Cameco reports first quarter financial results

Cameco reports first quarter financial results 
SASKATOON, SASKATCHEWAN -- (Marketwired) -- 04/29/14 --  ALL AMOUNTS
ARE STATED IN CDN $ (UNLESS NOTED) 


 
 
--  strong first quarter sales and average realized price in our uranium
    segment 
--  uranium production and sales outlook reconfirmed 
--  mining activities now underway at Cigar Lake 
--  McClean Lake mill modifications proceeding; mill will not begin
    processing ore in Q2 
--  completed the sale of our interest in Bruce Power Limited Partnership 

Cameco (TSX: CCO) (NYSE: CCJ) today reported its consolidated financial
and operating results for the first quarter ended March 31, 2014 in
accordance with International Financial Reporting Standards (IFRS). 
"We saw strong first quarter results compared to 2013," said
president and CEO, Tim Gitzel, "driven by higher uranium deliveries
and realized prices, and the sale of our interest in Bruce Power
Limited Partnership. Our operations continued to perform well, with
the highlight being the startup of production at the Cigar Lake mine. 
"As an industry, we saw positive signs in Japan, where a new energy
policy confirmed that nuclear power will remain an important source
of energy. However, that news did not change our view of the current
market, where excess supply and discretionary demand for uranium
products has resulted in further downward pressure on the uranium
price. While we do not expect improvement in the near to medium term,
the long-term outlook for the industry remains strong, and we're
making efficient use of our resources to be ready for that future
growth." 


 
 
                                                THREE MONTHS                
                                              ENDED MARCH 31                
                               ------------------------------               
HIGHLIGHTS                                                                  
($ MILLIONS EXCEPT WHERE                                                    
 INDICATED)                              2014           2013        CHANGE  
----------------------------------------------------------------------------
Revenue                                   419            444            (6)%
----------------------------------------------------------------------------
Gross profit                              108             95            14% 
----------------------------------------------------------------------------
Net earnings attributable to                                                
 equity holders                           131              9         1,356% 
----------------------------------------------------------------------------
  $ per common share (diluted)           0.33           0.02         1,550% 
----------------------------------------------------------------------------
Adjusted net earnings (see non-                                             
 IFRS)                                     36             27            33% 
----------------------------------------------------------------------------
  $ per common share (adjusted                                              
   and diluted)                          0.09           0.07            29% 
----------------------------------------------------------------------------
Cash provided by continuing                                                 
 operations (after working                                                  
 capital changes)(1)                        7            241           (97)%
----------------------------------------------------------------------------
(1) For comparison purposes, our results have been revised to exclude BPLP. 
    The impact of BPLP is shown separately as a discontinued operation.     

FIRST QUARTER 
Net earnings attributable to equity holders (net earnings) this
quarter were $131 million ($0.33 per share diluted) compared to $9
million ($0.02 per share diluted) in the first quarter of 2013. In
addition to the items noted below, our net earnings were affected by
a gain on the sale of our interest in BPLP of $127 million, offset by
mark-to-market losses on foreign exchange derivatives. 
On an adjusted basis, our earnings this quarter were $36 million
($0.09 per share diluted) compared to $27 million ($0.07 per share
diluted) (see non-IFRS measure) in the first quarter of 2013. The
change was mainly due to higher earnings from our uranium segment
based on higher sales volumes and higher realized prices, partially
offset by an early termination fee of $18 million incurred as a
result of the cancellation of our toll conversion agreement with
Springfields Fuels Ltd. (SFL), which was to expire in 2016. 
See Financial results by segment for more detailed discussion. 
Uranium market update 
In the first quarter of 2014, market conditions continued along the
same trend as in 2013. Contracted volumes remained low, putting
further downward pressure on both spot and long-term uranium prices.
On the supply side, production cutbacks and project deferrals have
contributed positively to long-term fundamentals, but for the near
term, the market continues to be adequately supplied. Utilities
remain well covered and we expect little improvement over the near to
medium term. 
While there has been no fundamental change to market conditions,
there have been developments that solidify the positive long-term
outlook, including the approval of a new energy policy in Japan that
confirms nuclear power will remain an important electricity source
for the country. In addition, the Nuclear Regulatory Authority
continued to clarify the process for utilities to begin restarting
the country's idled nuclear reactors. While the initial restarts will
be a positive development, we expect it will take some time for a
significant number of reactors to resume operations, and for the
inventory that has built up since 2011 to clear. 
Long-term fundamentals remain positive as nuclear growth continues to
progress around the world. Approximately 70 new reactors are under
construction, and we expect a net increase of 93 reactors over the
next 10 years, which is expected to drive an increase in annual
uranium consumption from today's 170 million pounds to about 240
million pounds. This demand fundamental combined with the timing,
development and execution of new supply projects and the continued
performance of existing supply will determine the pace of market
recovery. 
Outlook for 2014 
Our strategy is to profitably produce at a pace aligned with market
signals, while maintaining the ability to respond to conditions as
they evolve.  
Our outlook for 2014 reflects the expenditures necessary to help us
achieve our strategy. Our outlook for uranium revenue and
consolidated revenue, as well as our production outlook for fuel
services has changed, and is explained below. We do not provide an
outlook for the items in the table that are marked with a dash.  
See 2014 Financial results by segment for details.  
2014 FINANCIAL OUTLOOK 


 
 
                                                           FUEL             
                         CONSOLIDATED      URANIUM     SERVICES        NUKEM
----------------------------------------------------------------------------
Production                          - 23.8 to 24.3     12 to 13            -
                                       million lbs  million kgU             
----------------------------------------------------------------------------
Sales volume                        -     31 to 33     Decrease      9 to 11
                                       million lbs    5% to 10%  million lbs
                                                                        U3O8
----------------------------------------------------------------------------
Revenue compared to 2013     Increase     Increase     Decrease     Increase
                            5% to 10%        5% to    5% to 10%     0% to 5%
                                            10%(1)                          
----------------------------------------------------------------------------
Average unit cost of                -     Increase     Increase     Increase
 sales (including D&A)                 0% to 5%(2)     0% to 5%     0% to 5%
----------------------------------------------------------------------------
Direct administration        Increase            -            -    Increase 
 costs compared to           0% to 5%                               0% to 5%
 2013(3)                                                                    
----------------------------------------------------------------------------
Exploration costs                   -     Decrease            -            -
 compared to 2013                       35% to 40%                          
----------------------------------------------------------------------------
Tax rate                  Recovery of            -            -   Expense of
                           30% to 35%                             30% to 35%
----------------------------------------------------------------------------
Capital expenditures     $495 million            -            -            -
----------------------------------------------------------------------------
(1) Based on a uranium spot price of $30.75 (US) per pound (the Ux spot     
    price as of April 28, 2014), a long-term price indicator of $45.00 (US) 
    per pound (the Ux long-term indicator on April 28, 2014) and an exchange
    rate of $1.00 (US) for $1.08 (Cdn).                                     
(2) This increase is based on the unit cost of sale for produced material   
    and committed long-term purchases. If we make discretionary purchases in
    2014, then we expect the overall unit cost of sales to increase further.
(3) Direct administration costs do not include stock-based compensation     
    expenses.                                                               

We now expect an increase of 5% to 10% for sales revenue in our uranium
segment (previously an increase of up to 5%) due to the impact of the
strengthening US dollar. The consolidated revenue will increase by 5%
to 10% as well (previously up to 5%) due to the impact of the uranium
revenue increase. 
We now expect production in our fuel services segment to be 12
million to 13 million kgU (down from previously reported 13 million
to 14 million kgU) due to the cancellation of our toll conversion
contract with SFL, which was included in the previously reported
production amount. 
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. We expect
our uranium deliveries for the second quarter will be greater than
the first quarter. Uranium sales are relatively balanced for the
remainder of 2014. However, not all delivery notices have been
received to date, which could alter the delivery pattern. Typically,
we receive notices six months in advance of the requested delivery
date. 
SENSITIVITY ANALYSIS 
For the rest of 2014:  


 
 
--  a change of $5 (US) per pound in both the Ux spot price ($30.75 (US) per
    pound on April 28, 2014) and the Ux long-term price indicator ($45.00
    (US) per pound on April 28, 2014) would change revenue by $58 million
    and net earnings by $35 million 
--  a one-cent change in the value of the Canadian dollar versus the US
    dollar would effectively 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). 

