Cameco Reports Second Quarter Financial Results

Cameco Reports Second Quarter Financial Results 
SASKATOON, SASKATCHEWAN -- (Marketwired) -- 08/01/13 -- ALL AMOUNTS
ARE STATED IN CDN $ (UNLESS NOTED) 


 
--  second quarter results as expected 
--  production, uranium and fuel services sales and consolidated revenue
    outlook reconfirmed 
--  restructured our business, targeting a 10% future cost reduction through
    a combination of reduced spending for administration, operations and
    capital 
--  at Cigar Lake preparing to begin jet boring in ore 
--  our share of the total capital cost for Cigar Lake expected to increase
    between 15% and 25% 
--  in the US, our North Butte satellite operation began production 

 
Cameco (TSX:CCO) (NYSE:CCJ) today reported its consolidated financial
and operating results for the second quarter ended June 30, 2013 in
accordance with International Financial Reporting Standards (IFRS).  
"Despite the prolonged weakness in the uranium market, our strong
contract portfolio has continued to serve us well," said Tim Gitzel,
president and CEO, "providing us with average realized prices that
continue to be above the current uranium spot price.  
"This year, we have undergone some restructuring with the intent of
increasing profitability and achieving a sustainable 10% future cost
reduction. The changes we've made are part of our commitment to
improving near-term financial results and creating shareholder value
by growing the company and remaining a low-cost producer. We continue
to focus on achieving our strategy to profitably increase production,
and look forward to Cigar Lake starting production later this year as
a highlight of our progress toward that goal." 


 
                                   THREE MONTHS         SIX MONTHS          
                                    ENDED JUNE          ENDED JUNE          
HIGHLIGHTS                              30                  30              
                                   -------------       ------------         
($ MILLIONS EXCEPT WHERE INDICATED) 2013   2012 CHANGE  2013   2012 CHANGE  
----------------------------------------------------------------------------
Revenue                              421    282     49%  865    748     16% 
----------------------------------------------------------------------------
Gross profit                          99     50     98%  194    200     (3)%
----------------------------------------------------------------------------
Net earnings attributable to equity                                         
 holders                              34      5    580%   43    133    (68)%
----------------------------------------------------------------------------
  $ per common share (diluted)      0.09   0.01    800% 0.11   0.34    (68)%
----------------------------------------------------------------------------
Adjusted net earnings (see non-                                             
 IFRS)                                61     31     97%   88    151    (42)%
----------------------------------------------------------------------------
  $ per common share (adjusted and                                          
   diluted)                         0.15   0.08     88% 0.22   0.38    (42)%
----------------------------------------------------------------------------
Cash provided by operations (after                                          
 working capital changes)            (37)  (117)    68%  232    257    (10)%
----------------------------------------------------------------------------

 
SECOND QUARTER 
Net earnings attributable to equity holders (net earnings) this
quarter were $34 million ($0.09 per share diluted) compared to $5
million ($0.01 per share diluted) in the second quarter of 2012. Net
earnings were impacted by the items noted below, partially offset by
mark-to-market losses on foreign exchange derivatives.  
On an adjusted basis, our earnings this quarter were $61 million
($0.15 per share diluted) compared to $31 million ($0.08 per share
diluted) (see non-IFRS measure) in the second quarter of 2012, mainly
due to: 


 
--  higher earnings from our uranium business based on higher realized
    prices and increased sales volumes 
--  higher tax recoveries due to a decline in pre-tax earnings in Canada 
--  partially offset by lower earnings in the electricity business as a
    result of lower generation and higher operating costs 

 
See Financial results by segment for more detailed discussion. 
FIRST SIX MONTHS  
Net earnings in the first six months of the year were $43 million
($0.11 per share diluted) compared to $133 million ($0.34 per share
diluted) in the first six months of 2012. In addition to the items
noted below, net earnings were impacted by mark-to-market losses on
foreign exchange derivatives.  
On an adjusted basis, our earnings for the first six months of this
year were $88 million ($0.22 per share diluted) compared to $151
million ($0.38 per share diluted) (see non-IFRS measure) for the
first six months of 2012, mainly due to: 


 
--  lower earnings in the electricity business as a result of lower
    generation and higher operating costs 
--  lower earnings from our uranium business based on lower sales volumes 
--  higher expenditures for administration due to the addition of NUKEM's
    administration and advisory fee, and costs for corporate restructuring
    as described in Restructuring 
--  partially offset by higher tax recoveries due to a decline in pre-tax
    earnings in Canada 

 
See Financial results by segment for more detailed discussion. 
Uranium market update  
Similar to the previous quarter, near- to medium-term uncertainty
continues to impede a recovery in the market, with neither buyers nor
suppliers under significant pressure to contract. Volumes contracted
have remained low, and uranium prices were relatively stable during
the second quarter, though there has recently been downward pressure
on the spot price. We believe the market will remain in this
'wait-and-see' mode for the present, particularly during the summer
months, during which contracting is traditionally light.  
The inventories and lack of demand as a result of Japan's idled
reactors are largely responsible for the continued market
sluggishness, and restarts of those reactors will be an important
catalyst. There has been some progress in Japan: the Nuclear
Regulatory Authority finalized new safety guidelines against which
reactor restarts will be evaluated, and as of July 31, four utilities
have applied to restart 12 reactors. Like most industry participants,
we will be paying close attention to how the review process
progresses and what it could mean for subsequent restart
applications.  
Over the long term, Japan's energy policy is still being determined;
however, we believe nuclear remains an important energy source for
the country. Japan's Liberal Democratic Party (LDP) has expressed
support for nuclear energy as being important for the country's
economy and for achieving their environmental goals. In July, the
party won control of the country's upper house, giving the LDP a
strong majority, which we expect to be positive for the industry.  
The supply side continues to evolve. Over the past few quarters, we
have seen some projects delayed due to uranium prices insufficient to
support new production. However, more recently, there have been
announcements that other projects, primarily driven by sovereign
interests, will go ahead despite market conditions. These
developments do not directly impact the near-term market, but could
have an effect on the longer term outlook for the uranium industry.  
In July, the US Department of Energy (DOE) updated its plan for
excess uranium inventories, which is used to outline such things as
total volume of inventories, planned use and future sales. Overall,
total UF6 volumes and future sales referenced in the plan are
generally in line with industry expectations. However, the revised
plan removes the well-known guideline which had limited DOE uranium
excess inventory sales to 10% of US reactor fuel requirements. There
is potential for this to impact the uranium market; however, DOE
sales will continue to be governed by Secretarial Determinations,
which require that any such sales not have a material adverse impact
on the US uranium, conversion and enrichment industries.  
Despite the current challenging industry environment, we are well
positioned to continue to succeed. We have the advantage of extensive
mineral reserves and resources, low cost operations, a strong sales
contract portfolio, experienced employees and a growth strategy that
will allow us to remain competitive in challenging environments,
while maintaining the ability to respond with additional production
when the market signals that more supply is required. 
Outlook for 2013  
Our outlook reflects our expectations for 2013 and the growth
expenditures necessary to help us achieve our strategy. Our outlook
for NUKEM sales volumes, revenue and operating cash flows,
electricity average unit cost of sales (including D&A) and capital
expenditures, uranium exploration and consolidated capital
expenditures has changed and we explain the changes below. We do not
provide an outlook for the items in the table that are marked with a
dash.  
See Financial results by segment for details.  
2013 FINANCIAL OUTLOOK  
NUKEM is included in the consolidated amounts; BPLP is not included
in the consolidated amounts due to a change in accounting.  


