Cameco Announces Record 1996 Net Earnings of $138 Million

Saskatoon, Saskatchewan, Canada, February 5, 1997

Cameco Corporation reported today annual net earnings of $138 million ($2.60 per share) in 1996, an increase of 35% from earnings of $102 million ($1.95) in 1995.

The growth in earnings was achieved through increased uranium sales volumes and prices. Revenues grew by about 50% to $591 million in 1996 from $395 million in 1995. Uranium products and services accounted for about 95% of last year's revenues with the remainder from gold.

"1996 was Cameco's best year to date, due to aggressive sales growth and the general improvement in world uranium markets which began in 1995," said Bernard Michel, Cameco's chair, president and chief executive officer. Cameco increased its market share to about 15% of the western world's uranium consumption and approximately 20% of western world's conversion services.

Cameco sold a record volume of uranium concentrates in 1996, up about 39% from 1995 and at prices some 14% higher. In conversion services, sales volumes increased by roughly 28% at relatively stable prices.

Cash from operations rose 32% in 1996 to $176 million ($3.33 per share) from $133 million ($2.54 per share) in 1995. These strong cash flows were used to pay $26 million in dividends and to fund about $150 million of investments which will form the basis of Cameco's future growth.

Earnings from operations continued their upward trend of the past years, rising 40% in 1996 to $145 million ($2.75 per share) from $104 million ($1.98 per share) in 1995.

"Cameco anticipates the trend of robust pre-tax earnings and cash flows will continue in future years," Michel said, but noted that, as previously reported, the company will begin to record in 1997 deferred income taxes which will reduce net earnings. However, Cameco expects it will not have to pay significant cash income taxes until after the year 2000.

Long-term debt increased marginally to $200 million in 1996 from $196 million in 1995. About two-thirds of the debt represents Cameco's share of the loans to the Kumtor gold project in Kyrgyzstan.

Uranium spot prices climbed from $12.20 (US) per pound U₃O₈ at the beginning of 1996 to a high of $16.50 (US) per pound and ended the year at $14.70 (US).

The rapid rise in the uranium spot price caused buyers to shift their focus from the spot to the long-term market. Consequently, western world spot market sales declined by more than half from 40 million pounds U₃O₈ in 1995 to 19 million pounds last year and represented only 13% of western world consumption.

At the same time, the volume of new long-term contracts by utilities were up over 50% in 1996 compared to the previous year. Cameco was successful in securing more than 30 million pounds U₃O₈ for delivery over the next decade and continues to focus on the long-term market to secure sales for its current and future production.

The uranium spot market demand remains low as utilities continue to rely on the long-term market and inventory drawdown to meet their requirements, but supply to the spot market also being limited, one could expect spot price volatility in 1997.

"The long-term uranium market outlook remains favorable," said Michel, noting that uranium production is about half of consumption, excess inventories are being depleted and some regions, particularly in Asia, are firmly committed to nuclear power.

"With exceptionally large, high-grade and low-cost uranium reserves in Canada, Cameco is ideally positioned for the future," said Michel. He also noted that Cameco continues to strengthen its presence in the US uranium industry and is in the process of acquiring from Pathfinder Mines Corporation, a US mining company owned by Cogema Resources Inc., their 25% interest in the Highland uranium mine which Power Resources, Inc., a Cameco subsidiary, operates in Wyoming. With this acquisition, Cameco will own almost all of the Highland project.

In return, Cameco will transfer to Cogema its 20% interest in the Kiggavik uranium deposit, located in the Northwest Territories in Canada and will supply Cogema a total of 800,000 pounds U₃O₈ over the 1997-1998 period.

Cameco also announced today that its board of directors has declared its regular quarterly dividend of $0.125 per share payable April 15, 1997 to shareholders of record on March 31, 1997.

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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