Cameco Corporation

Thank you for standing by. This is the conference operator. Welcome to the Cameco Corporation's second quarter 2025 results conference call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. Following the introductory remarks, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. Webcast participants are asked to wait until the Q&A session before submitting their questions, as the information they are looking for may be provided during the presentation. The Q&A session will conclude at 9 a.m. Eastern. I would now like to turn the conference over to Corey Koss, Vice President, Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Cameco's second quarter conference call. I would like to acknowledge that some of us are speaking from our corporate office today, which is in Saskatchewan on Treaty 6 territory. It's a traditional territory of the Crete people and the homeland of the Métis. Today, we're also dialing in from Toronto, which is on Treaty 13 territory and the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinaabe, the Chippewa, the Haudenosaunee, and the Wendat peoples, and now home to many diverse First Nations, Inuit, and Métis peoples. With us in Toronto are Tim Gitzel, President and CEO, and Grant Isaac, Executive VP and CFO. Joining from our Saskatoon headquarters, we have Heidi Schake, Senior VP and Deputy CFO, and Rachelle Girard, Senior VP and Chief Corporate Officer. I will hand it over to Tim momentarily to briefly discuss the positive momentum that continues to drive more and more interest in the nuclear markets and the excellent financial performance through the first half of the year that has kept CAMCO in a solid financial position. After, we will open it up to your questions. Today's call will be approximately one hour, concluding at 9 a.m. Eastern Time. While our goal is to be open and transparent with our communication, we do want to respect everyone's time and conclude the call by 9 a.m. Therefore, should we not get to your questions during this call, or if you would like to follow up and get detailed financial modeling questions about our first half results, we'd be happy to respond to any follow-up inquiries. There are a few ways to contact us with additional questions. You can reach out to the contacts provided in our news release. You can submit a question through the Send Us a Message link in the Invest section of our website, or you can use the Ask a Question form at the bottom of the webcast screen, and we will be happy to follow up after this call. If you join the conference call through our website event page, there are slides available which will be displayed during the call. In addition, for your reference, our quarterly investor handout is available for download in a PDF file on our website at Cameco.com. Today's conference call is open to all members of the investment community, including the media. During the Q&A session, please limit yourself to two questions and then return to the queue. Note that this conference call will include forward-looking information. which is based on a number of assumptions and actual results could differ materially. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements and we do not undertake any obligation to update any forward-looking statements we make today, except as required by law. As required by securities laws, we also need to make you aware that during today's discussion, the company will make a number of references to non-IFRS and other financial measures. Cameco believes these measures provide investors with useful perspective on underlying business trends, and a full reconciliation of non-IFRS measures is available at cameco.com slash invest. Please refer to our most recent annual information form and MD&A for more information about the factors that could cause these different results and the assumptions we have made. I will now turn it over to our President and CEO, Tim Gitzel.

Well, thank you, Corey, and good morning, everyone. We appreciate you taking the time to join our discussion today. Hope everyone's doing well and has had the chance to enjoy some quality time with friends and family over the summer or winter, depending on where you are in the world today. Our industry is typically quieter during July and August, but with all the attention nuclear has been getting, especially in the past couple of months, we've had very little downtime. In fact, as Corey mentioned, Corey Grant and I are calling in from Toronto today, where we are once again meeting with government representatives to talk about nuclear power. We're excited to be working not only with our local provincial and Canadian governments, but with policymakers from the US and from around the world. These types of discussions and the actions that they generate are critical to expanding nuclear energy in Canada and abroad and ensuring the industry is supported by a secure nuclear fuel cycle. Canada's significant uranium resources and nuclear service infrastructure not only makes our country a key player in the global nuclear fuel supply chain, but it also positions Canada as a leader in enhancing global energy security and supporting clean energy solutions. With our operations across the fuel and reactor life cycles, we believe Cameco is positioned as a central pillar supporting the wave of new nuclear plans announced in recent months. Here in Ontario, OPG has received full approval to begin construction of the first of four planned SMR units, representing what could be the first commercial grid-scale SMRs in North America. In the US, the resurgence of interest in nuclear has resulted in plans to build 10 new reactors across various states, creating opportunities for Westinghouse and its AP1000 reactor technology. Those North American announcements are in addition to a number of others from across the globe, including three reactors in Poland, two reactors in the Czech Republic that are now approved to break ground, additional interest from the UK, and consideration of new nuclear in Sweden and Finland, to name just a few. The advancing dialogue to build safe, secure, and clean nuclear plants is coming amid the supportive shifts in government policies. Alongside broadly favorable developments such as the World Bank, lifting its long-standing ban on nuclear financing. With the continually improving demand picture and a growing number of new build announcements, clean electrons have remained on the critical path to addressing global energy security concerns. And if nuclear energy is on the critical path to those clean electrons, then Cameco, with our Tier 1 assets in stable jurisdictions and strategic investments across the entire nuclear fuel cycle, is a key component on the critical path to global energy security as well. It's exciting to see the market beginning to realize the value of Cameco and the potential for our investment in Westinghouse. As we get started today, I wanted to highlight, as we always do in this industry, the importance of maintaining a long-term view. Geopolitical and trade-related developments may continue to introduce short-term uncertainty, but our strategy has consistently demonstrated resilience in navigating those types of challenges. The alignment of our marketing, operational, and financial decisions has proven to be a real strength as the nuclear fuel market shifts its focus towards security of supply. First and foremost, we've maintained a disciplined and patient approach on the marketing front. We are layering in long-term contracts for both uranium and conversion services, that are designed to protect us from weaker market conditions while still providing exposure