 
                                            FUEL                            
                  CONSOLIDATED URANIUM      SERVICES  NUKEM     ELECTRICITY 
----------------------------------------------------------------------------
Production        -            23.3 million 15 to 16  -         -           
                               lbs          million                         
                                            kgU                             
----------------------------------------------------------------------------
Sales volume      -            31 to 33     Increase  8 to 10   -           
                               million lbs  5% to 10% million               
                                                      lbs U3O8              
----------------------------------------------------------------------------
Capacity factor   -            -            -         -         88%         
----------------------------------------------------------------------------
Revenue compared  Increase     Increase     Increase  $450 to   Decrease    
 to 2012          25% to 30%   0% to 5%(1)  5% to 10% $550      5% to 10%   
                                                      million               
----------------------------------------------------------------------------
NUKEM operating   -            -            -         $60 to $80-           
 cash flows                                           million               
----------------------------------------------------------------------------
NUKEM gross profit-            -            -         3% to 5%  -           
----------------------------------------------------------------------------
Average unit cost -            Increase     Decrease  -         Increase    
 of                            0% to 5%(2)  0% to 5%            20% to 25%  
 sales(including                                                            
 D&A)                                                                       
----------------------------------------------------------------------------
Direct            Increase     -            -         $10 to $12-           
 administration   0% to 5%                            million               
 costs compared to                                                          
 2012(3)                                                                    
----------------------------------------------------------------------------
Exploration costs -            Decrease     -         -         -           
 compared to 2012              15% to 20%                                   
----------------------------------------------------------------------------
Tax rate          Recovery of  -            -         Expense of-           
                  15% to 20%                          30% to 35%            
----------------------------------------------------------------------------
Capital           $685         -            -         -         $80 million 
 expenditures     million(4)                                    (our share) 
----------------------------------------------------------------------------
1   Based on a uranium spot price of $34.50 (US) per pound (the Ux spot     
    price as of July 29, 2013), a long-term price indicator of $55.00 (US)  
    per pound (the Ux long-term indicator on July 29, 2013) and an exchange 
    rate of $1.00 (US) for $1.00 (Cdn).                                     
2   This increase is based on the unit cost of sale for produced material   
    and committed long-term purchases. If we decide to make discretionary   
    purchases in 2013 then we expect the overall unit cost of product sold  
    to increase further.                                                    
3   Direct administration costs do not include stock-based compensation     
    expenses or restructuring costs.                                        
4   Does not include our share of capital expenditures at BPLP.             

 
In the NUKEM segment, sales volumes are now expected to be 8 million
to 10 million pounds (previously 9 million to 11 million pounds) as a
result of a decision to decrease planned sales activities given the
current spot price. We also now expect revenue of $450 million to
$550 million (previously $500 million to $600 million) due to the
reduced sales expectation. Operating cash flows are, therefore, also
expected to be less than previously forecast at $60 million to $80
million (previously $100 million to $125 million).  
We are discontinuing providing outlook for NUKEM's SWU sales volumes
as the amount is not material to our results. Therefore, we will not
be reporting NUKEM's SWU sales volumes and will also discontinue
reporting UF6 sales volumes. However, the revenue for these sales
will be included in the total revenue figure reported for NUKEM.  
In our electricity segment, average unit cost of sales (including
D&A) is now expected to increase by 20% to 25% (previously 25% to
30%) due to lower outage costs.  
We now expect uranium exploration expenditures to be 15% to 20% lower
than 2012 (previously 5% to 10%), due to the restructuring activities
which took place during the first quarter.  
We expect consolidated capital expenditures to be about $685 million
compared to our previous estimate of $655 million mainly due to
increased costs at Cigar Lake. In 2013, we expect our capital cost
for Cigar Lake will be about $260 million compared to our previous
estimate of $182 million due to additional scope, increased costs at
the mine and mill and the inclusion of some capital costs that will
be incurred subsequent to the mining of the first ore and not
included in our previous estimate. Please see Cigar Lake for
additional information. For our expected capital expenditures
breakdown for 2013 by site and our outlook for investing activities
in 2014 and 2015, please see Capital spending.  
Capital expenditures for BPLP are now expected to be $80 million
(previously $93 million) due to deferral of projects.  
In our uranium and fuel services segments, our customers choose when
in the year to receive deliveries, so our quarterly delivery
patterns, sales volumes and revenue, can vary significantly. However,
the majority of delivery notices have been received for 2013,
reducing the variability of our delivery pattern for the remainder of
the year. Uranium sales for the balance of 2013 are expected to be
more heavily weighted (more than 60%) to the second half of the year. 
SENSITIVITY ANALYSIS  
For the rest of 2013:  


 
--  a change of $5 (US) per pound in both the Ux spot price ($34.50 (US) per
    pound on July 29, 2013) and the Ux long-term price indicator ($55.00
    (US) per pound on July 29, 2013) would change revenue by $37 million and
    net earnings by $19 million 
--  a change of $5/MWh in the electricity spot price would change our 2013
    net earnings by $1 million based on the assumption that the spot price
    will remain below the floor price of $52.34/MWh provided under BPLP's
    agreement with the Ontario Power Authority (OPA) 
--  a one-cent change in the value of the Canadian dollar versus the US
    dollar would change revenue by $7 million and adjusted net earnings by
    $3 million, with a decrease in the value of the Canadian dollar versus
    the US dollar having a positive impact. This sensitivity is based on an
    exchange rate of $1.00 (US) for $1.00 (Cdn). 

