Shares of uranium producers are sharply lower after a member of the group, Cameco (CCJ), warned that analyst estimates for fiscal year 2016 are too high.

WHAT'S NEW: Last night, after the close of trading, Canada's largest uranium producer Cameco said that it expects that adjusted net earnings for 2016 will be significantly lower than analysts' earnings estimates. The company said that its not its usual practice to disclose earnings expectations, however, due to its participation in upcoming industry conferences the company felt a need to address the "significant discrepancy" between its view and the current analyst expectations. "Our current earnings expectations are not reflective of the strength of our core uranium business, which saw us achieve our outlook for delivery volumes at a realized price 83% higher than the current spot price," said Cameco president and CEO, Tim Gitzel. "The current earnings expectations do however reflect the consequences of a continued weak uranium market and our resolve to make the necessary decisions to defend and preserve our core uranium business for the long-term benefit of our stakeholders."

FY16 VIEW: The company expects to report an IFRS net loss for 2016 due in part to asset impairments resulting from fair market value assessments at year end. Cameco expects to make total adjustments to net earnings between approximately $180M and $220M after-tax, or 45c to 56c per share, for FY16. The company attributes the need for a reassessed view to FY16 earnings due in part to the implementation of a number of strategic initiatives in 2016. These initiatives include the suspension of production at the company's Rabbit Lake operation and curtailment of its U.S. mining operations; signing of a collaboration agreement with the aboriginal communities located near its Saskatchewan operations; restructuring of its NUKEM segment and corporate office departments and consolidation of office space. The company also cites legal costs related to the tax dispute with the Canada Revenue Agency. The total estimated cost for all these items is approximately $120M in 2016.

OPERATIONAL CHANGES: Cameco is planning a number of actions in 2017 intended to further reduce costs and improve efficiency at its uranium mining operations. The workforce at the McArthur River, Key Lake and Cigar Lake operations is expected to be reduced by approximately 10%, or 120 employees in total. The reduction is planned to be conducted in stages and expected to be completed by the end of May 2017. Cameco also plans to implement changes to the air commuter service by which employees and contract workers get to and from the mine and mill sites in northern Saskatchewan, as well as work schedule changes to achieve additional cost savings. These changes will begin in April 2017 and are expected to be completed during 2018.

PRICE ACTION: Shares of Cameco are down over 18% in afternoon trading to $10.85 per share.

OTHER URANIUM PRODUCERS FOLLOW: Other uranium producers are also lower in afternoon trading, including Uranium Energy (UEC), which is down over 7.5% to $1.45 per share, UR-Energy (URG), which is down 8% to 73c per share, and Uranium Resources (URRE), which is down 8% to $2.13 per share.