Uranium Operations

Profile
Cameco operates and owns a controlling interest in the world's largest uranium mines and mills, McArthur River, Key Lake and Rabbit Lake, located in northern Saskatchewan. Through its wholly owned US subsidiaries, the company also obtains uranium production from operations at Highland in Wyoming and Crow Butte in Nebraska.

Cameco is an integrated, value-added uranium producer with refining and conversion plants in Ontario.

Following Cameco's record production in 1998, the transition to a new high-grade mine and market forces resulted in a planned decrease in output to 17 million pounds. In 1999, the company accounted for about 20% of the world's total uranium production.

The company's future is secured by more than 365 million pounds of proven and probable reserves primarily from its share of McArthur River and Cigar Lake, the two largest high-grade known uranium deposits in the world.

Mining Operations
McArthur River/Key Lake   McArthur River is the world's largest high-grade uranium mine. Ore from the mine is transported to Key Lake for processing.

At the Rabbit Lake laboratory, Lori Burnouf analyzes the uranium content in the mill's product which is a uranium concentrate commonly called yellowcake.

Milling stockpiled ore from mined-out deposits on site, Key Lake produced 9.7 million pounds U₃O₈ in 1999 maintaining its position as the world's largest uranium operation.

During the two years of mine construction at McArthur River, more than 2,500 truck loads of materials were transported to the remote site. Construction of the mine was completed and operating approvals were received from federal and provincial government authorities in 1999. Approvals were also received to transport and process McArthur River ore at the Key Lake mill, with its expanded capacity, and to manage the resulting tailings at the site.

Mining began at McArthur River in December 1999 with the first ore from the site processed at the Key Lake mill in early January 2000. During mine startup, also known as mine commissioning, the operation of processing and mining equipment is evaluated, and modified if required, as ore production is ramped up. While mine commissioning is expected to be completed in 2000, the rampup to full production of 18 million pounds U₃O₈ annually is planned for the next two years. In 2000, production from McArthur River is targeted at 11 million pounds U₃O₈, with the majority of the output to occur in the latter part of the year.

In 1999, Cameco completed a transaction in which COGEMA Resources Inc. acquired a 17% interest in Key Lake and an additional 14% interest in McArthur River. Cameco now owns 83% of Key Lake and 70% of McArthur River.

Rabbit Lake/Cigar Lake   In 1999, Rabbit Lake, the longest operating uranium facility in Saskatchewan, produced 7.0 million pounds U₃O₈. Operations at Rabbit Lake's Eagle Point underground mine were suspended in early 1999.

Cigar Lake is the world's second largest high-grade known uranium deposit in the world. The majority of the ore will be transported to Cameco's Rabbit Lake operation for milling and tailings management. Production is expected to begin in 2003.

Testing of the jet boring mining system was conducted at Cigar Lake in 1999, confirming the potential of this innovative mining method. Further testing of this method will be conducted in 2000, both in waste rock and in ore, subject to regulatory approval.

Kent Graas, an environment technologist at Cigar Lake, reads the filter from a high volume sampler which provides data on dust intake levels in the area around the mine shaft.

Preparation of the environmental impact statement (EIS) for the processing of Cigar Lake ore at the Rabbit Lake site began in 1999 with community meetings in northern Saskatchewan and technical research. In 2000, the EIS document will be submitted to the regulatory agencies of both levels of government. Cameco owns 50% of Cigar Lake and 100% of Rabbit Lake.

Highland/Crow Butte   Production at the Highland in situ leach operation in Wyoming was more than 900,000 pounds U₃O₈ in 1999. Record production was achieved at the Crow Butte in situ leach operation in Nebraska, with more than 800,000 pounds U₃O₈ produced for the year.

Work continued on the permitting process of new mining areas in Wyoming, including Gas Hills, during 1999. The development schedule for these properties will depend on market conditions.

