Cameco Signs Uranium Agreement in Principle with Russia

Saskatoon, Saskatchewan, Canada, August 18, 1997

Cameco Corporation today reports that it has signed an agreement in principle to purchase uranium resulting from the dismantlement of Russian nuclear weapons.

The agreement covers the purchase by Cameco, Cogema (a French 89% state-owned private company specializing in the nuclear fuel cycle) and Nukem Inc. (a privately owned US uranium trader), of the majority of the natural uranium hexafluoride (the uranium) becoming available through 2006 as a result of the dilution in Russia of weapons grade highly enriched uranium (HEU) to commercial grade low enriched uranium for delivery to the United States Enrichment Corporation (USEC).

Cameco and the other purchasing companies will pay a discounted market price for the uranium and will guarantee minimum prices subject to certain conditions being met. Each company will market its share independently in full compliance with the USEC Privatization Act and other applicable laws.

In conjunction with the purchase, Cameco, Cogema and Nukem will advance, to the Russian Federation Ministry of Atomic Energy (Minatom), up to one-half of each year's aggregate purchase price to a maximum of $100 million (US) against deliveries.

Certain defined quantities of weapons derived uranium will not be purchased by Cameco, Cogema and Nukem and will be retained by Minatom for HEU blending, for consumption in Russia and for delivery to customers through its commercial representatives, Techsnabexport and Global Nuclear Services and Sales.

The uranium has become available following the announcement, in 1993, of a 20-year agreement between the United States and Russia to dismantle nuclear weapons. A majority of the resulting 400 million pounds of Russian U₃O₈ (equivalent) will be sold for use in western nuclear power plants. The purchase agreement with Cameco, Cogema and Nukem is for at least 10 years.

Bernard Michel, Cameco's chair, president and chief executive officer, said that the 10-year deal, which could be extended beyond 2006, caps four years of discussions and negotiations with the Russians and strengthens Cameco's position in the marketplace.

"Such an arrangement alleviates the market uncertainties surrounding the disposition of this HEU derived material," he said, "and it provides Cameco, which will purchase some 45% of the available uranium, with a new and significant source of supply in addition to its own production. Although Cameco and other market participants have accounted for this material in their long-term forecasts of uranium supply," Michel added, "until now, no one knew how it was going to be sold and by whom. We are very pleased to see this uncertainty settled and are very proud to play a role in the transformation of the former weapons uranium to the peaceful production of electricity."

Cameco anticipates no change in either its production levels at existing operations or in its uranium mine development plans as a result of the acquisition of this material.

While the agreement is subject to formal documentation, negotiations are expected to proceed expeditiously.

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.

For further information, please contact: