Cameco Reports Six-Month Net Earnings of $68 Million

Saskatoon, Saskatchewan, Canada, July 18, 1996

Cameco Corporation today reported six-month financial results showing net earnings of $68 million ($1.28 per share) to June 30, 1996 compared to $47 million ($0.91 per share) for the same period in 1995.

Revenues increased to $281 million from last year's six-month sales of $188 million. The improvement in net earnings and revenues was due primarily to increases in uranium concentrate sales volumes and average selling prices. Uranium sales volumes were up 35% compared to last year while the average selling price rose by 12%.

"These excellent results reflect the general strengthening of the uranium market," said Bernard Michel, Cameco's chair, president and chief executive officer. "Based on information currently available, we expect record revenues and earnings for 1996."

Cash from operations for the six months ended June 30, 1996 was $39 million ($0.73 per share), down $38 million from the previous year. While cash receipts from sales were significantly higher than in the first six-months of 1995, they were offset by increased levels of uranium purchases, royalty payments, expenditures related to producing higher volumes of uranium and gold as well as by higher exploration and research and development expenses. Despite the relatively lower cash flow in the second quarter, expectations are that record cash from operations will be achieved this year.

Since the end of 1995, Cameco's long-term debt has risen by $13 million to $209 million as of June 30, 1996. Most of this increase can be attributed to Cameco's investment in the Kumtor gold project.

In 1996, earnings sensitivity to the uranium spot price is such that a change of $1.00 (US) per pound U₃O₈ for the remainder of the year would change revenues by about $4 million (CDN).

During the second quarter, the uranium spot price averaged $16.34 (US) per pound U₃O₈ compared to $14.49 (US) during the first quarter of 1996 and $11.73 (US) in the second quarter of 1995.

Continued strengthening of the uranium spot market price has contributed to directing more of the utilitites' attention back to the long-term market. Some industry observers estimate that by June 1996 utilities had entered into long-term contract commitments for almost 70 million pounds U₃O₈. Forecasts suggest that utilities may commit a total of more than 140 million pounds under long-term contracts during 1996.

"During the six-month period, Cameco has signed new long-term contracts for about 18 million pounds U₃O₈ for delivery between 1996 to 2009," said Michel, "demonstrating Cameco's strong presence in the market. In addition, we have secured commitments for some 4,500 tonnes of uranium conversion services under new long-term contracts."

In April 1996, legislation to privatize the United States Enrichment Corporation (USEC) was passed. It includes provisions for the orderly introduction, into the US market, of uranium obtained from Russian and American nuclear weapons into the US market. Outside of limited volumes allowed under the US/Russia uranium trade agreement, this material will become available beginning in 1998 in planned quantities.

The legislation also covers uranium inventories held by the US Department of Energy which must be sold in a manner that will not have an adverse material effect on the US market.

"The USEC Privatization Act effectively reduces the uncertainty surrounding the impact of Russian and American military stockpiles on the uranium market," said Michel. "We continue to believe this material can be integrated into the market in a non-disruptive manner."

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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