Cameco Corporation (the "Company", or "Cameco") is the largest, lowest cost, publicly traded integrated producer of uranium in the world. Cameco sells its uranium for use by electric utilities in the nuclear generation of electricty. The Company has increased its production of uranium concentrate (U3O8 or triuranium octoxide) from 13 million pounds in 1993 to 19 million pounds in 1997. This accounted in 1997 for about 25% of Western World production. In 1997, Cameco's share of the Western World U3O8 market was approximately 15%.
In addition to uranium mining, Cameco is one of four commercial converters of uranium to UF6 (uranium hexafluoride) in the Western World, supplying approximately 20% of the medium to long-term market demand for conversion services. While Cameco continues its principal focus on the uranium business, it also has gold mining operations. Cameco has brought into commercial production the large Kumtor gold project (nominal annual production capacity of 500,000 ounces) in the Republic of Kyrgyzstan in Central Asia, and also operates a small gold mine at Contact Lake in northern Saskatchewan. The Company continues to actively explore for uranium and gold in a number of countries around the world.
Over the past several years, Cameco has expanded and diversified its uranium production capabilities through exploration, acquisition and development initiatives. As of December 31, 1997, the Company had total proven and probable reserves estimated at 364 million pounds of U3O8 and total indicated and inferred resources estimated at 270 million pounds of U3O8.
The Company's current uranium producing activities are conducted primarily through its 66 2/3% interests in, and operation of, two large uranium mines in Saskatchewan, the Key Lake mine and the Rabbit Lake mine. The Key Lake mine is the highest grade, lowest cost and largest operating uranium mine in the world in terms of production. The Key Lake mine, which has a proven annual production capacity exceeding 14 million pounds of U3O8 , produced approximately 49% of Cameco's total uranium concentrate output in 1997. The Key Lake ore reserves are expected to be depleted by the end of 1999. Under current plans the Key Lake mill will then be used to process ore from the McArthur River mine. The Rabbit Lake mine, a large uranium mine that is one of the lowest cost operating uranium mines in the world, is currently producing at an annual rate of over 12 million pounds of U3O8 . It is anticipated that the reserves at Rabbit Lake will be depleted by the end of 2001 at which time further decommissioning work will be undertaken. The Company also has a 32.31% share of production in the Crow Butte mine in Nebraska which produced approximately 0.8 million pounds of U3O8 in 1997. During 1997, Cameco acquired a 100% interest in the Highland mine in Wyoming, which produced approximately 1.6 million pounds of U3O8 in 1997.
The Company is currently developing three projects, two of which have the world's highest known grades of uranium ore, McArthur River and Cigar Lake in Saskatchewan. Subject to the timely receipt of all necessary federal and provincial approvals, permits and licences and the successful implementation on an industrial scale of innovative technology proven in test mining, Cameco expects production at McArthur River to begin in 1999 and at Cigar Lake in 2001. The McArthur River project, of which the Company is operator and owns a 55.84% interest, is the world's largest known high grade uranium deposit with total proven and probable reserves of 189 million pounds of U3O8 with an average grade of 18.7% of U3O8 and total indicated resources of 228 million pounds of U3O8 with an average grade of 12.0% U3O8 . The Cigar Lake project, of which the Company owns a 48.75% participating interest and a 50.75% voting interest, is the world's second largest known high grade uranium deposit with proven and probable reserves of 353 million pounds of U3O8 with an average grade of approximately 13.6% of U3O8 . After receipt of regulatory approvals for project development, Cameco will be appointed mine operator for the Cigar Lake project.
The third project, Gas Hills, is an in-situ leach deposit in Wyoming. Cameco, through its wholly-owned subsidiary PRI, has a 100% interest in this project. Total reserves and resources are 18 million pounds U3O8 and 53 million pounds U3O8, respectively. Subject to the timely receipt of all necessary federal and state approvals, production is expected to commence in 2000 at 1 million pounds U3O8 and increase gradually to 2.5 million pounds U3O8. When these projects are put into production, the Company anticipates that, based on planned production rates, the total production from all of its uranium operations will increase to over 20 million pounds U3O8 per year.
Cameco owns and operates Canada's only uranium processing facilities. Cameco's uranium refining facility at Blind River, Ontario, refines uranium concentrates into UO3 which is shipped to Port Hope for conversion. Cameco's conversion facility at Port Hope, Ontario produces UF6 and UO2.
In connection with Cameco's conversion services business, in July, 1996 Cameco entered into an agreement with the United States Enrichment Corporation ("USEC") to develop the technology and demonstrate the technical and economic feasibility of converting uranium into feedstock for the atomic vapour laser isotope separation enrichment process ("AVLIS") being developed by USEC. Pending a decision by USEC respecting the commercial deployment of AVLIS technology and following completion of the approximately two-year AVLIS feedstock demonstration project, Cameco and USEC will assess the feasibility of a full-scale production facility.
As used herein, "Western World" is a uranium industry term referring to those countries from which statistics are available for the purpose of compilation of data relating to the industry, and generally refers to those countries outside the former Soviet Union ("FSU" or Republics of the Commonwealth of Independent States "CIS"), Eastern Europe and the People's Republic of China.
Unless otherwise stated herein, references to "$" or "Cdn$" are to Canadian dollars and references to "$(US)" and "US$" are to United States dollars.
Incorporation
Cameco was incorporated under the Canada Business Corporations Act ("CBCA") on June 19, 1987 to combine the uranium mining and milling operations of Saskatchewan Mining Development Corporation ("SMDC") with the uranium mining, refining and conversion operations of Eldorado Nuclear Limited ("ENL"), since renamed Canada Eldor Inc. ("CEI") (the "Reorganization"). The Reorganization of SMDC and ENL was accomplished by the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) (the "ENL Reorganization Act") and The Saskatchewan Mining Development Corporation Reorganization Act (Saskatchewan) (the "SMDC Reorganization Act"). Pursuant to this legislation, in October 1988 CEI and SMDC transferred substantially all of their assets to Cameco in exchange for Cameco assuming substantially all of their current and certain other liabilities and issuing common shares of the Company, one Class B Share and promissory notes of the Company.
At its formation, Cameco's share capital was owned 61.5% and 38.5%, respectively, by the Province of Saskatchewan (the "Province") and the Government of Canada. The Company became a publicly traded company in Canada after the initial public offering of its common shares in 1991. Through a series of secondary sales, the Government of Canada has sold all of its shares in Cameco and the Province has reduced its ownership to 9.4%, with public shareholders today owning 90.6%.
The Company owns a one-third interest in Kumtor Gold Company ("KGC") through its wholly owned subsidiaries Cameco Gold Inc. ("CGI") and Kumtor Mountain Corporation ("KMC"). KGC is a joint stock corporation that is registered in the Republic of Kyrgyzstan and is the owner of the Kumtor gold concession. Also, effective January 1, 1997, the Company purchased Power Resources, Inc. ("PRI") which is incorporated under the laws of Wyoming, U.S.A.
Cameco's head office and principal place of business is located at 2121 -- 11th Street West, Saskatoon, Saskatchewan, S7M 1J3, telephone (306) 956-6200.