PURCHASE COMMITMENTS 
During the first quarter, our purchase commitments increased due to
the signing of new long-term purchase commitments, which we believe
will be beneficial for us as they have been in the past. The increase
was partially offset by the termination of our agreement with SFL.  
As of March 31, 2014, we had commitments of about $1.6 billion (Cdn)
for the following: 


 
 
--  approximately 29 million pounds of U3O8 equivalent from 2014 to 2028 
--  approximately 7 million kgU as UF6 in conversion services from 2014 to
    2017, including about 4 million kgU to complete our 2014 obligations to
    SFL under the terminated agreement 
--  over 1.2 million Separative Work Units (SWU) of enrichment services to
    meet existing forward sales commitments under agreements with a non-
    Western supplier 

See Purchase commitments in our first quarter MD&A for more
information. 
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 pre-tax adjustments on derivatives, income
taxes on adjustments, and the after tax gain on the sale of our
interest in BPLP.  
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 
                                                             ENDED MARCH 31 
                                              ------------------------------
($ MILLIONS)                                            2014           2013 
----------------------------------------------------------------------------
Net earnings attributable to equity holders              131              9 
----------------------------------------------------------------------------
Adjustments                                                                 
  Adjustments on derivatives(1) (pre-tax)                 44             25 
  Income taxes on adjustments                            (12)            (7)
  Gain on interest in BPLP (after tax)                  (127)             - 
----------------------------------------------------------------------------
Adjusted net earnings                                     36             27 
----------------------------------------------------------------------------
(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.                                               

DISCONTINUED OPERATION 
On March 27, 2014, we completed the sale of our 31.6% limited
partnership interest in BPLP. The aggregate sale price for our
interest in BPLP and certain related entities was $450 million. The
sale has been accounted for effective January 1, 2014. We realized an
after tax gain of $127 million on this divestiture. See note 4 to our
first quarter interim financial statements for more information. 
CRA DISCLOSURE 
As previously reported, since 2008, the Canada Revenue Agency (CRA)
has disputed the offshore marketing company structure and related
transfer pricing methodology we used for certain intercompany uranium
sale and purchase agreements, and issued notices of reassessment for
our 2003 through 2008 tax returns. We continue to believe the
ultimate resolution of this matter will not be material to our
financial position, results of operations and cash flows in the
year(s) of resolution. We are updating our disclosure on the CRA case
to reflect the CRA's intention to accelerate the frequency of
reassessments. 
Transfer pricing is a complex area of tax law, and it is difficult to
predict the outcome of a case like ours as there are only a handful
of reported court decisions on transfer pricing in Canada. However,
tax authorities generally test two things:  


 
 
--  the governance (structure) 
--  the price 

The majority of our customers are located outside Canada and we
established an offshore marketing subsidiary. This subsidiary entered
into intercompany purchase and sales agreements as well as uranium
supply agreements with third parties. We have arm's-length transfer
price arrangements in place, which expose both parties to the risks
and the rewards accruing to them under this portfolio of purchase and
sales contracts.  
With respect to the contract prices, they are generally comparable to
those established in sales contracts between arm's-length buyers and
sellers entered into at that time. We have recorded a cumulative tax
provision of $75 million, where an argument could be made that our
transfer price may have fallen outside of an appropriate range of
pricing in uranium contracts for the period from 2003 to March 31,
2014.  
We are confident that we will be successful in our case; however, for
the years 2003 through 2008, CRA issued notices of reassessment for
approximately $2.0 billion of additional income for Canadian tax
purposes, which would result in a related tax expense of about $590
million. The Canadian Income Tax Act includes provisions that require
larger companies like us to pay 50% of the cash tax plus related
interest and penalties at the time of reassessment. To date, under
these provisions, after applying elective deductions and tax loss
carryovers, we have been required to pay a net amount of $117 million
to CRA, which includes the amounts shown in the table below. 


 
 
                                      INTEREST AND     TRANSFER             
                                        INSTALMENT      PRICING             
YEAR ($ MILLIONS)          CASH TAXES    PENALTIES    PENALTIES        TOTAL
----------------------------------------------------------------------------
Prior to 2013                       -           13            -           13
----------------------------------------------------------------------------
2013                                1            9           36           46
----------------------------------------------------------------------------
2014                               28           30            -           58
----------------------------------------------------------------------------
Total                              29           52           36          117
----------------------------------------------------------------------------

Using the methodology we believe CRA will continue to apply, and
including the $2.0 billion already reassessed, we expect to receive
notices of reassessment for a total of approximately $5.7 billion of
additional income as taxable in Canada for the years 2003 through
2013, which would result in a related tax expense of approximately
$1.6 billion. As well, CRA may continue to apply transfer pricing
penalties to taxation years subsequent to 2007. As a result, we
estimate that cash taxes and transfer pricing penalties would be
between $1.25 billion and $1.3 billion. In addition, we estimate
there would be interest and instalment penalties applied that would
be material to us. We would be responsible for remitting 50% of the
cash taxes and transfer pricing penalties (between $625 million and
$650 million), plus related interest and instalment penalties
assessed, which would be material to us.  
Under the Canadian federal and provincial tax legislation, the amount
required to be remitted each year will depend on the amount of income
reassessed in that year and the availability of elective deductions
and tax loss carryovers. CRA has indicated that they intend to
accelerate the frequency of reassessments related to the transfer
pricing adjustments. Their audit of 2009 has been completed and we
have received proposed adjustments to 2009 taxable income which are
calculated in a manner consistent with prior years. We expect the
reassessment for the 2009 taxation year to be issued in the second
quarter of 2014, rather than in the fourth quarter as was the case
for previous years. In addition, we believe CRA may complete their
audit of 2010 and issue the resulting reassessment in 2014 as well.
The estimated amounts summarized in the table below reflect this
expected accelerated schedule. 


 
 
                              2003 -              2015 -    2017 -          
$ MILLIONS                      2013   2014(2)      2016      2023     TOTAL
----------------------------------------------------------------------------
50% of cash taxes and                                                       
 transfer pricing penalties                                                 
 payable in the period(1)         37 115 - 135 450 - 475    0 - 25 625 - 650
----------------------------------------------------------------------------
 
(1) These amounts do not include interest and instalment penalties, which   
    totaled approximately $52 million to March 31, 2014.                    
(2) These amounts include $28 million already paid in 2014.                 

In light of our view of the likely outcome of the case as described
above, we expect to recover the amounts remitted to CRA, including
the $117 million already paid to date. 
The case on the 2003 reassessment is expected to go to trial in 2015.
If this timing is adhered to, we expect to have a Tax Court decision
by 2016. 
Caution about forward-looking information relating to our CRA tax
dispute 
This discussion of our expectations relating to our tax dispute with
CRA and future tax reassessments by CRA, including the amounts of
future additional taxable income, additional tax expense, cash taxes
payable, transfer pricing penalties, and interest and possible
instalment penalties thereon and related remittances, and timing of a
Tax Court decision, is forward-looking information that is based upon
the assumptions and subject to the material risks discussed under the
heading Caution about forward-looking information and also on the
more specific assumptions and risks listed below. Actual outcomes may
vary significantly. 


 
 
Assumptions                                                                 
 
--  CRA will reassess us for the years 2009 through 2013 using a similar
    methodology as for the years 2003 through 2008, and the reassessments
    will be issued on an accelerated basis as described above 
--  we will be able to apply elective deductions and tax loss carryovers to
    the extent anticipated 
--  CRA will seek to impose transfer pricing penalties (10% of the income
    adjustment) in addition to interest charges and instalment penalties 
--  we will be substantially successful in our dispute with CRA and the
    cumulative tax provision of $75 million to date will be adequate to
    satisfy any tax liability resulting from the outcome of the dispute to
    date 
 
Material risks that could cause actual results to differ materially         
 
--  CRA reassesses us for years 2009 through 2013 using a different
    methodology than for years 2003 through 2008, or we are unable to
    utilize elective deductions and loss carryovers to the same extent as
    anticipated, resulting in the required cash payments to CRA pending the
    outcome of the dispute being higher than expected 
--  the time lag for the reassessments for each year is different than we
    currently expect 
--  we are unsuccessful and the outcome of our dispute with CRA results in
    significantly higher cash taxes, interest charges and penalties than the
    amount of our cumulative tax provision, which could have a material
    adverse effect on our liquidity, financial position, results of
    operations and cash flows 
--  cash tax payable increases due to unanticipated adjustments by CRA not
    related to transfer pricing 
 
Financial results by segment                                                
 
Uranium                                                                     
                                                THREE MONTHS                
                                              ENDED MARCH 31                
                               ------------------------------               
HIGHLIGHTS                               2014           2013        CHANGE  
----------------------------------------------------------------------------
Production volume (million lbs)           5.7            5.9            (3)%
----------------------------------------------------------------------------
Sales volume (million lbs)                6.9            5.1            35% 
----------------------------------------------------------------------------
Average spot price ($US/lb)             34.94          42.71           (18)%
Average long-term price                                                     
 ($US/lb)                               48.67          56.50           (14)%
Average realized price                                                      
  ($US/lb)                              46.60          48.42            (4)%
  ($Cdn/lb)                             50.58          48.25             5% 
----------------------------------------------------------------------------
Average unit cost of sales                                                  
 ($Cdn/lb) (including D&A)              33.30          31.90             4% 
----------------------------------------------------------------------------
Revenue ($ millions)                      348            247            41% 
----------------------------------------------------------------------------
Gross profit ($ millions)                 119             84            42% 
----------------------------------------------------------------------------
Gross profit (%)                           34             34             -  
----------------------------------------------------------------------------

FIRST QUARTER 
Production volumes this quarter were 3% lower compared to the first
quarter of 2013 due, mainly, to lower production at Rabbit Lake. See
Operations updates for more information. 
Uranium revenues were up 41% due to a 35% increase in sales volumes
and a 5% increase in the Canadian dollar average realized price.
Sales in the first quarter were higher than anticipated at the end of
2013 due to a change in the timing of deliveries during the quarter,
which can vary significantly and are driven by customer requests. 
Our realized prices this quarter were higher than the first quarter
of 2013, primarily as a result of the weakening of the Canadian
dollar. In the first quarter of 2014, the exchange rate on the
average realized price was $1.00 (US) for $1.09 (Cdn) over the
quarter, compared to $1.00 (US) for $1.00 (Cdn) in the first quarter
of 2013. 
Total cost of sales (including D&A) increased by 40% ($229 million
compared to $163 million in 2013). This was mainly the result of a
35% increase in sales volumes and an increase in non-cash costs. In
the first quarter of 2014, total non-cash costs were $48 million
compared to $20 million in the first quarter of 2013 due to the
completion of a number of capital projects at our various production
facilities. Upon project completion, we begin to depreciate the
asset, which increases the non-cash portion of our production costs. 
Additionally, in the first quarter, our cost of purchased material
was higher than the average spot price for the quarter and higher
than in the first quarter of 2013. We had back-to-back purchase and
sale arrangements that, while profitable, required we purchase
material at a price higher than the current spot price. 
The net effect was a $35 million increase in gross profit for the
quarter. 
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                
                                              ENDED MARCH 31                
                               ------------------------------               
($CDN/LB)                                2014           2013        CHANGE  
----------------------------------------------------------------------------
Produced                                                                    
  Cash cost                             20.82          19.12             9% 
  Non-cash cost                         10.55           8.44            25% 
----------------------------------------------------------------------------
  Total production cost                 31.37          27.56            14% 
----------------------------------------------------------------------------
  Quantity produced (million                                                
   lbs)                                   5.7            5.9            (3)%
----------------------------------------------------------------------------
Purchased                                                                   
  Cash cost                             42.18          33.44            26% 
----------------------------------------------------------------------------
  Quantity purchased (million                                               
   lbs)                                   1.3            2.3           (43)%
----------------------------------------------------------------------------
Totals                                                                      
  Produced and purchased costs          33.38          29.21            14% 
----------------------------------------------------------------------------
  Quantities produced and                                                   
   purchased (million lbs)                7.0            8.2           (15)%
----------------------------------------------------------------------------