 
ADJUSTED NET EARNINGS (NON-IFRS MEASURE) 
Adjusted net earnings is a measure that does not have a standardized
meaning or a consistent basis of calculation under IFRS (non-IFRS
measure). We use this measure as a more meaningful way to compare our
financial performance from period to period. We believe that, in
addition to conventional measures prepared in accordance with IFRS,
certain investors use this information to evaluate our performance.
Adjusted net earnings is our net earnings attributable to equity
holders, adjusted to better reflect the underlying financial
performance for the reporting period. The adjusted earnings measure
reflects the matching of the net benefits of our hedging program with
the inflows of foreign currencies in the applicable reporting period,
and has been adjusted for impairment charges on a non-producing
property.  
Adjusted net earnings is non-standard supplemental information and
should not be considered in isolation or as a substitute for
financial information prepared according to accounting standards.
Other companies may calculate this measure differently, so you may
not be able to make a direct comparison to similar measures presented
by other companies.  
The table below reconciles adjusted net earnings with our net
earnings. 


 
                                          THREE MONTHS          SIX MONTHS  
                                          ENDED JUNE 30       ENDED JUNE 30 
                                    ----------------------------------------
($ MILLIONS)                          2013         2012   2013         2012 
----------------------------------------------------------------------------
Net earnings attributable to equity     34            5     43          133 
 holders                                                                    
----------------------------------------------------------------------------
Adjustments                                                                 
  Adjustments on derivatives(1)         36           35     61           25 
   (pre-tax)                                                                
  Income taxes on adjustments to        (9)          (9)   (16)          (7)
   derivatives                                                              
----------------------------------------------------------------------------
Adjusted net earnings                   61           31     88          151 
----------------------------------------------------------------------------
1   We do not apply hedge accounting for our portfolio of foreign currency  
    forward sales contracts. However, we have adjusted our gains or losses  
    on derivatives to reflect what our earnings would have been had hedge   
    accounting been in place.                                               

 
RESTRUCTURING  
In response to current market uncertainty, we have made some
modifications to our operating and development plans to ensure we
remain a low cost producer and profitably grow the company. This
resulted in the consolidation of a number of business and operating
functions, which has allowed us to reduce the workforce by about 8%.
The changes target achieving a sustainable 10% future cost reduction
through a combination of decreased spending for administration,
operations and capital. In order to achieve our targeted cost
reduction, we have incurred $13 million in restructuring costs, which
will impact our financial results this year. Of this total, $5
million relates to an increase in our direct administration costs,
while the other $8 million will flow through cost of sales. We do not
expect to incur any significant additional costs. Our goal is to make
the company a more efficient, streamlined and profitable organization
that is prepared to weather the current uncertainty, increase our
focus on execution and be ready for the sustained long-term growth we
expect. 
CAPITAL SPENDING  
We classify capital spending as sustaining, capacity replacement or
growth. As a mining company, sustaining capital is the money we spend
to keep our facilities running in their present state, which would
follow a gradually decreasing production curve, while capacity
replacement capital is spent to maintain current production levels at
those operations. Growth capital is money we invest to generate
incremental production, and for business development. 


 
CAMECO'S SHARE ($ MILLIONS)                                        2013 PLAN
----------------------------------------------------------------------------
Sustaining capital                                                          
  McArthur River/Key Lake                                                 55
  Rabbit Lake                                                             70
  US ISR                                                                   5
  Inkai                                                                    7
  Fuel services                                                           10
  Other                                                                   23
----------------------------------------------------------------------------
Total sustaining capital                                                 170
----------------------------------------------------------------------------
Capacity replacement capital                                                
  McArthur River/Key Lake                                                 75
  Rabbit Lake                                                              5
  US ISR                                                                  30
  Inkai                                                                   20
----------------------------------------------------------------------------
Total capacity replacement capital                                       130
----------------------------------------------------------------------------
Growth capital                                                              
  McArthur River/Key Lake                                                 55
  US ISR                                                                  30
  Millennium                                                               5
  Inkai                                                                   21
  Cigar Lake                                                             260
  Fuel Services                                                            4
----------------------------------------------------------------------------
Total growth capital                                                     375
----------------------------------------------------------------------------
Talvivaara                                                                10
----------------------------------------------------------------------------
Total uranium & fuel services                                            685
----------------------------------------------------------------------------
Electricity (our 31.6% share of BPLP)                                     80
----------------------------------------------------------------------------

 
We expect our total sustaining capital to be $170 million (previously
$200 million) primarily due to a reduction in expenditures at
McArthur River/Key Lake related to restructuring activities. We
expect our total growth capital to be $375 million (previously $310
million) due to additional scope and increased costs at Cigar Lake.
Please see Cigar Lake for additional information. Our capital
spending related to Talvivaara is expected to increase to $10 million
this year (previously $5 million) due to increased costs associated
with the construction of the uranium extraction facility. 
OUTLOOK FOR INVESTING ACTIVITIES  


 
CAMECO'S SHARE ($ MILLIONS)                         2014 PLAN      2015 PLAN
----------------------------------------------------------------------------
Sustaining capital                                    200-220        195-215
----------------------------------------------------------------------------
Capacity replacement capital                          125-140        120-135
----------------------------------------------------------------------------
Growth capital                                        175-190        135-150
----------------------------------------------------------------------------
Total uranium & fuel services                         500-550        450-500
----------------------------------------------------------------------------

 
We expect total uranium and fuel services capital expenditures to be
between $500 million and $550 million in 2014 (previously $600
million to $650 million) and between $450 million and $500 million in
2015 (previously $550 million to $600 million) due to a decrease in
expected sustaining capital expenditures resulting from our
restructuring activities.  
Financial results by segment 
Uranium 


