Notes

Capital Disclosures
On January 1, 2008, Cameco adopted the standard issued by the Canadian Institute of Chartered Accountants (CICA) relating to capital disclosures.  The standard requires disclosure of Cameco’s objectives, policies and processes for managing capital, quantitative data about what Cameco regards as capital and whether Cameco has complied with any capital requirements and, if it has not complied, the consequences of such non-compliance.

Cameco’s capital structure reflects our vision and the environment in which we operate.  We seek growth through development and expansion of existing assets and by acquisition.  Our capital resources are managed to support achievement of our goals.  The overall objectives for managing capital remained unchanged in the first quarter of 2008 from the prior comparative period.

Cameco’s management considers its capital structure to consist of long-term debt (net of cash and cash equivalents), minority interest and shareholders’ equity.

The capital structure at March 31, 2008 was as follows:

(thousands)	Mar 31/08
Long-term debt	$721,885
Cash and cash equivalents	(132,242)
Net debt	589,643
Minority interest	478,285
Shareholders' equity	2,831,000
Total equity	3,309,285
Total capital	$3,898,928

Cameco is bound by certain covenants in its general credit facilities.  These covenants place restrictions on total debt, including guarantees, and set minimum levels for net worth.  As of March 31, 2008, Cameco met these requirements and does not expect its activities in 2008 to be constrained by them.

The types of risk exposure and the way in which such exposure is managed is provided as follows:

Market Risk
Cameco engages in various business activities which expose the company to market risk from changes in commodity prices and foreign currency exchange rates.  As part of its overall risk management strategy, Cameco uses derivatives to manage exposures to market risk that result from these activities.

Derivative instruments may include financial and physical forward contracts.  Such contracts may be used to establish a fixed price for a commodity, an interest-bearing obligation or a cash flow denominated in a foreign currency.  Market risks are monitored regularly against defined risk limits and tolerances.

Cameco’s actual exposure to these market risks is constantly changing as the company’s portfolios of foreign currency and commodity contracts change.  Changes in fair value or cash flows based on market variable fluctuations cannot be extrapolated as the relationship between the change in the market variable and the change in fair value or cash flow may not be linear.

(i)	Commodity Price Risk As a significant producer and supplier of uranium, nuclear fuel processing, gold and electricity, Cameco bears significant exposure to changes in prices for these products.  A substantial change in prices will affect the company’s net earnings and operating cash flows.  Prices for Cameco’s products are volatile and are influenced by numerous factors beyond the company’s control, such as supply and demand fundamentals, geopolitical events and, in the case of electricity prices, weather. To mitigate the risks associated with the fluctuations in the market price for uranium products, Cameco seeks to maintain a portfolio of uranium product sales contracts with a variety of delivery dates and pricing mechanisms that provide a degree of protection from pricing volatility.  To mitigate risks associated with fluctuations in the market price for electricity, BPLP enters into various energy and sales related contracts that qualify as cash flow hedges.  Cameco’s sales contracting strategy focuses on reducing the volatility in our future earnings and cash flow, while providing both protection against decreases in market price and retention of exposure to future market price increases.  At March 31, 2008, commodity price risk had no impact on the financial statements.
(ii)	Foreign Exchange Risk The relationship between the Canadian and US dollars affects financial results of the uranium business as well as the fuel services business. Sales of uranium and fuel services are routinely denominated in US dollars while production costs are largely denominated in Canadian dollars.  Cameco attempts to provide some protection against exchange rate fluctuations by planned hedging activity designed to smooth volatility.   Cameco also has a natural hedge against US currency fluctuations because a portion of its annual cash outlays, including purchases of uranium and fuel services, is denominated in US dollars.  At March 31, 2008, the effect of a $0.01 increase in the US to Canadian dollar exchange rate on our portfolio of currency hedges and other USD denominated exposures would be a decrease of $1.6 million in net earnings and a decrease of $8.3 million in other comprehensive income.
(iii)	Counterparty Credit Risk Cameco’s sales of uranium product, conversion and fuel manufacturing services expose the company to the risk of non-payment.  Counterparty credit risk is associated with the ability of counterparties to satisfy their contractual obligations to Cameco, including both payment and performance. Cameco manages this risk by monitoring the credit worthiness of our customers and seeking pre-payment or other forms of payment security from customers with an unacceptable level of credit risk. Cameco’s maximum counterparty credit exposure at the balance sheet date consists primarily of the carrying amount of financial assets.  At March 31, 2008, there were no significant concentrations of credit risk and no amounts were held as collateral.
(iv)	Liquidity Risk Financial liquidity represents Cameco’s ability to fund future operating activities and investments.  Cameco ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the company’s holdings of cash and cash equivalents.  The company believes that these sources will be sufficient to cover the likely short-term and long-term cash requirements. The tables below outline the maturity dates for Cameco’s non-derivative financial liabilities including principal and interest as at March 31, 2008: Contractual Repayments of Financial Liabilities     Due in less Due in Due in Due after (millions) Total than 1 year 1-3 years 3-5 years 5 years Long term debt  $560 -   -    $30  $530 BPLP lease 188 9 23 29 127 Total contractual repayments  $748  $9  $23  $59  $657   Interest Payments on Financial Liabilities     Due in less Due in Due in Due after (millions) Total than 1 year 1-3 years 3-5 years 5 years Interest on long-term debt  $170  $27 51  51  $41 Interest on BPLP lease 91 14 25  21   31 Total interest payments  $261  $41  $76  $72  $72