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 first quarters of 2014 and 2013. 
CASH AND TOTAL COST PER POUND RECONCILIATION 


 
 
                                                THREE MONTHS                
                                              ENDED MARCH 31                
                               ------------------------------               
($ MILLIONS)                             2014           2013        CHANGE  
----------------------------------------------------------------------------
Cost of product sold                    180.9          144.0            26% 
Add / (subtract)                                                            
  Royalties                             (14.2)         (14.4)           (1)%
  Standby charges                        (9.3)          (8.1)           15% 
  Other selling costs                    (2.4)           2.8          (186)%
  Change in inventories                  18.5           65.4           (72)%
----------------------------------------------------------------------------
Cash operating costs (a)                173.5          189.7            (9)%
Add / (subtract)                                                            
  Depreciation and amortization          48.3           19.5           148% 
  Change in inventories                  11.9           30.3           (61)%
----------------------------------------------------------------------------
Total operating costs (b)               233.7          239.5            (2)%
----------------------------------------------------------------------------
  Uranium produced & purchased                                              
   (million lbs) (c)                      7.0            8.2           (15)%
----------------------------------------------------------------------------
Cash costs per pound (a / c)            24.79          23.14             7% 
Total costs per pound (b / c)           33.38          29.21            14% 
----------------------------------------------------------------------------
 
Fuel services                                                               
 
(includes results for UF6, UO2 and fuel fabrication)                        
 
                                                THREE MONTHS                
                                              ENDED MARCH 31        CHANGE  
                               ------------------------------               
HIGHLIGHTS                               2014           2013                
----------------------------------------------------------------------------
Production volume (million kgU)           4.0            4.7           (15)%
----------------------------------------------------------------------------
Sales volume (million kgU)                1.8            3.4           (47)%
----------------------------------------------------------------------------
Average realized price                                                      
 ($Cdn/kgU)                             22.41          19.60            14% 
----------------------------------------------------------------------------
Average unit cost of sales                                                  
 ($Cdn/kgU) (including D&A)             21.36          16.27            31% 
----------------------------------------------------------------------------
Revenue ($ millions)                       40             66           (39)%
----------------------------------------------------------------------------
Gross profit ($ millions)                   2             11           (82)%
----------------------------------------------------------------------------
Gross profit (%)                            5             17           (71)%
----------------------------------------------------------------------------

FIRST QUARTER 
Total revenue decreased by 39% due to a 47% decrease in sales
volumes, offset by a 14% increase in realized price. 
The total cost of products and services sold (including D&A)
decreased by 31% ($38 million compared to $55 million in the first
quarter of 2013) due to the decrease in sales volumes, partially
offset by an increase in the average unit cost of sales. When
compared to 2013, the average unit cost of sales was 31% higher due
to the mix of fuel services products sold and lower UF6 production. 
The net effect was a $9 million decrease in gross profit. 
NUKEM 


                                                THREE MONTHS                
                                              ENDED MARCH 31                
                               ------------------------------               
($ MILLIONS EXCEPT WHERE                                                    
 INDICATED)                              2014           2013        CHANGE  
----------------------------------------------------------------------------
Uranium sales (million lbs)               0.7            2.3           (70)%
----------------------------------------------------------------------------
Revenue                                    32            131           (76)%
----------------------------------------------------------------------------
Cost of product sold (including                                             
 D&A)                                      35            127           (72)%
----------------------------------------------------------------------------
Gross profit (loss)                        (3)             4          (175)%
----------------------------------------------------------------------------
Net loss                                   (7)            (3)         (133)%
----------------------------------------------------------------------------
Adjustments on derivatives(1)               1              2           (50)%
----------------------------------------------------------------------------
Adjusted net loss                          (6)            (1)         (500)%
----------------------------------------------------------------------------
(1) Adjustments relate to unrealized gains and losses on foreign currency   
    forward sales contracts (see non-IFRS measure).                         