 
                                THREE MONTHS           SIX MONTHS           
                                ENDED JUNE 30         ENDED JUNE 30         
                                -------------         -------------         
HIGHLIGHTS                        2013   2012 CHANGE    2013   2012 CHANGE  
----------------------------------------------------------------------------
Production volume (million lbs)    4.4    5.3    (17)%  10.3   10.2      1% 
----------------------------------------------------------------------------
Sales volume (million lbs)         6.4    5.0     28%   11.6   13.2    (12)%
----------------------------------------------------------------------------
Average spot price ($US/lb)      40.18  51.33    (22)% 41.45  51.53    (20)%
Average long-term price ($US/lb) 57.00  61.00     (7)% 56.75  60.67     (6)%
Average realized price                                                      
  ($US/lb)                       46.30  42.17     10%  47.24  46.20      2% 
  ($Cdn/lb)                      47.35  42.29     12%  47.75  46.66      2% 
----------------------------------------------------------------------------
Average unit cost of sales                                                  
 ($Cdn/lb) (including D&A)       33.25  33.45     (1)% 32.65  32.54      -  
----------------------------------------------------------------------------
Revenue ($ millions)               305    211     45%    552    617    (11)%
----------------------------------------------------------------------------
Gross profit ($ millions)           91     44    107%    174    187     (7)%
----------------------------------------------------------------------------
Gross profit (%)                    30     21     43%     32     30      7% 
----------------------------------------------------------------------------

 
SECOND QUARTER 
Production volumes this quarter were 17% lower compared to the second
quarter of 2012, due mainly to lower production at Rabbit Lake and
McArthur River/Key Lake. See Operations and development project
updates for more information.  
Uranium revenues were up 45% due to a 12% increase in the Canadian
dollar average realized price and a 28% increase in sales volumes.
The average realized price in the second quarter of 2012 was
significantly lower due to lower US dollar prices under fixed price
contracts.  
Our realized prices this quarter were higher than the second quarter
of 2012, mainly due to higher US dollar prices under fixed price
contracts. In the second quarter of 2013, our realized foreign
exchange rate was $1.02 compared to $1.00 in the prior year.  
Total cost of sales (including D&A) increased by 28% ($214 million
compared to $167 million in 2012). This was mainly the result of a
28% increase in sales volumes.  
The net effect was a $47 million increase in gross profit for the
quarter. 
FIRST SIX MONTHS 
Production volumes for the first six months of the year were 1%
higher than in the previous year due to higher production from Inkai.
See Operations and development project updates for more information. 
For the first six months of 2013, uranium revenues were down 11%
compared to 2012, due to a 12% decrease in sales volumes, partially
offset by a 2% increase in the Canadian dollar average realized
price.  
Our realized prices for the first six months of 2013 were higher than
2012, mainly due to higher US dollar prices under fixed price
contracts.  
Total cost of sales (including D&A) decreased by 12% ($377 million
compared to $430 million in 2012). This was mainly the result of a
12% decrease in sales volumes.  
The net effect was a $13 million decrease in gross profit for the
first six months.  
The table below shows the costs of produced and purchased uranium
incurred in the reporting periods (which are non-IFRS measures, see
the paragraphs below the table). These costs do not include selling
costs such as royalties, transportation and commissions, nor do they
reflect the impact of opening inventories on our reported cost of
sales. 


 
                                THREE MONTHS           SIX MONTHS           
                                ENDED JUNE 30         ENDED JUNE 30         
                                -------------         -------------         
($CDN/LB)                         2013   2012 CHANGE    2013   2012 CHANGE  
----------------------------------------------------------------------------
Produced                                                                    
  Cash cost                      23.00  20.13     14%  20.78  21.21     (2)%
  Non-cash cost                   9.34   7.87     19%   8.83   7.70     15% 
----------------------------------------------------------------------------
  Total production cost          32.34  28.00     16%  29.61  28.91      2% 
----------------------------------------------------------------------------
  Quantity produced (million                                                
   lbs)                            4.4    5.3    (17)%  10.3   10.2      1% 
----------------------------------------------------------------------------
Purchased                                                                   
  Cash cost                      24.05  24.38     (1)% 28.45  28.18      1% 
----------------------------------------------------------------------------
  Quantity purchased (million                                               
   lbs)                            2.6    2.4      8%    4.9    3.8     29% 
----------------------------------------------------------------------------
Totals                                                                      
  Produced and purchased costs   29.26  26.87      9%  29.24  28.71      2% 
----------------------------------------------------------------------------
  Quantities produced and                                                   
   purchased (million lbs)         7.0    7.7     (9)%  15.2   14.0      9% 
----------------------------------------------------------------------------

 
Cash cost per pound, non-cash cost per pound and total cost per pound
for produced and purchased uranium presented in the above table are
non-IFRS measures. These measures do not have a standardized meaning
or a consistent basis of calculation under IFRS. We use these
measures in our assessment of the performance of our uranium
business. We believe that, in addition to conventional measures
prepared in accordance with IFRS, certain investors use this
information to evaluate our performance and ability to generate cash
flow. 
These measures are non-standard supplemental information and should
not be considered in isolation or as a substitute for measures of
performance prepared according to accounting standards. These
measures are not necessarily indicative of operating profit or cash
flow from operations as determined under IFRS. Other companies may
calculate these measures differently so you may not be able to make a
direct comparison to similar measures presented by other companies.  
To facilitate a better understanding of these measures, the following
table presents a reconciliation of these measures to our unit cost of
sales for the second quarters and the first six months of 2013 and
2012. 
CASH AND TOTAL COST PER POUND RECONCILIATION 


 
                                 THREE MONTHS           SIX MONTHS          
                                ENDED JUNE 30         ENDED JUNE 30         
                                -------------         -------------         
($ MILLIONS)                     2013   2012  CHANGE   2013   2012  CHANGE  
----------------------------------------------------------------------------
Cost of product sold            213.8  167.3      28% 377.3  430.3     (12)%
Add / (subtract)                                                            
  Royalties                     (17.6) (24.2)    (27)%(32.1) (57.6)    (44)%
  Standby charges                (9.1)  (5.8)     57% (17.2) (12.9)     33% 
  Other selling costs             0.8   (0.4)   (300)%  3.6   (2.4)   (250)%
  Change in inventories         (24.2)  28.3    (186)% 21.8  (34.0)    164% 
----------------------------------------------------------------------------
Cash operating costs (a)        163.7  165.2      (1)%353.4  323.4       9% 
Add / (subtract)                                                            
  Depreciation and amortization  46.7   32.7      43%  66.1   64.6       2% 
  Change in inventories          (5.6)   9.0    (162)% 24.9   13.9      79% 
----------------------------------------------------------------------------
Total operating costs (b)       204.8  206.9      (1)%444.4  401.9      11% 
----------------------------------------------------------------------------
  Uranium produced & purchased                                              
   (millions lbs) (c)             7.0    7.7      (9)% 15.2   14.0       9% 
----------------------------------------------------------------------------
Cash costs per pound (a / c)    23.39  21.45       9% 23.25  23.10       1% 
Total costs per pound (b / c)   29.26  26.87       9% 29.24  28.71       2% 
----------------------------------------------------------------------------