On February 12, 2004, Cameco, Cameco Bruce Holdings II Inc., BPC Generation Infrastructure Trust and TransCanada Pipelines Limited (collectively, the “Consortium”) sent a letter to British Energy Limited and British Energy International Holdings Limited (collectively, BE) requesting, amongst other things, indemnification for breach of a representation and warranty contained in the February 14, 2003, Amended and Restated Master Purchase Agreement. The alleged breach is that the Unit 8 steam generators were not “in good condition, repair and proper working order, having regard to their use and age.”  This defect was discovered during a planned outage conducted just after closing.   As a result of this defect, the planned outage had to be significantly extended.  The Consortium has claimed damages in the amount of $64,558,200 being 79.8% of the $80,900,000 of damages actually incurred, plus an unspecified amount to take into account the reduced operating life of the steam generators.  The parties have agreed that the arbitration should be before a single arbitrator.

In anticipation of this claim, BE issued on February 10, 2006 and then served on Ontario Power Generation Inc. and BPLP a Statement of Claim. This Statement of Claim seeks damages for any amounts that BE is found liable to pay to the Consortium in connection with the Unit 8 steam generator arbitration described above, damages in the amount of $500,000,000, costs and pre and post judgment interest amongst other things.  This action is in abeyance pending further developments on the Unit 8 steam generator arbitration.

Management is of the opinion, after review of the facts with counsel, that this action against BPLP will not have a material financial impact on Cameco's financial position, results of operations and liquidity.

Pursuant to an agreement between Centerra Gold Mongolia Limited (CGM) and Gatsuurt LLC, an unrelated Mongolian company, under which CGM acquired the Gatsuurt licenses, CGM agreed to transfer the principal license covering the Gatsuurt property to Gatsuurt LLC if CGM did not complete a feasibility study by December 31, 2005.  CGM completed a feasibility study in December 2005.  Gatsuurt LLC informed Centerra that it does not believe that CGM complied with its obligation and began proceedings in the Mongolian National Arbitration Court (MNAC) alleging non-compliance by CGM and seeking the return of the principal license for the Gatsuurt property.  CGM believes that the Gatsuurt LLC claim is without merit and on July 10, 2007, filed a petition with Mongolia’s District Court contesting the jurisdiction of the MNAC. On July 25, 2007, the Mongolian District Court returned CGM’s petition, without a decision on the jurisdictional issue, to permit CGM to supplement its submissions.  All proceedings were suspended in August 2007 pending the outcome of settlement discussions.  CGM and Gatsuurt LLC have reached an agreement in principle to suspend, and upon signing a definitive agreement, to terminate the arbitration proceedings between CGM and Gatsuurt LLC.  In anticipation of a settlement, CGM has recorded a $3,000,000 (US) charge as an estimate of the cost to settle the matter.