FIRST QUARTER 
During the first three months of 2014, NUKEM delivered 0.7 million
pounds of uranium, a decline of 1.6 million pounds (70%) due to
timing of customer requirements. NUKEM revenues amounted to $32
million as a result of the decline in deliveries and a lower realized
price.  
Gross loss amounted to $3 million, a decline of $7 million compared
to the first quarter of 2013. Included in the gross loss for the
quarter is a $6 million write-down of inventory, as a result of a
further decline in the spot price that caused the carrying values of
certain quantities to exceed their estimated net realizable value.  
While sales were significantly lower in the current year, excluding
the effects of the inventory write-down, they were at higher margins.
On a percentage basis, gross profits were 9% in the first quarter of
2014 compared to 3% in same period last year.  
Adjusted net loss for the first three months of 2014 was $6 million,
compared to a loss of $1 million in 2013.  
Operations updates 
URANIUM PRODUCTION 


 
 
                                  THREE MONTHS ENDED                        
CAMECO'S SHARE                              MARCH 31                        
(MILLION LBS)                         2014      2013   CHANGE      2014 PLAN
----------------------------------------------------------------------------
McArthur River/Key Lake                3.8       3.5        9%          13.1
----------------------------------------------------------------------------
Rabbit Lake                            0.5       1.1      (55)%          4.1
----------------------------------------------------------------------------
Smith Ranch-Highland                   0.5       0.3       67%           2.0
----------------------------------------------------------------------------
Crow Butte                             0.2       0.2        -            0.6
----------------------------------------------------------------------------
Inkai                                  0.7       0.8      (13)%          3.0
----------------------------------------------------------------------------
Cigar Lake                               -         -        -      1.0 - 1.5
----------------------------------------------------------------------------
Total                                  5.7       5.9       (3)%  23.8 - 24.3
----------------------------------------------------------------------------

McArthur River/Key Lake 
Production for the quarter was 9% higher compared to the same period
last year due to efficiency and reliability improvements at the Key
Lake mill. 
We have begun developing the next freeze wall in zone 4. Freezing of
zone 4 north is underway, and production from the area is expected to
begin this year. 
At McArthur River, the Canadian Nuclear Safety Commission has
approved an increase of our licence production limit to 21 million
pounds (100% basis) per year from the mine. However, the current
annual mill production licence limit at Key Lake remains at 18.7
million pounds (100% basis). 
As part of our Key Lake extension environmental assessment (EA), we
are seeking approval to increase Key Lake's nominal annual production
rate to 25 million pounds and to increase our tailings capacity. A
public review and comment period for the EA concluded in February and
a regulatory decision is expected this year. 
The current collective agreements with unionized employees at
McArthur River and Key Lake expired on December 31, 2013. Bargaining
began in November, 2013 and is ongoing. There is risk to production
if we are unable to reach an agreement and a work stoppage occurs. 
Cigar Lake 
In the first quarter, we announced the start of mine production at
Cigar Lake. The jet boring system is performing as expected and six
ore cavities have been mined to date. The ore is routinely
transported to the McClean Lake site where it is being stored for
processing. 
AREVA has made good progress on modifications to the McClean Lake
mill, and reports the following: 


 
 
--  the ore receiving systems have been commissioned and more than 350
    tonnes of ground ore slurry has been shipped from the Cigar Lake mine
    and loaded into storage tanks at the mill 
--  an expanded ore slurry storage facility has been completed, including
    receipt of regulatory approvals 
--  engineering work related to the mill modifications has been completed,
    all materials have been ordered and key long-lead items have been
    received, and a detailed commissioning plan has been prepared 
--  contractors are on site and the construction is actively progressing 