 
Fuel services  
(includes results for UF6, UO2 and fuel fabrication) 


 
                                 THREE MONTHS           SIX MONTHS          
                                ENDED JUNE 30         ENDED JUNE 30         
                                -------------         -------------         
HIGHLIGHTS                        2013   2012 CHANGE    2013   2012 CHANGE  
----------------------------------------------------------------------------
Production volume (million kgU)    4.8    4.3     12%    9.6    8.8      9% 
----------------------------------------------------------------------------
Sales volume (million kgU)         4.0    4.2     (5)%   7.3    7.1      3% 
----------------------------------------------------------------------------
Average realized price                                                      
 ($Cdn/kgU)                      16.45  16.94     (3)% 17.89  18.43     (3)%
----------------------------------------------------------------------------
Average unit cost of sales                                                  
 ($Cdn/kgU) (including D&A)      13.98  14.76     (5)% 15.03  15.54     (3)%
----------------------------------------------------------------------------
Revenue ($ millions)                65     70     (7)%   131    130      1% 
----------------------------------------------------------------------------
Gross profit ($ millions)           10      9     11%     21     20      5% 
----------------------------------------------------------------------------
Gross profit (%)                    15     13     15%     16     15      7% 
----------------------------------------------------------------------------

 
SECOND QUARTER 
Total revenue decreased by 7% due to a 5% decrease in sales volumes
and a 3% decrease in realized price.  
The total cost of sales (including D&A) decreased by 10% ($55 million
compared to $61 million in the second quarter of 2012) mainly due to
a 5% decrease in sales volumes and differences in the mix of fuel
services products sold.  
The net effect was a $1 million increase in gross profit. 
FIRST SIX MONTHS  
In the first six months of the year, total revenue increased by 1%
due to a 3% increase in sales volumes, offset by a 3% decrease in
realized price.  
The total cost of sales (including D&A) was unchanged at $110
million, as the 3% increase in sales volume was offset by a 3%
decrease in the average unit cost of sales. The decrease in the
average unit cost of sales was due to the mix of fuel services
products sold.  
The net effect was a $1 million increase in gross profit. 
NUKEM 


 
                   THREE MONTHS                     SIX MONTHS              
                  ENDED JUNE 30                  ENDED JUNE 30              
               -----------------             ------------------             
($ MILLIONS                                                                 
 EXCEPT WHERE          PURCHASE                       PURCHASE              
 INDICATED)    NUKEM ACCOUNTING  CONSOLIDATED NUKEM ACCOUNTING  CONSOLIDATED
----------------------------------------------------------------------------
Uranium sales                                                               
 (million lbs)   1.2          -          1.2    3.5          -          3.5 
----------------------------------------------------------------------------
Revenue           60         (7)          53    191         (8)         183 
----------------------------------------------------------------------------
Cost of product                                                             
 sold                                                                       
 (including                                                                 
 D&A)             43          7           50    144         31          175 
----------------------------------------------------------------------------
Gross profit      17        (14)           3     47        (39)           8 
----------------------------------------------------------------------------
Net earnings      13        (10)           3     27        (27)           - 
----------------------------------------------------------------------------
Adjustments on                                                              
 derivatives(1)   (5)         -           (5)    (3)         -           (3)
----------------------------------------------------------------------------
Adjusted net                                                                
 earnings(1)       8        (10)          (2)    24        (27)          (3)
----------------------------------------------------------------------------
Cash provided                                                               
 by operations   (11)         -          (11)    88          -           88 
----------------------------------------------------------------------------
1   Adjustments relate to unrealized gains and losses on foreign currency   
    forward sales contracts (see non-IFRS measure).                         

 
On January 9, 2013, we acquired NUKEM Energy GmbH (NUKEM) for cash
consideration of EUR107 million ($140 million (US)). We also assumed
NUKEM's net debt which amounted to about EUR79 million ($104 million
(US)). 
For accounting purposes, the purchase price is allocated to the
assets and liabilities acquired based on their fair values as of the
acquisition date. The purchase price allocation is provided in the
table on the below. We believe that these values are representative
of the transaction; however, it is possible that the final allocation
will differ. 
Much of the purchase price was related to nuclear fuel inventories
and the portfolio of sales and purchase contracts acquired. The
amounts attributed to inventory and contracts were based on market
values as at the acquisition date. They will be charged to earnings
in the period(s) in which related transactions occur. The amount
categorized as goodwill reflects the value assigned to the expected
future earnings capabilities of the organization. This is the
earnings potential that we anticipate will be realized through new
business arrangements. Goodwill is not amortized and is tested for
impairment at least annually.  
PURCHASE PRICE ALLOCATION 


 
                                                               $US MILLIONS 
----------------------------------------------------------------------------
Net assets                                                                  
  Working capital                                                       (22)
  Inventory                                                             165 
  Sales, purchase contracts and other intangibles                        88 
  Goodwill                                                               88 
  Debt                                                                 (117)
  Deferred taxes                                                        (54)
----------------------------------------------------------------------------
Net assets acquired                                                     148 
----------------------------------------------------------------------------
Financed by                                                                 
  Cash                                                                  140 
  Additional consideration (earn-out provision)                           8 
----------------------------------------------------------------------------
Liabilities and equity                                                  148 
----------------------------------------------------------------------------

