The world's largest publicly traded uranium company, Cameco, is to receive a refund on some of the letters of credit (L/Cs) it has posted with the Canadian government in its protracted dispute with the Canada Revenue Agency (CRA).

But this is only a partial victory for the uranium miner because the refund only relates to certain tax years; the cash and L/Cs it will still need to lodge with the Canadian government pending resolution of disputes pertaining too other years will continue to put strain Cameco's finances.

Partial refund

Cameco is expecting a refund of about 300 million Canadian dollars (C$300 million - US$220) after the CRA issued revised reassessments for the 2007 through 2013 tax years, but Canada's tax authority continues to hold cash and L/Cs from the company based in the Canadian province of Saskatchewan.

The latest refund includes C$89 million in cash and C$211 million in L/Cs, which the company had remitted based on prior reassessments CRA issued in a long-standing tax dispute. Cameco says the timing of the refund has not yet been determined.

Transfer pricing adjustment

A series of court decisions that were completely and unequivocally in Cameco's favour for the 2003, 2005 and 2006 tax years determined that the income earned by a Cameco foreign subsidiary from the sale of non-Canadian produced uranium was not taxable in Canada.

As a result, CRA has issued reassessments reducing the proposed transfer pricing adjustment from C$5.12 billion to C$3.25 billion, resulting in a reduction of C$1.87 billion in income taxable in Canada. These revisions to income result in the refund of approximately C$300 million.

Cameco describes the pending return of C$300 million in cash and security as "positive and certainly warranted", but its broader tax dispute with CRA remains ongoing.

Finances still tied-up

The revenue agency continues to hold a further C$480 million, consisting of C$206 million in cash and C$274 million in L/Cs, that Cameco has remitted or secured to date.

The uranium miner says the cash and L/Cs are "tying up a significant portion of our financial capacity."

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.