Quarterly Text

Cameco Announces Third Quarter Financial Results for 1999

To Our Shareholders

Highlights from Bernard Michel, Chair, President and Chief Executive Officer

"Cameco has recorded an after tax net gain of $71 million from the sale of uranium assets announced in the second quarter and used the net proceeds of $238 million to reduce debt. In addition, the company has reduced the carrying value of its gold assets by $43 million after tax as a result of concerns over the continued volatility in the gold market."

"Annual uranium sales volumes are expected to be higher than last year, even though volumes were lower in the third quarter as a result of the flexible delivery schedules demanded by customers."

"The company remains a strong generator of cash in spite of net earnings which continue to reflect declining uranium and gold prices."

"Cameco is eagerly anticipating production startup at the McArthur River project before year end after receiving a mine operating licence from the Atomic Energy Control Board on October 7, 1999."

"Despite sustained demand from utilities, the uranium spot market remains under pressure from a few sellers who appear to be committed to make short-term sales in a weakening market."

"At the end of the third quarter, we announced the company's share repurchase program. We have commenced the purchase of Cameco shares which we believe is in the best interest of our shareholders."

Financial Highlights

		Nine Months Ended			Nine Months Ended
		Sept. 30/99			Sept. 30/98			Change
Revenue ($ millions)		498			492			1%
Earnings from operations ($ millions)		40			93			-57%
Cash provided by operations ($ millions)		170			66			158%
Net earnings attributable to common shares ($ millions)		53			55			-4%
Earnings per share ($)		0.93			0.97			-4%
Average uranium spot price for the period (US$/lb U3O8)		10.41			10.77			-3%
Cameco's average realized gold price for the period (US$/ounce)		345			396			-13%
Average LME gold price for the period (US$/ounce)		273			294			-7%

Consolidated Financial Results

Cash Flow

During the first nine months of 1999, Cameco's cash flow from operations, after working capital changes, was $170 million ($2.96 per share) compared to $66 million ($1.16 per share) generated during the first nine months of 1998. This increase of $104 million is due to changes in working capital as Cameco's trade receivables and inventories are significantly lower than they were a year ago. Receivables are down due to timing of sales while inventories are lower as a result of greater sales volumes and reduced uranium production at the Key Lake and Rabbit Lake minesites. The lower production is part of the company's strategy to reduce its product inventory now that McArthur River is in the startup phase. Before working capital changes, cash provided by operations was $147 million compared to $165 million in 1998. This reduction is largely attributable to decreased profit margins caused by lower prices.

In the nine months ended September 30, 1999, Cameco generated positive cash flow of $65 million from its investing activities. This reflected the net proceeds from the sale of uranium assets to Cogema Resources Inc. (Cogema) of $238 million and capital expenditures of $175 million related mainly to the continued development of McArthur River and Cigar Lake.

Earnings

For the nine months ended September 30, 1999, net earnings attributable to common shares were $53 million ($0.93 per share) compared to $55 million ($0.97 per share) in 1998. Earnings in 1999 were significantly impacted by two unusual items which were recorded in the third quarter; the gain on the sale of uranium assets to Cogema and the writedown of gold assets. Excluding the impact of these two items, net earnings attributable to common shares would have been $25 million ($0.44 per share) for the first nine months of 1999.

The sale of assets to Cogema resulted in a net gain of $71 million, of which $59 million is recorded as a deferred income tax recovery with the remainder appearing as a gain on the sale of assets.

The company reduced the carrying values of its gold assets in the third quarter which resulted in a $43 million charge to earnings, net of a $6 million deferred tax recovery. The majority of this charge, or $40 million, relates to the company's investment in Kumtor. The remaining $3 million has been taken against Cameco's investments in other gold companies.

The lower earnings in the third quarter from the nuclear segment reflect the following factors; declining uranium spot prices combined with a higher proportion of uranium deliveries with pricing based upon the current spot price, lower delivery volumes, and more sales of higher-cost purchased uranium. Cameco's earnings fluctuate with the timing of uranium deliveries and therefore, earnings from quarter to quarter can vary significantly. It is anticipated that the fourth quarter will see a much higher volume of uranium deliveries. Total 1999 volumes are expected to surpass the 1998 levels.

The company's earnings were also weakened by decreased operating profits from Kumtor, which has been negatively impacted by lower realized gold prices, lower production volumes and grades, and higher depreciation charges. Higher interest expenses and preferred securities charges also reduced earnings for the nine-month period compared to last year.

Financial Position

At September 30, 1999, total debt was $379 million compared to $601 million at December 31, 1998, and the company's debt-to-capitalization ratio had declined to 16% from 24% at the end of 1998. Cameco used the proceeds from the Cogema sale to reduce long-term indebtedness. In July, the company issued $100 million of 6.9% debentures with a seven-year term. The net proceeds of this transaction were used to repay commercial paper as it matured.