 
SECOND QUARTER 
During the second quarter of 2013, NUKEM delivered 1.2 million pounds
of uranium. On a consolidated basis, NUKEM contributed $53 million in
revenues and $3 million in gross profit. Adjusted net earnings were a
loss of $2 million (see non-IFRS measure). NUKEM's contribution to
our earnings is significantly impacted by our purchase price
accounting. Excluding the impact of the purchase accounting, NUKEM's
adjusted net earnings (see non-IFRS measure) were $8 million for the
quarter.  
FIRST SIX MONTHS  
During the first six months of 2013, NUKEM delivered 3.5 million
pounds of uranium. On a consolidated basis, NUKEM contributed $183
million in revenues, $8 million in gross profit, and adjusted net
earnings (see non-IFRS measure) amounted to a loss of $3 million.
NUKEM's contribution to our earnings is significantly impacted by our
purchase price accounting. Excluding the impact of the purchase
accounting, NUKEM's adjusted net earnings (see non-IFRS measure) were
$24 million for the first six months. NUKEM generated strong cash
flows of $88 million from its operating activities due largely to the
collection of accounts receivable.  
As noted above, much of the NUKEM purchase price was attributable to
inventories and the portfolio of contracts. With respect to nuclear
fuel inventories, amounts assigned were based on market values as of
the date of acquisition. As these quantities are delivered to NUKEM's
customers, we will adjust the cost of product sold to reflect the
values at the acquisition date, regardless of NUKEM's historic costs. 
As of the date of the purchase agreement, had NUKEM's sales and
purchase contracts been settled, it would have realized significant
financial benefit. As a result, we paid a premium to acquire the
portfolio. Accordingly, a portion of the purchase price has been
attributed to the various contracts. In our accounting for NUKEM, we
will amortize the amounts assigned to the portfolio in the periods in
which NUKEM transacts under the relevant contracts. The net effect is
a reduction in reported profit margins relative to NUKEM's results.
We expect the majority of the amount allocated to the contract
portfolio will be amortized within two years. 
Electricity results 
SECOND QUARTER  
Total electricity revenue decreased 19% this quarter due to lower
output and a lower realized price. Realized prices reflect spot
sales, revenue recognized under BPLP's agreement with the OPA, and
financial contract revenue. BPLP recognized revenue of $159 million
this quarter under its agreement with the OPA, compared to $225
million in the second quarter of 2012. Gains on BPLP's contract
activity in the second quarter of 2013 were $14 million, compared to
$32 million in the second quarter of 2012.  
The capacity factor was 77% this quarter, down from 91% in the second
quarter of 2012. There were 70 planned and three unplanned outage
days in the quarter, compared to no planned and 19 unplanned outage
days in the second quarter of 2012.  
Operating costs were $297 million compared to $217 million in 2012
due to higher maintenance costs incurred primarily as a result of
more planned outage days in the second quarter of 2013, and lower
supplemental lease charges in 2012.  
The result was $1 million in earnings before taxes in the second
quarter of 2013 compared to $46 million in earnings before taxes in
the second quarter of 2012.  
BPLP did not make any distributions to the partners in the second
quarter. BPLP capital calls to the partners in the second quarter
were $9 million. Our share was $3 million. The partners have agreed
that BPLP will distribute excess cash monthly, and will make separate
cash calls for major capital projects. 
FIRST SIX MONTHS  
Total electricity revenue for the first six months decreased 16%
compared to 2012 due to lower output and a lower realized price.
Realized prices reflect spot sales, revenue recognized under BPLP's
agreement with the OPA, and financial contract revenue. BPLP
recognized revenue of $283 million in the first six months of 2013
under its agreement with the OPA, compared to $409 million in the
first six months of 2012. Gains on BPLP's contract activity in the
first six months of 2013 were $22 million compared to $63 million in
the first six months of 2012.  
The capacity factor was 77% for the first six months of the year,
down from 88% for the same period in 2012. There were 140 planned and
12 unplanned outage days in the first six months of 2013, compared to
46 planned and 23 unplanned outage days in the first six months of
2012.  
Operating costs were $580 million compared to $472 million in 2012
due to higher maintenance costs incurred primarily as a result of
more planned outage days and lower supplemental lease charges in
2012.  
The result was a $1 million loss before taxes in the first six months
of 2013 compared to $69 million in earnings before taxes in the first
six months of 2012.  
BPLP distributed $100 million to the partners in the first six months
of 2013. Our share was $32 million. BPLP capital calls to the
partners in the first six months of the year were $16 million. Our
share was $5 million. The partners have agreed that BPLP will
distribute excess cash monthly, and will make separate cash calls for
major capital projects. 
Operations and development project updates  
Production in our uranium segment this quarter was 0.9 million pounds
lower compared to the second quarter of 2012. Production in the first
half of the year was 0.1 million pounds higher than the same period
in 2012.  
URANIUM PRODUCTION 


 
CAMECO'S SHARE                THREE MONTHS             SIX MONTHS           
(MILLION LBS)                 ENDED JUNE 30          ENDED JUNE 30          
                              -------------          -------------          
                               2013    2012  CHANGE    2013   2012  CHANGE  
----------------------------------------------------------------------------
McArthur River/Key Lake         2.7     3.3     (18)%   6.3    6.3       -  
----------------------------------------------------------------------------
Rabbit Lake                     0.4     0.9     (56)%   1.5    1.8     (17)%
----------------------------------------------------------------------------
Smith Ranch-Highland            0.3     0.3       -     0.6    0.6       -  
----------------------------------------------------------------------------
Crow Butte                      0.2     0.2       -     0.4    0.4       -  
----------------------------------------------------------------------------
Inkai                           0.8     0.6      33%    1.5    1.1      36% 
----------------------------------------------------------------------------
Total                           4.4     5.3     (17)%  10.3   10.2       1% 
----------------------------------------------------------------------------

