We have a strategy and process in place to double our annual production to 40 million pounds by 2018, which we expect to come from three sources:

• operating properties
• development projects
• projects under evaluation

The product pipeline chart to the right shows how we expect each of these sources to progress towards achieving our 2018 production goal.

About half of the total expected 2018 annual production is from mines that are already operating. The other half is from projects that are in development or under evaluation. To reach our goal, we expect existing cash balances and operating cash flows will meet anticipated capital requirements without the need for significant additional funding.

We expect to spend, on average, between $20 million and $25 million per year for the next three years to assess the feasibility of projects under evaluation. These amounts will be expensed as incurred.

This is not a complete list of all the projects we are currently evaluating. Many projects are early stage. As we evaluate them, the mix of projects to reach our 2018 goal may change. Our evaluation process is designed to provide flexibility in development decisions.

Operating properties

Our sources of production are McArthur River/Key Lake, Rabbit Lake, Smith Ranch-Highland, Crow Butte and Inkai.

We plan to maintain the base of our current production at these operations, and to expand production where we can by developing new mining zones. We are upgrading the mills at Key Lake and Rabbit Lake to support our growing production.

Inkai blocks 1 and 2, in Kazakhstan, have the potential to significantly increase production. Based on current mineral reserves, we expect Rabbit Lake to produce until 2017, although work is ongoing to extend its mine life even further.

Development project

Cigar Lake is our project in development. It is a superior, world-class deposit that we expect to generate 9 million pounds of uranium per year for Cameco (18 million pounds per year in total) after we finish remediation and construction, and ramp up to full production. We are targeting initial production in mid-2013.

Projects under evaluation

We are evaluating several potential sources of production, including expanding McArthur River, increasing production at Inkai blocks 1 and 2, and advancing Inkai block 3, Kintyre and Millennium.

• The McArthur River extension is expected to expand our existing mining area, which is part of the most prolific high-grade uranium system in the world.
• Under a memorandum of understanding with our Inkai partner, National Atomic Company KazAtomProm Joint Stock Company (Kazatomprom), we are in discussions to increase annual production from blocks 1 and 2, which would result in our share increasing to 5.7 million pounds.
• Inkai block 3, in Kazakhstan, has the potential to become a significant source of production.
• Our acquisition in 2008 of a 70% interest in Kintyre, in Australia, adds potential for low-cost production and diversifies our production by geography and deposit type.
• Millennium is a uranium deposit in northern Saskatchewan that we expect will take advantage of the mill at Key Lake.

Our strategy is to advance these projects through a stage gate process (see chart to the right) that includes several defined decision points in the assessment and development stages. At each point, we re-evaluate the project based on current competitive, economic, social, legal, political and environmental considerations. If it continues to meet our criteria, we proceed to the next stage. This process allows us to build a pipeline of projects ready for a production decision.

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Cautionary Note Regarding Forward-Looking Information

This discussion of our strategy, our process to double our annual uranium production by 2018, and our growth beyond that date is forward-looking information. It is based on the assumptions and subject to the material risks discussed here, and specifically on the assumptions and risks listed here.

Assumptions

Our statements about doubling annual production by 2018 to 40 million pounds reflect our current production target for 2018. Although we are confident in our efforts to reach that target, we cannot guarantee that we will. We have made assumptions about 2018 production levels at each of our existing operating mines, except those that we do not expect will still be operating then. We have also made assumptions about the development of mines that are not operating yet and their 2018 production levels. We believe these assumptions are reasonable, individually and together, but if an assumption about one or more mines proves to be incorrect, we will not reach our 2018 target production level unless the shortfall can be made up by additional production at another mine.

Material risks that could prevent us from reaching our target

• we cannot locate additional reserves and identify appropriate methods of mining to maintain and increase production levels at McArthur River
• our partner or the Kazakh government does not support an increase in production to the expected level at Inkai, blocks 1 and 2, or we don't reach the full production level as quickly as we expect
• we cannot bring block 3 into production at Inkai if the feasibility study is not favourable or we cannot secure partner or government approval
• remediation and development at Cigar Lake is not completed on schedule, or we do not reach the full production level as quickly as we expect
• development of Kintyre is delayed due to political, regulatory or indigenous people issues
• we cannot obtain a favourable feasibility study for Kintyre or the Millennium project, or we cannot reach agreement with our project partners to move ahead with production at Kintyre or Millennium
• the Key Lake mill does not have enough capacity to handle anticipated production increases, and we aren't able to expand its capacity or to identify alternative milling arrangements
• the projects under evaluation do not proceed or, if they do, are not completed on schedule or don't reach full production levels as quickly as we expect
• uranium prices and development and operating costs make it uneconomical to develop projects under consideration
• we cannot obtatin or maintain necessary permits or approvals from government authorities
• disruption in production or development due to natural phenomena, labour disputes, political risks, blockades or other acts of social or political activism, lack of tailings capacity, or other development and operation risks