On September 27, 1999, the company announced a program to purchase for cancellation up to 2.9 million of its common shares, representing 5% of the 57.7 million issued and outstanding common shares of the company. Under the program, purchases can be made during the period beginning on September 29, 1999 and ending on September 28, 2000. The company will make only open-market purchases of its shares and will pay the market price of the shares at the time of purchase. Cameco began purchasing shares in early October 1999.

Segmented Financial Results

Nuclear Business

To September 30, 1999, nuclear revenue increased to $421 million from $381 million for the same period one year ago. Sales volume rose by 17% for U₃O₈ primarily due to the addition of UEM Inc. (Uranerz) delivery commitments. Conversion services sales volumes rose by 10% due to normal variations in delivery patterns. Cameco's average realized price for uranium concentrates declined due to lower U₃O₈ spot prices which averaged about 3% less than in 1998.

Cost of products and services sold, including depreciation, depletion and reclamation were lower on a per unit basis but, in total increased by 14% reflecting higher uranium and conversion delivery volumes. The unit cost for uranium has been favourably influenced by the UEM acquisition which has increased Cameco's share of low-cost production from the Key Lake and Rabbit Lake mines. In addition, the average cost of purchased product was slightly lower than a year earlier.

Gold Business

As noted in our report to shareholders for the second quarter ended June 30, 1999, Cameco has undertaken a review of the carrying value of its investment in Kumtor. This review was completed in the quarter ended September 30, 1999, with the result that Cameco has reduced the carrying value of its investment in Kumtor by $31 million (US), or $46 million (Cdn). This represents a writedown of Cameco's initial equity investment to the project in excess of its one-third equity in the Kumtor Gold Company (KGC).

Gold prices tested the $250 (US) per ounce level during the quarter and continue to be volatile despite the improvement near the end of September. Cameco believes that gold prices still face pressure from the downward trend which began three years ago and is of the view that taking a conservative outlook of future gold prices is justified. Following the writedown, Cameco's book value of its interest in KGC was $125 million (US) on September 30, 1999.

The review also indicated that KGC would be able to meet its payment obligations as they become due to its senior lenders at an average realized gold price of about $225 (US) per ounce or higher over the life of the mine. Following the scheduled debt repayment of $25 million (US) on June 1, 1999, KGC's outstanding senior indebtedness, all of which is guaranteed by Cameco, was reduced to $216 million (US).

For the nine months ended September 30, 1999, gold revenue declined by 31% to $76 million compared to a year earlier, due to lower sales volume and lower prices. Sales volume declined by 39,674 ounces (22%) to 141,650 ounces, partly due to a decrease in Kumtor production and partly due to the shutdown of Contact Lake mine in mid-1998. Cameco's share of Kumtor production for the nine months ended September 30, 1999 declined by 7% to 146,756 ounces compared to 157,575 ounces last year, largely reflecting an anticipated lower average ore grade. In 1999, the average grade processed was 4.4 grams per tonne with recoveries averaging almost 80%. The average realized gold price declined to $345 (US) per ounce for the nine months ended September 30, 1999, from $396 (US) per ounce for last year.

For the first nine months of 1999, KGC's total cash cost per ounce was about $178 (US). This cost is calculated in accordance with the standards of The Gold Institute.

KGC's hedge position at the end of September 1999 was 1,256,240 ounces at an average expected price of about $300 (US) per ounce. This represents a net increase of 755,180 ounces since the end of the previous quarter and the total position now covers the equivalent of about two years of production. The mark-to-market unrealized loss of KGC's hedge position was $3 million based on a market spot gold price of $299 (US) per ounce at quarter end.

Outlook

Total forecast revenue for 1999 is expected to show a modest increase over levels achieved in 1998 due to the effect of greater uranium sales being offset by lower gold volume and price. Product costs over the next two years are expected to vary as the company brings new high-grade, underground uranium mines into steady state operation. For the remainder of the year, a $1.00 (US) change in the U₃O₈ spot price from current levels would change revenue by about $3 million (Cdn) and net earnings by about $1 million (Cdn). Cameco's share of 1999 uranium production is expected to be about 16 million pounds U₃O₈.

At Kumtor, gold production for the year is expected to exceed 600,000 ounces. (Cameco's share is one-third).

Uranium Spot Market

The U₃O₈ restricted spot price averaged $9.90 (US) per pound U₃O₈ on September 30, 1999, which was a decline of 5% from $10.41 (US) at the end of the second quarter, and an increase of 12% over the average spot price at the end of 1998. Utility demand continued to be strong during the third quarter, but certain sellers were motivated to conclude sales, particularly for near-term deliveries, at increasingly lower prices.

The uranium spot market volume for the quarter was about 4 million pounds U₃O₈ bringing the year's volume to approximately 19 million pounds. This compares to just 11 million pounds for the entire year in 1998.

