Uranium Mining and Exploration

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Potash Corp soars, Cameco tumbles
Murray Lyons, Saskatchewan News Network; CanWest News Service
Published: Monday, January 07, 2008

SASKATOON -- Observers might be forgiven for wanting to quote Charles Dickens in describing the fortunes of Potash Corp. of Saskatchewan, Inc. and uranium producer Cameco Corp. in 2007.

It was the best of times. It was the worst of times ...

Both Saskatoon-based firms are widely held and listed both on the Toronto and New York exchanges, but shareholders of each had a different ride during the year.

Men work about 600 metres (1,969 feet) below the surface at the Cameco McArthur River uranium mine site in northern

A graph of Potash Corp.'s share price looks like an expedition up Everest. The share price started at around $51 at the beginning of the year and rose well past $130.

It has managed to linger in the region of $125 as the year neared its end. All along the way up, the firm reported record quarterly sales and net profits.

This year, Potash Corp. overtook Toronto-based Barrick Gold to become Canada's highest-valued mining company by market capitalization, exceeding the gold miner by a healthy $7 billion.

Demand for fertilizer, particularly potash, grew in Asia and the Americas along with the rising demand for crops such as corn, soybeans and palm that are grown for both human consumption and processing into biofuels.

Asian potash buyers were paying $265 US a tonne out of Vancouver in November, a 44-per-cent year-over-year rise.

A graph of Cameco's share price showed the stock moving up steadily until mid-summer, when it hit a peak of $59.90, then a steady slide down to below $36 as the spot price of uranium slid.

Cameco reported more difficulties throughout its far-flung operations, including contamination under its key refining building in Port Hope, Ont., as well as a late-year underground flood that temporarily shut down the venerable Rabbit Lake operation in northern Saskatchewan.

Throughout the year, Cameco kept revising the time frame it would take to fully plug the major geological leak underground at the Cigar Lake project and move that high-grade deposit toward production, now not slated to begin until 2011.

Cameco recently provided a Cigar Lake update when it said its attempt to plug the water inflow with concrete plug had succeeded and it expected to be ready by February to do a test of how well that plug is holding and that work to control water inflow at Rabbit Lake was also successful.

Cameco executives might argue that the "worst of times" hardly applies to the company's quarter by quarter results in 2007.

Because of the big run-up in uranium prices, partly triggered by the Cigar Lake flood itself in October 2006, Cameco is headed for a year of record revenues and perhaps net earnings as well.

Besides the continuing problems with mines and uranium refineries that require environmental cleanups before operations can restart, Cameco's top executives spent part of the year playing defence, especially after a particularly harsh assessment by an analyst who referred to Cameco's head office, hived off in an industrial part of Saskatoon, as Sleepy Hollow for the inability of the company to make big acquisitions to broaden its global uranium reach.

Cameco president Jerry Grandey bristled at the notion and pointed out to analysts that Cameco's mine production should grow 80 per cent over the next nine years, reaching 36 million pounds of uranium by 2016, just through organic growth.

Analysts will be hoping 2008 is the year Cameco can prove that will happen by making the underground water go away.

http://www.canada.com/reginaleaderpost/news/business_agriculture/story.html?id=a11d5cbc-f192-4a04-91d8-321ea1b0da79