Financial Notes

In 1999, after a prolonged period of depressed gold prices, Cameco reduced the carrying value of its investment in the Kumtor gold mine by $45,523,000. The amount of the writedown was determined based on estimated future net cash flows assuming a future gold price of $300 (US) per ounce.

In 1998, Cameco recorded a writedown of $15,964,000 relating to certain of its in situ leach development properties located in the United States.

Cameco has a $400,000,000 unsecured long-term revolving credit facility that is available until February 18, 2003 and bears interest at margins over bankers acceptances and LIBOR of 0.17%. Amounts drawn under the long-term revolving credit facility are classified as long-term debt up to the limit available under the facility. Amounts outstanding are:

• Commercial paper of $102,081,000 (1998 - $316,057,000) bearing interest at an average rate of 6.1% (1998 - 5.3%).
• Bank debt of $35,000,000 (US) ($50,516,000 (Cdn)) drawn as LIBOR-based loans at an average rate of 6.4%. At December 31, 1998, $32,038,000 was drawn as bankers acceptances at an average rate of 6.0% and $53,000,000 (US) ($81,117,000 (Cdn)) as LIBOR-based loans at an average rate of 5.6%.

Cameco completed a $100,000,000 debt issuance on July 12, 1999 in the form of senior unsecured debentures. These debentures bear interest at a rate of 6.9% per annum and will mature July 12, 2006.

Cameco has a $15,000,000 overdraft facility and $221,248,000 ($113,000,000 (Cdn) and $75,000,000 (US) in letter of credit facilities. Outstanding letters of credit at December 31, 1999 amounted to $130,765,000 (1998 - $125,600,000).

The table below represents scheduled repayments of long-term debt over the next five years and thereafter, including Cameco's one-third share of Kumtor Gold Company principal repayments on debt and Cameco's share savings plan payments.

Pursuant to the terms of the Kumtor financing arrangements [note 19], Cameco has guaranteed, subject to exclusions in respect of defined political force majeure events, the repayment of Kumtor's senior debt. Cameco's contingent obligations under these guarantees exceed the amount included in Cameco's long-term debt as at December 31, 1999 by $183,780,000 (1998 - $245,220,000).

In 1998, Cameco issued $125,000,000 (US), 8.75% preferred securities in denominations of $25 (US) each due September 30, 2047 accruing interest from the date of issuance payable quarterly commencing December 31, 1998.

Cameco has the right to defer, subject to certain conditions, payments of interest on the preferred securities for a period of up to 20 consecutive quarterly periods, provided that no such extension period may extend beyond the stated maturity of the preferred securities. Except in certain limited circumstances, during any extension period, Cameco shall not pay or declare dividends on any of its capital stock (except by way of stock dividend). There may be multiple extension periods of varying lengths, each of up to 20 consecutive quarterly periods, throughout the term of the preferred securities. During any extension period, interest will accrue but will not compound. Cameco may satisfy its obligation to pay deferred interest on any applicable interest payment date by delivering to the trustee common shares of Cameco. The holders of the preferred securities shall be entitled to receive cash payments equal to the deferred interest from the proceeds of the sale of the common shares by the trustee.

The preferred securities are redeemable, at the option of Cameco, in whole or in part at any time on or after October 14, 2003 at a redemption price equal to 100% of the principal amount of the preferred securities to be redeemed plus any accrued and unpaid interest thereon to the date of redemption.

Cameco may satisfy its obligation to pay the applicable redemption price or the principal amount of the preferred securities plus accrued and unpaid interest thereon on the applicable payment date by delivering to the trustee common shares of Cameco. The holders of the preferred securities shall be entitled to receive cash payments equal to the applicable redemption price of the principal amount of the preferred securities plus accrued and unpaid interest thereon from the proceeds of the sale of the common shares by the trustee.

The principal amounts of the preferred securities, net of after tax issue costs of $4,330,000 (Cdn) have been classified as equity, and interest payments on an after tax basis will be classified as distributions of equity, as Cameco has the unrestricted ability to settle its obligations by delivering common shares to the trustee.

The provision for income taxes differs from the amount computed by applying the combined expected federal and provincial income tax rate to earnings before income taxes. The reasons for these differences are as follows:

(a) During 1999, Cameco purchased an additional 1.275% interest in the Cigar Lake Joint Venture.

Production expenses relating to mining and milling activities are included in the cost of inventory. Certain of the joint ventures allocate inventory to each of the joint venture participants and the joint venture participants derive revenue directly from the sale of such inventory. Cameco's share of assets and liabilities of these joint ventures is as follows:

For the Kumtor gold joint venture, which obtains revenue from the sale of products, Cameco's share of the assets and liabilities, revenue and expenses is as follows: