Uranium Supply Squeeze Bolsters Cameco's Strategic Position

Cameco reports strong 2025 results and projects sustained high uranium prices due to a record supply-demand deficit, disciplined production, and robust utility demand.

Despite broader market declines, Cameco Corporation continues to paint a robust picture for the uranium sector. The company's recent presentations highlight a deepening structural deficit, where years of under-contracting by utilities collide with persistent supply challenges. This fundamental mismatch is setting the stage for a potentially sustained period of higher price levels.

Operational Discipline Amid Market Strength

Cameco's latest operational update underscores a strategy of measured growth. The company reported production of 34 million pounds of uranium for the full year 2025. Looking ahead to 2026, output from its flagship McArthur River operation is projected to reach up to 17 million pounds, a figure intentionally held slightly below historical capacity rates. Management emphasized a commitment to aligning production with demand through "patience and discipline," resisting the urge to ramp up output precipitously.

This disciplined approach extends to the conversion market, another identified bottleneck. Cameco noted its Port Hope facility is currently the largest operating conversion plant in the Western world. The company stated that any expansion of this capacity would only be considered if long-term contract terms could justify the required capital investment.

Financial Performance Provides Solid Backdrop

The company's confident market outlook is supported by strong recent financial results. For the fourth quarter of 2025, Cameco reported earnings per share of USD $0.37 (adjusted), surpassing consensus estimates by 14%. Quarterly revenue reached USD $877 million, exceeding expectations by 9%.

Full-year 2025 results were equally positive:
* Revenue totaled USD $3.48 billion, an 11% increase over the prior year.
* Diluted earnings per share came in at USD $1.35, surging 246%.
* Net earnings reached CAD $590 million, a significant rise from CAD $172 million in 2024.
* The board approved a 50% dividend increase compared to 2024.

Furthermore, Cameco's 49% stake in Westinghouse Electric turned around dramatically, moving from a net loss of USD $218 million to a net profit of USD $58 million. Westinghouse's adjusted EBITDA was reported at CAD $780 million, a 61% year-over-year gain.

Record "Uncovered Requirements" Signal Tightening Market

At the BMO Global Metals, Mining & Critical Minerals Conference in Florida, President and COO Grant Isaac detailed a sharply tightening market. He stated that utility companies have contracted below the "replacement rate" for approximately 12 to 14 years, securing less uranium than is needed for long-term security of supply. This practice has created what Cameco terms an "uncovered requirements wedge," which has now grown to record dimensions.

Concurrently, the company views often-cited supply projections as overly optimistic. Cameco pointed out that roughly 30% of its own permitted capacity remains idled. Additional supply has been constrained by disruptions, including the outage at an Orano-operated mine in Niger.

The price environment reflects this tension. Cameco indicated long-term uranium contract prices are currently around USD $90 per pound. Market-related contracts also suggest the potential for prices to reach triple digits. In response, the company has adjusted its sensitivity tables to include upper bounds of USD $160 per pound. Isaac described the start of 2026 as "very strong," with notable market activity, rising forward prices, and higher contract floors and ceilings.

U.S. Reactor Partnership Could Unlock Major Demand

A significant future demand driver discussed was the Memorandum of Understanding announced in October 2025 between the U.S. government, Cameco, and Brookfield Asset Management. This partnership aims to facilitate the construction of new AP1000 nuclear reactors across the United States.

Cameco expressed confidence that a formal announcement for orders covering eight to ten reactors could be made in 2026. Isaac identified long-lead procurement items such as reactor pressure vessels, steam generators, coolant pumps, and instrumentation and control modules. The company is also advocating for nuclear fuel itself to be classified as a long-lead item within the procurement process.

The scale of this potential demand is substantial. Cameco quantified that ten reactors built over a decade—including initial core loads and ongoing fuel requirements—would represent approximately 65 million pounds of incremental uranium demand not currently factored into mainstream market projections.

Share Price Weathers Broad Market Decline

On the day of the BMO conference, Cameco's shares closed at USD $118.63, a decline of 2.14%. This move was in line with a broad market sell-off (Dow Jones -1.66%, S&P 500 -1.04%, Nasdaq -1.13%) triggered by tariff policy uncertainty and a widely discussed research report on AI sector disruption. Despite the daily drop, the stock recorded a weekly gain of 5.08% through the conference date.