to the price improvements needed to support future supply investments. And as customers commit to those contracts, it directly informs our operational planning. We invest in supply to ensure fuel is made available in step with demand. In the past, we've seen how unencumbered supply creates an overhang, slows down contracting, and negatively impacts prices. In fact, even the expectation that uncommitted supplies will be available, credible or not, can stall momentum. So Cameco will never front-run the market. To support our marketing activities and underpin long-term operational planning, we are also dedicated to financial discipline and maintaining a strong balance sheet. That provides us with the flexibility to invest when and where needed and allows us to be patient as the contracting cycle continues to evolve. The bottom line is our actions are deliberate, our decisions are value-driven, and our strategy is built to deliver long-term success. And when we see that the risk to future supply far outweigh the risks to long-term demand, we're confident that we're on the right path with the right strategy. Even with long-term uranium prices holding near decade-long highs, we're still not seeing the level of long-term contracting needed to support both brownfield expansions and the new projects required to meet future demand. Utilities still have a significant amount of uranium to secure to meet their fuel needs through 2045. And now that we're halfway through 2025, It appears likely that it could be yet another year where utilities consume more uranium than they contract in the forward market. Both spot and long-term contracting are down in the first half of the year relative to 2024, pushing more material into a period of significant uncovered demand and even greater supply uncertainty. And we don't expect to see a move to just-in-time delivery for nuclear fuel. Long-term contracting is essential in our market. It enables continued investment in supply and it aligns with both the long-term economics of uranium mining and the processing time it takes to transport, convert, enrich, and fabricate a nuclear fuel bundle. Looking ahead, we believe that procuring uranium will become a top priority, a shift that is not only necessary but unavoidable. Moving to briefly highlight Cameco's second quarter and the first half results, our overall financial performance across the uranium fuel services and Westinghouse segments was strong and has improved our overall 2025 expectations. As we always highlight, quarterly results will vary and it's our annual expectations that matter. Aside from a slight increase in our expected annual average realized price driven by a rise in market prices, the most notable shift was in our full-year expectations from our Westinghouse investment. We now expect our 49% share of Westinghouse's adjusted EBITDA to be between $525 million U.S. and $580 million U.S., driven by the $170 million U.S., increase in our share of Westinghouse's second quarter revenue. That improvement was tied to Westinghouse's participation in a construction project for two nuclear reactors at the Duchovany Power Plant in the Czech Republic, which I mentioned earlier. While all the recent nuclear project announcements have the potential to positively impact our core uranium and fuel services business, We believe the check project in particular points to significant prospective growth opportunities that lie ahead for Westinghouse. As was expected at our uranium operations, this year's second quarter timing of planned maintenance at the Key Lake Mill resulted in lower uranium production and a higher unit cost of sales compared to the second quarter and the first six months of last year. We continue to expect both MacArthur River Key Lake and Cigar Lake to each produce 18 million pounds this year on a 100% basis. However, uranium mining isn't easy. And as we've highlighted at the beginning of this year, our current uranium production plan assumes that ground freezing and development in new mining areas advances as planned, that we maintain access to adequate skilled labor, and that new equipment is commissioned on time. So as we monitor those risks, we will plan accordingly to ensure we meet our commitments. In addition to the production sources we operate, JV Inkay in Kazakhstan remains on track for its target production volume of 8.3 million pounds on a 100% basis. From that volume, our purchase allocation is 3.7 million pounds this year, and shipments from JV Inkay are expected to begin in the second half of 2025. Similar to our Canadian operations, no mining method or production source is ever without risk. JVNCAI's annual production target requires it to successfully manage the availability of sulfuric acid, procurement and supply chain risks, transportation challenges, construction delays, and inflationary pressures on production costs. At our fuel services division our annual production outlook which includes UF6 conversion, UO2 conversion and heavy water reactor fuel bundles remains on track for between 13 million and 14 million KGU of combined fuel services products. Looking at our financial position we've remained diligent in managing our liquidity and our capital structure to deliver on our strategy to take advantage of opportunities, and to self-manage risk. We're maintaining a strong balance sheet guided by our investment grade rating and supported by strong cash flow generation. So from a financial perspective, we are in excellent shape with $716 million in cash and cash equivalents, $1 billion in total debt, and a $1 billion undrawn revolving credit facility. These are incredibly exciting times for the nuclear industry. We're seeing a global shift in how nuclear energy is perceived, with nuclear power included as a critical part of the solution to energy security and the clean energy transition. In the face of ongoing geopolitical uncertainty and increasingly complex global trade dynamics, the importance of sourcing nuclear fuel from trusted experienced and sustainable suppliers like Cameco has never been more clear. It's about more than just fuel. It's about enabling a future energy system that is secure, reliable, and carbon-free. With our world-class tier one fuel cycle assets and our strategic investments across the reactor life cycle, we believe Cameco is uniquely positioned to help power that future. So before we move to Q&A, I wanted to highlight a few changes to our senior management team that will go into effect on September 1st, which we announced this morning. Brad Isaac will be appointed Cameco's president and chief operating officer, with our current chief operating officer, Brian Riley, retiring in 2026. In the meantime, Brian will be assuming the role of senior advisor operations in order to retain and transfer his operational experience and knowledge to the team over the coming months. Heidi Schake, currently Senior Vice President and Deputy Chief Financial Officer, will be appointed Senior Vice President and Chief Financial Officer. Liam Mooney, currently our Vice President of Safety, Health and Environment, will be appointed Senior Vice President and Chief Legal Officer. And Sean Quinn, our outgoing Chief Legal Officer, who will also be retiring in 2026, will assume the role of Senior Advisor of Special Projects so we can capture his expertise as well. I will remain as CEO and will continue to guide this company through the most exciting times that any of us have ever experienced in this industry. So thank you all for joining us today, both on the line and via webcast. We appreciate your continued interest and will now open the floor to your questions.