Cameco (CCJ) is a Canadian company best known for mining uranium and accounting for 16% of world uranium production from its operating mines in North America and Kazakhstan. Cameco has a market capitalization of $7.85B and is listed on Yahoo Finance with a forward P/E of 15.51. Trading just below $20.00 at the time of writing, analysts have put out a median target price of $26.41.
In a recent news item, it was reported that Cameco had engaged two banks to advise on its interest in Urenco, a uranium enrichment firm owned jointly by the British and Dutch governments and two German utility operators EON (EONGY.PK) and RWE (RWEOY.PK). Present owners have apparently signaled their interest in selling their respective stakes and have also employed advisors to facilitate a possible deal. In a more recent news release, Cameco has indicated that a decision whether or not to bid for Urenco is still pending.
Besides mining uranium, Cameco also provides fuel processing services turning yellowcake (U3O8) which is typically produced at uranium mines into uranium trioxide (UO3) at the Blind River Refinery. The refined uranium trioxide is turned into uranium hexafluoride (UF6), or alternatively into uranium dioxide (UO2) at the Port Hope Conversion Facility. Both plants are operated by Cameco.
Uranium dioxide is used in the type of nuclear reactors common in Canada and some other regions, the so-called CANDU reactors. In fact, Cameco has a 31.6% stake in the four Bruce B reactors that burn uranium dioxide.
The second product made at the Port Hope facility (UF6) is delivered to so-called enrichment plants, which serve to process this material into enriched UF6 containing 3% to 5% U235 isotopes used as a fuel for light water nuclear reactors. Urenco provides these enrichment services using highly specialized centrifuges, which are connected in series forming so-called centrifuge cascades. Gaseous UF6 is rotated in these centrifuges and heavier U238 isotopes are separated from the desired U235 isotopes. Urenco maintains several facilities within the European Union and the U.S. and sells enriched UF6 to nuclear utilities in the U.S., Brazil, South-Africa, China and several European countries…
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