Cameco Reports First Quarter Net Earnings for 1997

Saskatoon, Saskatchewan, Canada, April 17, 1997

Cameco Corporation today released its quarterly financial results showing increased revenues and higher earnings from operations compared with 1996, but lower net earnings after recording for the first time, a non-cash income tax expense of $12 million.

"Revenues and earnings, impacted by deferred taxes, are generally consistent with what Cameco had anticipated and communicated to shareholders respecting 1997 results," said Bernard Michel, Cameco's chair, president and chief executive officer. "The company retains its ability to generate strong cash flows."

During the quarter, cash flow (before working capital changes) increased by 16% to $0.86 per share from $0.74 per share compared to the first quarter in 1996.

Revenues for the quarter increased to $114 million from last year's first quarter sales of $107 million. The $7 million increase in revenues is primarily from higher sales volumes of uranium concentrates, higher average realized uranium prices and higher gold sales.

Earnings from operations increased to $27 million ($0.51 per share) in the first quarter of 1997 from $23 million ($0.44 per share) compared with the first quarter of 1996.

Net earnings were $14 million ($0.27 per share) compared to $22 million ($0.42 per share) for the same period last year.

After working capital changes, the company's operating activities resulted in a net cash outflow of $14 million compared with $7 million from its operations during the same period last year.

Cameco's quarterly earnings fluctuate significantly with the timing of uranium deliveries. As such, annual results are not easily determined from the results of any one quarter.

Less than 20% of the company's expected contracted deliveries for the year were made in the first quarter of 1997. The company expects total sales volumes for the year, barring unforeseen events, to exceed the record levels achieved in 1996.

Cameco's long-term debt increased from $200 million at December 31, 1996 to $397 million as of March 31, 1997. Most of the debt is related to the acquisition of Power Resources, Inc., one of the largest uranium producers in the United States, and to investments in the Kumtor project.

Construction and development of the Kumtor gold project was essentially complete by the end of 1996. Mining of the deposit has proceeded well. Commissioning of the mill is under way, with about 35,000 ounces of gold produced and sold to March 31, 1997. Current engineering efforts are focused on raising mill recovery rates and throughput to design levels and on reaching commercial production in the near future. Project costs are estimated to remain at $450 million (US), the figure announced more than a year ago.

"I am pleased to report that the mill is now performing close to target in terms of throughput and recovery," said Michel. "We now expect the Kumtor production to be approximately 350,000 ounces of gold this year."

During the quarter, a joint federal-provincial panel concluded its review of the McArthur River uranium project and recommended the project proceed to development. Decisions by the two governments are expected in the coming months. On this timetable, McArthur River is on track to begin production in 1999.

During the first three months ending March 31, 1997, the average uranium spot price declined 5% to $13.77 (US) per pound of U₃O₈ from $14.49 (US) per pound compared to the first quarter in 1996.

The declining spot price, the extent of which Cameco did not anticipate, reflects the current excess of supply over demand in the spot market.

"We believe this to be a temporary situation which contrasts sharply with the long-term market outlook, where demand continues to outstrip production by almost 50%," said Michel.

The long-term fundamentals for the uranium industry remain strong. During the first quarter, Cameco contracted to sell about 6 million pounds U₃O₈ for delivery over the next decade.

Cameco sells only in the long-term market and has more than 100 million pounds under contract for delivery in the period 1997 to 2009. About 40% of quantities under contract will be delivered at prices not impacted by the spot market, while the remainder will be affected by the prevailing spot price at the time of delivery.

In 1997, 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 $11 million (CDN) and net earnings by about $4 million.

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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