For the years ended December 31, 2007 and 2006
($Cdn thousands except per share amounts and as noted)
Cameco's estimates of future asset retirement obligations are based on reclamation standards that satisfy regulatory requirements. Elements of uncertainty in estimating these amounts include potential changes in regulatory requirements, decommissioning and reclamation alternatives and amounts to be recovered from other parties.
Cameco estimates total future decommissioning and reclamation costs for its operating assets to be $440,000,000. These estimates are reviewed by Cameco technical personnel as required by regulatory agencies or more frequently as circumstances warrant. In connection with future decommissioning and reclamation costs, Cameco has provided financial assurances of $300,000,000 in the form of letters of credit to satisfy current regulatory requirements.
Under the BPLP lease agreement, OPG, as the owner of the Bruce nuclear plants, is responsible to decommission the Bruce facility and to provide funding and meet other requirements that the Canadian Nuclear Safety Commission (CNSC) may require of BPLP as licensed operator of the Bruce facility. OPG is also responsible to manage radioactive waste associated with decommissioning of the Bruce nuclear plants.
|Balance, beginning of year||$||228,496||$||167,568|
|Acquisition of Zircatec interest [note 23]||–||7,129|
|Changes in estimates||59,487||50,299|
|Impact of foreign exchange||(12,044)||(34)|
|Balance, end of year||$||284,673||$||228,496|
Following is a summary of the key assumptions on which the carrying amount of the asset retirement obligations is based:
|(i)||Total undiscounted amount of the estimated cash flows – $440,000,000.|
|(ii)||Expected timing of payment of the cash flows – timing is based on life of mine plans. The majority of expenditures are expected to occur after 2013.|
|(iii)||Discount rates – 5.25% to 7.50% for operations in North America; 8.00% for operations in Kyrgyzstan; 8.00% for operations in Mongolia.|