The spot market price for uranium conversion services also declined, ending the quarter at $2.90 (US) per kilogram uranium as UF₆ compared to $3.40 (US) three months earlier. As with U₃O₈, prices weakened as secondary suppliers were aggressive in liquidating conversion inventory for near-term delivery.

Uranium Long-Term Market

Late in the third quarter, the long-term price indicator fell to $11.00 (US) per pound U₃O₈ from $11.25 (US). This decline reflects the lack of activity in this market to date in 1999 and the softening of the spot price over the last two quarters. Long-term market activity for 1999 is expected to be in the range of the 50 million pounds U₃O₈ reported in 1998.

Operation and Development Updates

On October 7, 1999, the Atomic Energy Control Board (AECB) approved a two year, renewable operating licence for the McArthur River uranium mine. The licence permits the mining and processing of ore at McArthur River and the transport of ore slurry to Key Lake. In preparation for mining, extraction chambers and test holes for raise boring are being completed and commissioning of the underground ore preparation circuit is underway. The overall project is expected to be completed within the feasibility cost estimates and on schedule. Sinking of shaft number three, which is not needed to begin production, has begun and is scheduled for completion in 2001. The McArthur River mine contains the largest, high-grade uranium reserves in the world. When the mine achieves full production capacity, expected in 2001, it is expected to be one of the world's lowest-cost uranium production centres.

Retrofitting of the Key Lake mill to process the McArthur River ore continued during the third quarter and will be completed by the end of October. Subsequently, the mill will be restarted using Key Lake feed, followed by commissioning of the McArthur ore receiving station. The first delivery of McArthur River ore is expected later in the fourth quarter. The Key Lake capital modification projects are on budget and on schedule.

An operating licence permitting the milling of McArthur River ore at the Key Lake mill will be considered for approval by the AECB on November 4, 1999.

Year 2000 Readiness

Cameco's overall year 2000 readiness program continues to progress in accordance with expectations and the company has met all milestone dates in its project plan. Core business information systems have been fully assessed and remediation activities are essentially complete. A quality assurance (QA) program was established to ensure that critical corporate business systems were subjected to an additional level of integrated testing in a simulated end user production environment. The QA test plan was completed successfully by June 30, 1999.

The company has completed its corporate-wide impact assessment of imbedded systems and utilized an external audit process to independently review the results achieved at Cameco's Canadian locations. Replacement and/or remediation of identified at-risk imbedded systems components is substantially complete. All operating locations are well advanced with respect to developing Y2K-specific, year-end operating and contingency plans.

While business partners generally have responded in a positive manner regarding their year 2000 planning, this information cannot be verified, and therefore, should be viewed with some caution.

At Kumtor, the company views the Y2K uncertainty to be greater because of the low priority given to this issue in Kyrgyzstan.

The development and implementation of a year 2000 business continuity planning process at Cameco began in April 1999. This process utilizes a standard methodology which is being deployed at operating locations. The cost estimate for Cameco's entire Y2K program remains unchanged at under $1 million.

The effects of the year 2000 issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may have a material adverse effect on Cameco's business and financial condition.

It is not possible to be certain that all aspects of the year 2000 issues affecting the company (including the operations of the Kumtor gold mine) will be fully resolved, including those related to the efforts of customers, suppliers or third parties.

Forward-Looking Statements

Certain statements in this report to shareholders constitute forward-looking statements as defined in the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Cameco or of the uranium or gold business to be materially different from future results, performance or achievements expressed or implied by those forward-looking statements. These factors are discussed in greater detail in Cameco's most recent annual information form and management's discussion and analysis on file with the Canadian provincial securities regulatory authorities and the United States Securities and Exchange Commission.

For Further Information Contact:

Alice Wong Director, Investor & Corporate Relations Cameco Corporation Phone: (306) 956-6337 Fax: (306) 956-6318

Elaine Kergoat Manager, Media and Public Relations Cameco Corporation Phone:(306) 956-6315 Fax:(306) 956-6318

Profile

Cameco is the world's largest publicly traded uranium producer. The company operates underground uranium mines in Saskatchewan, Canada, in situ leach uranium facilities in Wyoming and Nebraska in the United States, uranium refining and conversion facilities in Ontario, Canada and a gold mine in Kyrgyzstan, Central Asia. The company's uranium products are used to generate electricity in nuclear energy plants around the world, providing one of the cleanest sources of energy available today.

Investor Information

Common Shares CCO The Toronto Stock Exchange The Montreal Exchange CCJ New York Stock Exchange Preferred Securities CCJPR New York Stock Exchange

Investor Inquiries Cameco Corporation 2121, 11th Street West Saskatoon, Saskatchewan S7M 1J3 Phone: (306) 956-6400 Fax:     (306) 956-6318 Web: www.cameco.com

Transfer Agent CIBC Mellon Trust Company 1080 - 2002 Victoria Avenue Regina, Saskatchewan S4P OR7 Phone: (306) 751-7550 Fax:     (306) 751-7552