As of June 30, 2023, we had cash and cash equivalents and short-term investments of $2.5 billion,
while our total debt amounted to $1.0 billion. Our cash balances include the April 12, 2023 cash refund of $86 million related to the receipt of revised reassessments from CRA for the 2007 through 2013 tax years and the
$79 million (US) dividend we received from JV Inkai on April 26, 2023. Our cash balances and investments are held in government securities or with banks that are party to our lending facilities. We have a risk management policy that we
follow to manage our exposure to banking counterparties, which limits amount and tenor of cash or investments based on counterparty credit rating. Our investment decisions prioritize security and liquidity and consider concentration amongst our
banking partners. The majority of our cash balances and short-term investments are with Schedule I Canadian banks.
As announced on October 11, 2022,
we have entered into a strategic partnership with Brookfield Renewable and its institutional partners to acquire Westinghouse. Permanent financing is expected to be a mix of capital sources (cash, debt and equity), designed to preserve the
companys balance sheet and ratings strength while maintaining our liquidity. Please see Liquidity and capital resources starting on page 50 of our annual MD&A for more information.
We expect our cash balances, operating cash flows, and the credit facilities put in place to support the close of the Westinghouse transaction, to meet our
2023 capital requirements. Depending on timing, we may have more or less cash than expected at closing and could temporarily draw on our revolving credit facility for short-term working capital purposes.
We have large, creditworthy customers that continue to need our nuclear fuel products and services even during weak economic conditions, and we expect the
contract portfolio we have built will continue to provide a solid revenue stream. In our uranium segment, from 2023 through 2027, we have commitments to deliver an average of 28 million pounds per year, with commitment levels in 2023 through
2025 higher than the average and in 2026 and 2027, lower than the average.
We expect increased production at McArthur River/Key Lake will be positive for
cash flow as we are able to source more of our committed sales from lower-cost produced pounds and are no longer required to expense operational readiness costs directly to cost of sales. However, cash flow from operations for 2023 will be dependent
on the timing and volume of production and the timing and magnitude of our purchasing activity.
With the Supreme Courts dismissal of CRAs
application for leave, the dispute for the 2003 through 2006 tax years is fully and finally resolved in our favour. Furthermore, we are confident the courts would reject any attempt by CRA to utilize the same position and arguments for tax years
2007 through 2014, or its alternate reassessing position for tax years 2014 through 2016 and believe CRA should return the remaining $483 million in cash and letters of credit we have been required to pay or otherwise secure. However, timing of
any further payments is uncertain. See Transfer pricing dispute starting on page 15 for more information.
CASH FROM/USED IN OPERATIONS
Cash provided by operations was $15 million lower this quarter than in the second quarter of 2022 due to lower earnings and an increase in working capital
requirements, which required $58 million more in 2023 than in 2022. Partially offsetting the lower earnings and increased working capital requirements was the cash refund of $86 million related to the revised reassessments from CRA for the
2007 through 2013 tax years as well as a higher dividend payment from JV Inkai and higher interest received due to higher cash and investment balances.
Cash provided by operations was $28 million higher in the first six months of 2023 than for the same period in 2022 due to higher earnings, the
$86 million cash refund from CRA, the higher dividend payment from JV Inkai and higher interest received due to higher cash and investment balances. These factors were partially offset by an increase in working capital requirements, which
required $152 million more in 2023 than in 2022. See note 16 of our interim financial statements for more information.
FINANCING ACTIVITIES
We use debt to provide additional liquidity. We have sufficient borrowing capacity with unsecured lines of credit totalling about $2.7 billion at
June 30, 2023, down from $2.8 billion at March 31, 2023. At June 30, 2023, we had approximately $1.4 billion outstanding in financial assurances, down from $1.6 billion at March 31, 2023, due largely to the return
of letters of credit from CRA.
At June 30, 2023, we had no short-term debt outstanding on our $1.0 billion unsecured revolving credit facility,
unchanged from December 31, 2022. This facility matures October 1, 2026.
|
|
|
|
|
2023 SECOND QUARTER REPORT |
|
|
21 |
|