Cameco Reports First Quarter Net Earnings of $22 Million

Saskatoon, Saskatchewan, Canada, April 19, 1996

Cameco Corporation today released its quarterly financial results showing net earnings of $22 million ($0.42 per share) to March 31, 1996 compared to $12 million ($0.23 per share) for the same period in 1995.

"While the company anticipates higher net earnings in 1996 than it achieved in 1995, the 83% increase in net earnings from first quarter 1995 compared to first quarter 1996 is not expected to be sustained over the full year," said Bernard Michel, Cameco's chair, president and chief executive officer.

Cameco's quarterly earnings fluctuate significantly with the timing of uranium deliveries. As such, the quarterly results show wide year-to-year variability and are not usually good indicators of the results for the year.

Revenues for the quarter increased to $107 million from last year's first quarter sales of $59 million. The $48 million increase in revenues is due primarily to higher sales volumes of uranium concentrates which are up about 80% compared to last year's first quarter.

During the quarter, the company's operating activities resulted in a net cash outflow of $7 million. The company generated $17 million from its operations during the same period last year.

The reduced cash flow in the first quarter of 1996 can be attributed primarily to greater expenditures for mining operations, uranium purchases and royalties as well as to relatively lower sales receipts due to near quarter-end deliveries. Cameco expects 1996 cash flows to exceed those from 1995.

Cameco's net debt (long-term debt less cash and securities) has increased from $182 million at December 31, 1995 to $201 million as of March 31, 1996.

Good progress is being made at the Kumtor gold project in Kyrgyzstan, which remains on schedule for start-up of production in early 1997. During the first quarter, the total cost of the Kumtor project has been the subject to an upward revision. "Kumtor is expected to contribute significantly to Cameco's future earnings and we have full confidence in the success of this outstanding project in Kyrgyzstan," said Michel.

During the first three months ending March 31, 1996, the average uranium spot price climbed 29% from $12.15 (US) per pound U₃O₈ to $15.68 (US). "A tightening of uranium supply to the spot market has been a primary contributor to strengthening prices," said Michel.

Many suppliers have been reluctant to commit their products too quickly in a rising and volatile market while others do not have sufficient material to satisfy the demand. As a result, some buyers have returned to the spot market several times to fill their requirements.

While the increasing spot price improves Cameco's average realized price, the magnitude of the improvement depends on a number of factors.

"Our uranium contracts have various pricing structures which may, in some cases, act to delay, to limit or to preclude the impact of rising spot prices," said Michel. "In addition, any gain in net earnings will be moderated to some extent by royalties and resource taxes which may consume up to 35% of any price increase."

Cameco estimates that a $1.00 (US) change in the spot price for the last three quarters of the year would change revenues by about $9 million (CDN) and net earnings by approximately $6 million (CDN).

Cameco, with its head office in Saskatoon, Saskatchewan, is the world's largest publicly traded uranium company and a growing gold producer. Its uranium products are used to generate electricity in nuclear power plants around the world, providing one of the cleanest sources of energy available today.

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