In 1999, Cameco, through its US subsidiaries, entered into an agreement to acquire an additional 10% of the Crow Butte operation. Completion of the acquisition is expected in March 2000 at which time Cameco will own 100% of Crow Butte. Cameco already owns 100% of the Highland operation.

At the end of the Blind River production circuit, process operator Jim Kendrick uses an overhead crane to move a tote bin into place so it can be filled with UO3. Blind River is Canada's only uranium refining facility.

The Highland and Crow Butte operations make Cameco one of the largest uranium producers in the US.

Fuel Services
Cameco is owner and operator of Canada's only uranium refining and conversion facilities, located in Ontario. Operations include the Blind River facility, the world's largest refinery where uranium concentrates are processed into high-purity uranium trioxide (UO₃), an intermediate product used as feed at the company's Port Hope conversion plants. The Port Hope facility is one of only four commercial suppliers of uranium hexaflouride (UF₆) in the western world. UF₆, after enrichment and further processing, becomes the fuel used in most nuclear reactors. The Port Hope plant is also the only commercial supplier of natural uranium dioxide (UO₂) which is used as fuel for Candu reactors. In 1999, production of UO₃ at Blind River was more than 11,000 tonnes, as was the combined production of UO₂ and UF₆ at Port Hope. Cameco owns 100% of both facilities.

Technology Development and Special Projects   In June 1999, the United States Enrichment Corporation (USEC) suspended the Atomic Vapour Laser Isotope Separation (AVLIS) enrichment project. Cameco was partnered with USEC in developing the process to supply metal grade feed to the project.

USEC refunded Cameco's $3 million contribution to the project.

Geologist Darcy Hirsekorn examines a non-uranium bearing core sample from the Cigar Lake project. Geologists use these samples to become familiar with the type of rock formations and mineralizations found near the ore zones at various sites.

Uranium Exploration
Cameco's exploration program targets high-grade uranium deposits. Discovery of rich deposits, typically buried hundreds of metres below the surface, requires careful analysis of geoscientific information and the drilling of prospective targets. In 1999, Cameco spent more than $11 million on uranium exploration, a planned reduction of 26% from the previous year. Activity continued to concentrate on the Athabasca Basin in northern Saskatchewan and the Arnhem Land region of the Northern Territory in Australia. Cameco and its joint-venture partners had a total land holding of 3.3 million hectares at the end of the year, compared to 3.4 million hectares in 1998.

Saskatchewan
Cameco is involved in a number of joint venture exploration projects in northern Saskatchewan's uranium-rich Athabasca Basin. One of the company's largest and most active projects is the Dawn Lake property which includes the La Rocque Lake claims where high-grade uranium mineralization was discovered during the 1999 exploration program. The results of three drill holes, with uranium grades up to 29.9% U₃O₈, are considered encouraging, but the results were not sufficient to draw conclusions as to the economic significance of the mineralization. Further drilling will be conducted on the claims in 2000 to test the possible extent of the mineralization. Also on the Dawn Lake project, additional drilling is planned on mineralized zones originally discovered by a previous operator in 1979.

Australia
In Australia, the majority of Cameco's exploration land holdings are early stage projects in the Arnhem Land region of the Northern Territory. The company holds or has rights to interests of between 50% and 100%. No economic uranium occurrences were found in 1999.

Kazakhstan
Inkai is an in situ leach project located in Kazakhstan in Central Asia. The project is owned and operated by Joint Venture Inkai of which Cameco holds a 60% interest. The remaining 40% interest is held by KazAtomProm, a company owned by the government of Kazakhstan.

During 1999, the joint venture was involved in negotiations with the government on a subsoil use contract related to the extraction and recovery of minerals. Once the contract is concluded, necessary government approvals to proceed with test mining can be granted. Subject to these approvals, further work, including test mining, is expected to be conducted in 2000. Cameco has agreed to provide funding of up to $40 million (US) to the joint venture for project development over the next few years.