
• Risk to future dividend payments from the joint venture
• Lack of clear timeline for resumption of operations

Insights

Uranium Market Analyst

The unexpected suspension of operations at JV Inkai represents a significant disruption in the global uranium supply chain. Inkai is one of the world's largest uranium mines, with planned production of approximately 8.3 million pounds U3O8 (100% basis) for 2024. Cameco's 40% share translates to roughly 3.3 million pounds of annual production at risk.

The uranium market is already experiencing tight supply conditions, with spot prices recently surging above $90/lb. This suspension could further strain the market, potentially driving prices higher. The timing is particularly critical given the growing global focus on nuclear energy for clean power generation and increasing utility contracting activity.

The bureaucratic nature of the suspension - stemming from delayed documentation rather than technical issues - suggests a possible resolution in the near term. However, the lack of clear timeline and Cameco's apparent surprise at the development raises governance concerns about the partnership with Kazatomprom.

Mining Operations Expert

The production halt at JV Inkai highlights critical operational risks in Kazakhstan's uranium sector. The suspension stems from administrative rather than technical challenges, specifically the failure to secure an extension for submitting updated Project Documentation. What's particularly concerning is the breakdown in communication between partners - Cameco received reports as recently as December 26th indicating no risk of suspension.

The immediate operational impact includes:

• Complete cessation of production activities
• Potential maintenance costs during shutdown
• Uncertainty around restart timeline
• Possible workforce management challenges

The lack of advance warning suggests possible coordination issues between Kazatomprom and regulatory authorities, raising questions about operational predictability in Kazakhstan's uranium sector.

Corporate Governance Analyst

This situation reveals significant governance and partnership dynamics issues. As the minority partner with 40% ownership, Cameco appears to have been blindsided by this development, despite regular communications with Kazatomprom. The fact that reports just days before the suspension made no mention of this risk indicates potential transparency issues in the joint venture relationship.

The market implications are substantial - Cameco's share price could face pressure not just from the production disruption, but from the revelation of these partnership risks. Investors may need to reassess the risk premium associated with Kazakh operations, particularly given the critical importance of JV Inkai to Cameco's production portfolio.

The resolution timeline remains unclear, creating uncertainty around both near-term production targets and the longer-term partnership stability. This event may prompt investors to seek additional governance safeguards in similar joint ventures with state-owned enterprises.

SASKATOON, Saskatchewan--(BUSINESS WIRE)-- Cameco (TSX: CCO; NYSE: CCJ) was informed by our partner, National Atomic Company Kazatomprom JSC (Kazatomprom), and Joint Venture Inkai LLP (JV Inkai), that as of January 1, 2025, JV Inkai has suspended production activity.

On December 31, 2024, JV Inkai formally notified us that it had not received an extension of the timeline to submit its updated Project for Uranium Deposit Development documentation (Project Documentation), an extension that was expected prior to 2024 year-end. We were informed by Kazatomprom that the extension was not received as expected due to the delayed submission of the necessary documentation to the Ministry of Energy. As majority owner and controlling partner of the joint venture, on December 30, 2024, Kazatomprom directed JV Inkai to plan for a halt of operations as of January 1, 2025, to avoid potential violation of Kazakhstan legislation.

Based on the information we had been receiving from JV Inkai and Kazatomprom, a process to address the update of the Project Documentation was underway and a positive outcome was expected. Reports received by Cameco as recently as December 26, 2024, made no mention of a production suspension being a risk in relation to this process.

We are disappointed and surprised by this unexpected suspension and we will be seeking further clarification on how this transpired, as well as the potential 2025 and 2026 production and financial impacts (including on future dividends), and what Cameco can do to help Kazatomprom and JV Inkai restart mining operations.

Kazatomprom holds a 60% interest in JV Inkai, while Cameco owns a 40% share.

Caution about forward-looking information

This news release includes statements and information about our expectations for the future, which we refer to as forward-looking information. Forward-looking information is based on our current views, which can change significantly, and actual results and events may be significantly different from what we currently expect. Examples of forward-looking information in this news release include: the timeframe for any required extension of the timeline to submit the Project Documentation or receive approval of the Project Documentation; and whether and when mining operations can be restored.

Material risks that could lead to different results include: complexity and uncertainty in the application, interpretation and enforcement of the laws of the Republic of Kazakhstan; expropriation or nationalization of JV Inkai’s properties or Cameco’s interest in JV Inkai; amendments to and uncertainty in the enforcement of government regulation in the Republic of Kazakhstan; termination of JV Inkai’s resource use contract by governmental authorities; geopolitical risk in Kazakhstan and surrounding countries; risk of corruption in Kazakhstan and surrounding countries; risk of sanctions and risk of dealing with sanctioned individuals or entities; production variance from JV Inkai’s resource use contract; procurement and supply chain issues, including with respect to the availability of sulphuric acid; availability of drilling services and construction services in Kazakhstan; and availability of transportation.

Please also review the discussion in the “Risk Factors” section of our current annual information form and the “Other relevant data and information – Regulatory risks” and “Other relevant data and information – Production and product delivery risks” sections of our technical report “Inkai Operation, Turkestan Region, Republic of Kazakhstan” dated November 12, 2024 for other material risks that could cause actual results to differ significantly from our current expectations, and other material assumptions we have made. Forward-looking information is designed to help you understand management’s current views of our near-term and longer-term prospects, and it may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by securities laws.

Profile

Cameco is one of the largest global providers of the uranium fuel needed to energize a clean-air world. Our competitive position is based on our controlling ownership of the world’s largest high-grade reserves and low-cost operations, as well as significant investments across the nuclear fuel cycle, including ownership interests in Westinghouse Electric Company and Global Laser Enrichment. Utilities around the world rely on Cameco to provide global nuclear fuel solutions for the generation of safe, reliable, carbon-free nuclear power. Our shares trade on the Toronto and New York stock exchanges. Our head office is in Saskatoon, Saskatchewan, Canada.

As used in this news release, the terms we, us, our, the Company and Cameco mean Cameco Corporation and its subsidiaries unless otherwise indicated.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250101851771/en/

Investor inquiries:

Cory Kos

306-716-6782

cory_kos@cameco.com

Media inquiries:

Veronica Baker

306-385-5541

veronica_baker@cameco.com

Source: Cameco Corporation

FAQ

Why did JV Inkai suspend uranium production operations in Kazakhstan?

JV Inkai suspended operations on January 1, 2025, because it did not receive an extension to submit updated Project Documentation, which was required to comply with Kazakhstan legislation.

How much of JV Inkai does Cameco (CCJ) own?

Cameco owns a 40% share in JV Inkai, while Kazatomprom holds the majority 60% interest.

What is the potential impact of JV Inkai's suspension on Cameco's (CCJ) financial performance?

The suspension could affect Cameco's 2025-2026 production levels, financial performance, and future dividend payments from the joint venture, though specific impacts are yet to be determined.

When did Cameco (CCJ) learn about the risk of JV Inkai's production suspension?

Cameco was surprised by the suspension, as reports received as recently as December 26, 2024, made no mention of production suspension risks.