The necessary time to complete all related construction work
(installing pumps, pipes, electrical and instrumentation), and
commissioning of the new components and the process circuit with
water to ensure the systems function as designed, has led AREVA to
advise us that the mill will not begin processing ore by the end of
the second quarter. 
Additionally, AREVA has advised us that work is in progress at
McClean Lake to double the mill's current capacity of 1 million
pounds per month in order to process Cigar Lake's full production, as
it is expected to ramp up to 18 million pounds per year by 2018.  
We expect to produce 2 million to 3 million packaged pounds (100%
basis) in 2014, depending on the mill startup and rampup, as well as
the continued success of mining operations at Cigar Lake. 
Inkai 
Production was 13% lower compared to the first quarter of 2013. An
abnormally heavy snowfall and rapid spring melt made it difficult to
deliver reagents and access the operating wellfields. 
Heavy spring snow melt in the Sozak region of Kazakhstan has resulted
in flooding and damage to the access roads that are used to deliver
reagents and supplies to several uranium mines. The impact on
production at Inkai was minimal, and based on our plans to construct
new wellfields, we remain on track for annual production of 3.0
million pounds U3O8 (our share). 
FUEL SERVICES  
Fuel services produced 4.0 million kgU in the first quarter, 15%
lower than the same period last year. We decreased our production
target in 2014 to between 12 million and 13 million kgU, so quarterly
production is anticipated to be lower than comparable periods in
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, mining and technology, Cameco 

Cigar Lake 


 
 
--  Scott Bishop, principal mine engineer, technology group, Cameco 

Inkai 


 
 
--  Ken Gullen, technical director, international, 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 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 2014 and future global uranium supply,
    consumption, demand and number of new reactors, including the discussion
    under the heading Uranium market update 
--  our consolidated outlook for the year and the outlook for our operating
    segments for 2014 
--  our expectations for uranium deliveries in the second quarter and
    uranium sales for the balance of 2014 
--  the discussion of our expectations relating to our tax dispute with
    Canada Revenue Agency (CRA), including our estimate of the amount and
    timing of expected cash taxes and transfer pricing penalties payable to
    CRA 
--  our future plans and expectations for each of our uranium operating
    properties and fuel services operating sites 
--  our plan for 2 million to 3 million packaged pounds (100% basis) in 2014
    from milling Cigar Lake ore at AREVA's McClean Lake mill 
 

 
 
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 
--  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 
--  we are subject to litigation or arbitration that has an adverse outcome,
    including lack of success in our dispute with CRA 
--  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 fulfil delivery commitments
--  our Cigar Lake mining or production plans are delayed or do not succeed,
    including as a result of any difficulties with the jet boring mining
    method or freezing the deposit to meet production targets, or any
    difficulties with the McClean Lake mill modifications or commissioning
    or milling of Cigar Lake 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 for any reason 
--  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 
 
Material assumptions                                                        
 
--  our expectations regarding sales and purchase volumes and prices for
    uranium and fuel services 
--  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 expenditures expectations 
--  our expectations regarding spot prices and realized prices for uranium 
--  our expectations regarding tax rates and payments, foreign currency
    exchange rates and interest rates 
--  our expectations about the outcome of the dispute with CRA 
--  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 mining and production plans succeed, including the
    additional jet boring equipment is acquired on schedule, the jet boring
    mining method works as anticipated and the deposit freezes as planned 
--  mill modifications and commissioning of the McClean Lake mill are
    completed as planned and the mill is able to process Cigar Lake ore as
    expected, including our expectation of processing 2 million to 3 million
    packaged pounds (100% basis) in 2014 
--  our McArthur River development, mining and production plans succeed 
--  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 

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 July 15, 2014, to shareholders of
record at the close of business on June 30, 2014. 
Conference call 
We invite you to join our first quarter conference call on Tuesday,
April 29th, 2014 at 1:00 p.m. Eastern. 
The call will be open to all investors and the media. To join the
call, please dial (866) 223-7781 (Canada and US) or (416) 340-2216.
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, May 30, 2014 by calling (800) 408-
    3053 (Canada and US) or (905) 694-9451 (Passcode 9624310#) 

Additional information 
You can find a copy of our first 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 2013 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. 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, the Company and
Cameco mean Cameco Corporation and its subsidiaries; including NUKEM
GmbH, unless otherwise indicated. 
Contacts:
Cameco
Investor inquiries:
Rachelle Girard
(306) 956-6403 
Media inquiries:
Gord Struthers
(306) 956-6593
 
 
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