Cameco shares pop after favorable Canada tax ruling

Shares of uranium titan Cameco Corporation (TSX:CCO) popped on Thursday after the Tax Court of Canada ruled in the company’s favor in a dispute with the Canada Revenue Agency (CRA) over the 2003, 2005 and 2006 tax years.

The Tax Court ruled that Cameco’s marketing and trading structure involving foreign subsidiaries and the related transfer pricing methodology used for certain intercompany uranium sale and purchase agreements are in full compliance with Canadian laws for those years. 

The court referred the matter back to the Minister of National Revenue to issue new reassessments for 2003, 2005 and 2006 in line with the court’s decision.

Shares of Cameco in New York jumped almost 16.5% to US$11.45 in the Thursday premarket, having closed 0.2% up on Wednesday at US$9.83. In Canada, Cameco stock closed Wednesday up 0.71% at C$12.79.

READ: Cameco, Areva celebrate start of output at Cigar Lake

“We followed the rules, yet this dispute has caused significant uncertainty for our investors during a period of prolonged weakness in markets for our products,” said Cameco president and CEO Tim Gitzel.

“Now we hope CRA accepts the decision and applies it to other tax years in dispute, so we can focus on managing our business for the benefit of all our stakeholders,” he added.

The CRA has 30 days from the date of the decision to appeal to Canada’s Federal Court of Appeal.

If it is appealed, it would take another two years for the Federal Court to hear and decide the matter.

The Tax Court decision is not legally binding for other tax years, but Cameco believes there is nothing in the decision that would warrant a different outcome for the other tax years in question. Cameco will be making an application to the court to recover the substantial costs incurred over the course of this case.

Cameco is one of the world’s largest uranium producers. The company is based in Saskatoon, Saskatchewan.

Story by ProactiveInvestors