The ongoing saga at Cigar Lake continues to haunt Cameco Inc. investors.
Late Thursday, the uranium miner released its long-awaited technical report on the Northern Saskatchewan project, revealing higher costs and a slower-than-expected ramp-up of production.
"While the company had recently disclosed a revised capital cost estimate of around $1.0 billion and a revised start-up timeline of 2013, the technical report disclosed higher than forecast life of mine cash operating costs of $23/lb (up from $14/lb) and a relatively slow production ramp up timeline (with full capacity not expected until 2017)," Orest Wowkowdaw, Canaccord Adams analyst, said.
Mr. Wowkodaw lowered his net present value for Cameco by 9.1% that resulted in a downgrade of the stock to Sell from Hold. His new price target is $25, down from $28 previously.
"While we remain bullish on the medium- to long-term fundamentals for uranium, we see limited upside in Cameco shares in the near-term," he said.
UBS analyst Brian MacArthur maintained his Buy rating but reduced his price target to $34 from $36. He said the extended mine ramp up was expected, but cash costs were higher than his forecast.