 
McArthur River/Key Lake 
Production was 18% lower in the second quarter compared to the same
period last year due to the timing of planned maintenance shutdowns
at the mill, which occurred in May this year. Production for the
first six months of 2013 was unchanged compared to 2012.  
At McArthur River, we finished drilling freeze holes in zone 4 north.
We plan to begin freezing the ground later this year and begin mining
this zone in late 2014.  
At Key Lake, we completed the installation of the electrical
substation. We have finished flattening the Deilmann tailings
management facility pitwalls and continue working to install a toe
buttress at the base of the west and northwest slope. This is
expected to stabilize the ground to prevent sloughing, which can
occur as the water level in the pit is allowed to increase.  
We also continue to advance work on the environmental assessment for
the Key Lake extension project. We plan to submit the final
environmental impact statement for review by the provincial and
federal regulators in the fourth quarter and pursue the required
regulatory approvals in 2014.  
This quarter we applied for a renewal of our McArthur River and Key
Lake operating licences.  
Rabbit Lake  
Production was 56% lower in the second quarter and 17% lower for the
first six months compared to the same periods last year. The timing
of the scheduled mill maintenance shutdown and changes to the Rabbit
Lake mill's operating schedule had an impact on production in the
first half of the year, although annual production remains on track.
To ensure the most efficient operation of the mill throughout the
year, we continually manage ore supply and, therefore, experience
large variations in mill production from quarter to quarter.  
The mill shut down for scheduled maintenance in May and will resume
operations in September.  
This quarter we applied for a renewal of our Rabbit Lake operating
licence. 
Smith Ranch-Highland and Crow Butte  
At our US operations, production for the quarter and for the first
six months of the year was unchanged from the same periods in 2012.  
Our ability to bring new wellfields into production in both Wyoming
and Nebraska continues to be affected by the lengthened review
process to obtain regulatory approvals. The operating environment has
become more complex as public interest and regulatory oversight has
increased.  
In the second quarter, our North Butte satellite operation began
production. It is expected to contribute approximately 300,000 pounds
in 2013 and ramp up to a target annual production rate of more than
700,000 pounds per year by 2015. 
Inkai  
Production was 33% higher in the second quarter and 36% higher in the
first six months of 2013 compared to the same periods last year. We
have continued to bring on new wellfields to maintain a higher head
grade in the wellfield production mix, which has resulted in the
higher production for the second quarter and first six months. The
higher head grade and other improvements to the extraction processes
allow the Inkai operation to produce at its design capacity of 5.2
million pounds per year.  
Cigar Lake  
We continued to make solid progress at Cigar Lake in the second
quarter and expect to begin jet boring in ore this summer, with the
first packaged pounds from AREVA's McClean Lake mill expected in the
fourth quarter.  
During the quarter, the second jet boring unit was shipped to site
and assembled underground.  
Installation of the underground and surface infrastructure required
to begin jet boring is progressing well.  
Like the rest of the mining industry, we are facing upward pressures
on costs, which have led to an increase in the expected capital cost
at Cigar Lake. As well, there have been some scope changes at the
mine and mill. As a result, we expect our share of the total capital
cost for the project to increase between 15% and 25% (the prior
estimate of our share was $1.1 billion).  
In 2013, we expect our capital cost will be about $260 million
compared to our previous estimate of $182 million due to additional
scope, increased costs at the mine and mill and the inclusion of some
capital costs that will be incurred subsequent to the mining of the
first ore and not included in our previous estimate.  
These additional capital expenditures will allow us to achieve first
production this year in a safe and deliberate manner, and to realize
the economic benefits from one of the world's largest high-grade
uranium deposits, second only to McArthur River.  
The CNSC has granted a uranium mining licence authorizing
construction and operation of the Cigar Lake project. The licence
term is from July 1, 2013 to June 30, 2021. 
Fuel services   
Fuel services produced 4.8 million kgU in the second quarter, 12%
higher than the same period last year. Production for the first half
of the year was 9.6 million kgU, 9% higher compared to last year. We
increased our production target in 2013 to between 15 million and 16
million kgU, so quarterly production is anticipated to be higher than
comparable periods in 2012. Production remains on track for the year. 
On July 5, 2013, unionized employees at the Port Hope conversion
facility accepted new three-year contracts that include a 6% wage
increase over the term of the agreements. The previous contracts
expired on June 30, 2013. 
Qualified persons  
The technical and scientific information discussed in this document
for our material properties (McArthur River/Key Lake, Inkai and Cigar
Lake) was approved by the following individuals who are qualified
persons for the purposes of NI 43-101: 
McArthur River/Key Lake  


 
--  David Bronkhorst, vice-president, Saskatchewan mining south, Cameco 

 
Inkai  


 
--  Alain G. Mainville, director, mineral resources management, Cameco 

 
Cigar Lake 


 
--  Grant Goddard, vice-president, Saskatchewan mining north, Cameco 

 
CAUTION ABOUT FORWARD-LOOKING INFORMATION  
This document includes statements and information about our
expectations for the future. When we discuss our strategy, plans,
future financial and operating performance, or other things that have
not yet taken place, we are making statements considered to be
forward-looking information or forward-looking statements under
Canadian and United States securities laws. We refer to them in this
document as forward-looking information.  
Key things to understand about the forward-looking information in
this document: 


 
--  It typically includes words and phrases about the future, such as:
    anticipate, believe, estimate, expect, plan, will, intend, goal, target,
    forecast, project, strategy and outlook (see examples below). 
--  It represents our current views, and can change significantly. 
--  It is based on a number of material assumptions, including those we have
    listed below, which may prove to be incorrect. 
--  Actual results and events may be significantly different from what we
    currently expect, due to the risks associated with our business. We list
    a number of these material risks below. We recommend you also review our
    annual information form and our annual and first quarter MD&A, which
    include a discussion of other material risks that could cause actual
    results to differ significantly from our current expectations. 
--  Forward-looking information is designed to help you understand
    management's current views of our near and longer term prospects, and it
    may not be appropriate for other purposes. We will not necessarily
    update this information unless we are required to by securities laws. 

 
Examples of forward-looking information in this document 


 
--  our expectations about 2013 and future global uranium supply and demand,
    including the discussion under the heading Uranium market update 
--  the outlook for each of our operating segments for 2013 and our
    consolidated outlook for the year 
--  our target for a sustainable 10% future cost reduction 
--  our expectations for 2013, 2014 and 2015 capital expenditures 
--  our future plans for each of our uranium operating properties and
    development project 
--  our expectation that we will begin jet boring in ore this summer at
    Cigar Lake with first packaged pounds from AREVA's McClean Lake mill in
    the fourth quarter 
--  our estimates of Cigar Lake capital costs 

