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Cameco's share price closed at $39.57 in 2007

MARCH 7, 2008  Cameco's resilience as a business organization was clearly evident in 2007.

We experienced volatility in our markets and significant challenges at several of our operations that impacted the confidence of our shareholders and other stakeholders. As chair of the board of directors, I am proud of the corporation's strong response and cohesiveness during a difficult year. While addressing these challenges, we were also able to make progress on our long-term goals of building shareholder value and strengthening the corporation to take advantage of emerging opportunities.

During 2007, the operations management group was restructured to sharpen focus on key priorities and enhance accountability. We undertook an intensive effort to achieve behavioural and cultural change across the corporation to strengthen our safety and quality management systems. Our exploration effort was expanded to leverage Cameco's leadership position and strengthen our base of reserves for the future. And we delivered excellent financial performance, recording our sixth consecutive year of record adjusted net earnings and revenues.

Sound corporate governance provides stability and sustained focus on key priorities. Cameco complies with the corporate governance standards of the Toronto Stock Exchange (TSX), the requirements of the US Sarbanes-Oxley Act, and the New York Stock Exchange (NYSE) corporate governance standards applied to foreign private issuers. The corporate governance practices followed by Cameco are substantially the same as those applied to US domestic corporations listed on the NYSE.

Cameco's board continues to review and improve its governance system to ensure we follow best practices and meet changing investor and market expectations. In 2006, we adopted several measures to enhance board focus and accountability, including limiting the number of other corporate boards on which Cameco's directors may sit, and adopting a majority voting policy. In 2007, the board's emphasis shifted to providing additional support and oversight on operational matters. The reserves oversight and safety, health and environment committees are monitoring implementation of improvements to the corporation's risk assessment and quality management systems, and the entire board is hearing more frequent updates from senior executives responsible for operations to ensure continued progress.

A key responsibility of the board is to ensure that Cameco has a management team with the integrity, ability and experience to fulfil the corporation's vision to be a dominant nuclear energy company. The nuclear industry is unique in its technical, regulatory and financial complexity and requires uniquely qualified executives. We believe Cameco has an exceptional management team and the board has full confidence in them. The team performed exceedingly well under challenging circumstances during 2007, making significant advances in the priority areas of restructuring and strengthening our management and operating systems, and entrenching a pervasive safety culture across the company. To ensure continued progress, we renewed the contract of president and chief executive officer Jerry Grandey during 2007 and added seasoned nuclear industry executive Tim Gitzel as chief operating officer.

We remain optimistic about the business environment for nuclear energy and Cameco's prospects. With the increasing urgency to address greenhouse gas emissions, nuclear energy is widely recognized as a critical component of the solution to global environmental problems. Progress toward construction of new nuclear generation capacity continues around the world, promising healthy markets for Cameco's products and services for decades to come. While the uranium spot price peaked at $136 per pound during June 2007 and then retreated, the long-term price remained steady at $95 and the fundamentals remain solid. To reflect our optimism, the board decided to reward investors with a further dividend increase of 20% for 2008, our fifth increase in the past six years.

Cameco entered 2008 with a clear strategic plan, renewed focus and the energy to face challenges and develop opportunities for the long-term benefit of our shareholders. The corporation is sure-footed in our commitment to sustainable operations and integrity in management and governance. The corporation is positioned for continued growth and our prospects remain robust.

For the efforts of Cameco's committed employees around the world, and the continued support of our shareholders during 2007, I extend my thanks.

VICTOR J. ZALESCHUK