 
Material risks  


 
--  actual sales volumes or market prices for any of our products or
    services are lower than we expect for any reason, including changes in
    market prices or loss of market share to a competitor 
--  we are adversely affected by changes in foreign currency exchange rates,
    interest rates or tax rates, or we are unsuccessful in our dispute with
    the Canada Revenue Agency 
--  our production costs are higher than planned, or necessary supplies are
    not available, or not available on commercially reasonable terms 
--  our estimates of production, purchases, costs, decommissioning or
    reclamation expenses, or our tax expense estimates, prove to be
    inaccurate 
--  we are unable to enforce our legal rights under our existing agreements,
    permits or licences, or are subject to litigation or arbitration that
    has an adverse outcome 
--  there are defects in, or challenges to, title to our properties 
--  our mineral reserve and resource estimates are not reliable, or we face
    unexpected or challenging geological, hydrological or mining conditions 
--  we are affected by environmental, safety and regulatory risks, including
    increased regulatory burdens or delays 
--  we cannot obtain or maintain necessary permits or approvals from
    government authorities 
--  we are affected by political risks in a developing country where we
    operate 
--  we are affected by terrorism, sabotage, blockades, civil unrest, social
    or political activism, accident or a deterioration in political support
    for, or demand for, nuclear energy 
--  we are impacted by changes in the regulation or public perception of the
    safety of nuclear power plants, which adversely affect the construction
    of new plants, the relicensing of existing plants and the demand for
    uranium 
--  there are changes to government regulations or policies that adversely
    affect us, including tax and trade laws and policies 
--  our uranium and conversion suppliers fail to fulfill delivery
    commitments 
--  our Cigar Lake development, mining or production plans are delayed or do
    not succeed, including as a result of any difficulties encountered with
    the jet boring mining method, processing of the ore, or our inability to
    acquire any of the required jet boring equipment 
--  our McArthur River development, mining or production plans are delayed
    or do not succeed 
--  we are affected by natural phenomena, including inclement weather, fire,
    flood and earthquakes 
--  our operations are disrupted due to problems with our own or our
    customers' facilities, the unavailability of reagents, equipment,
    operating parts and supplies critical to production, equipment failure,
    lack of tailings capacity, labour shortages, labour relations issues
    (including an inability to renew agreements with unionized employees at
    McArthur River and Key Lake), strikes or lockouts, underground floods,
    cave ins, ground movements, tailings dam failures, transportation
    disruptions or accidents, or other development and operating risks 
--  NUKEM's actual uranium sales volume, cash flows and revenue in 2013 are
    lower than expected due to losses in connection with spot market
    purchases, counterparty default on payment or other obligations,
    counterparty insolvency or other risks 
--  departure of key personnel at NUKEM could have an adverse effect on
    continuing operations 

 
Material assumptions 


 
--  our expectations regarding sales and purchase volumes and prices for
    uranium, fuel services and electricity 
--  our expectations regarding the demand for uranium, the construction of
    new nuclear power plants and the relicensing of existing nuclear power
    plants not being more adversely affected than expected by changes in
    regulation or in the public perception of the safety of nuclear power
    plants 
--  our expected production level and production costs 
--  the assumptions regarding market conditions upon which we have based our
    capital expenditure expectations 
--  our decommissioning and reclamation expenses 
--  our mineral reserve and resource estimates, and the assumptions upon
    which they are based, are reliable 
--  the geological, hydrological and other conditions at our mines 
--  our Cigar Lake development, mining and production plans are successful,
    including success with the jet boring mining method and processing of
    the ore, and that we will be able to obtain the additional jet boring
    systems we require on schedule 
--  the success of our McArthur River development, mining and production
    plans 
--  our ability to continue to supply our products and services in the
    expected quantities and at the expected times 
--  our ability to comply with current and future environmental, safety and
    other regulatory requirements, and to obtain and maintain required
    regulatory approvals 
--  our operations are not significantly disrupted as a result of political
    instability, nationalization, terrorism, sabotage, blockades, civil
    unrest, breakdown, natural disasters, governmental or political actions,
    litigation or arbitration proceedings, the unavailability of reagents,
    equipment, operating parts and supplies critical to production, labour
    shortages, labour relations issues (including an inability to renew
    agreements with unionized employees at McArthur River and Key Lake),
    strikes or lockouts, underground floods, cave ins, ground movements,
    tailings dam failure, lack of tailings capacity, transportation
    disruptions or accidents or other development or operating risks 
--  NUKEM's actual uranium sales volume, cash flows and revenue in 2013 will
    be consistent with our expectations 
--  key personnel will remain with NUKEM 

 
Quarterly dividend notice 
We announced today that our board of directors approved a quarterly
dividend of $0.10 per share on the outstanding common shares of the
corporation that is payable on October 15, 2013, to shareholders of
record at the close of business on September 30, 2013. 
Conference call  
We invite you to join our second quarter conference call on Thursday
August 1, 2013 at 1:00 p.m. Eastern.  
The call will be open to all investors and the media. To join the
call, please dial (866) 225-0198 (Canada and US) or (416) 340-8061.
An operator will put your call through. A live audio feed of the
conference call will be available from a link at cameco.com. See the
link on our home page on the day of the call.  
A recorded version of the proceedings will be available: 


 
--  on our website, cameco.com, shortly after the call 
--  on post view until midnight, Eastern, September 1, 2013 
    by calling (800) 408-3053 or (905) 694-9451 (Passcode 7039949#) 

 
Additional information 
You can find a copy of our second quarter MD&A and interim financial
statements on our website at cameco.com, on SEDAR at sedar.com and on
EDGAR at sec.gov/edgar.shtml.  
Additional information, including our 2012 annual management's
discussion and analysis, annual audited financial statements and
annual information form, is available on SEDAR at sedar.com, on EDGAR
at sec.gov/edgar.shtml and on our website at cameco.com. 
Profile  
We are one of the world's largest uranium producers, a significant
supplier of conversion services and one of two Candu fuel
manufacturers in Canada. Our competitive position is based on our
controlling ownership of the world's largest high-grade reserves and
low-cost operations. Our uranium products are used to generate clean
electricity in nuclear power plants around the world, including
Ontario where we are a limited partner in North America's largest
nuclear electricity generating facility. We also explore for uranium
in the Americas, Australia and Asia. Our shares trade on the Toronto
and New York stock exchanges. Our head office is in Saskatoon,
Saskatchewan.  
As used in this news release, the terms we, us, our and Cameco mean
Cameco Corporation and its subsidiaries, including NUKEM Energy Gmbh
(NUKEM), unless otherwise indicated.
Contacts:
Cameco
Investor inquiries:
Rachelle Girard
(306) 956-6403 
Media inquiries:
Rob Gereghty
(306) 956-6190