Cameco Reports Higher Fourth Quarter Earnings

Saskatoon, Saskatchewan, Canada, January 27, 2005

Cameco Corporation today reported its financial results for the year ended December 31, 2004.

Cameco Corporation today announced higher revenue and net earnings for the fourth quarter ended December 31, 2004, compared to the same period last year. All numbers are in Canadian dollars, unless otherwise stated.

“Our business segments continue to perform well in a strengthening market,” said Jerry Grandey, Cameco’s president and CEO. “This is a good time to be in the nuclear energy business and we are excited about our prospects for sustained growth.”

Cameco also recorded a banner year with higher revenue and net earnings for the four quarters ending on December 31, 2004.

Accounting Change

Cameco’s financial statements for 2004 have been revised to include $214 million in goodwill, offset by a $101 million increase in minority interest and a $113 million dilution gain due to an accounting change. This change has increased after-tax earnings by $86 million. These non-cash adjustments reflect a change in the accounting used for the restructuring transactions that helped create Centerra Gold Inc. (Centerra). The accounting change has been applied retroactively to the dates of the transactions. As a result, Cameco will be reissuing its financial statements for the periods ended June 30, 2004 and September 30, 2004. A more detailed explanation of this decision follows the fourth quarter discussion.

Fourth Quarter 2004

Financial Highlights	Three Months Ended Dec. 31/04	Three Months Ended Dec. 31/03	% Change
Revenue ($ millions)	361	272	33
Earnings from operations ($ millions)	46	48	(4)
Cash provided by operations ($ millions)	59	79	(25)
Net earnings ($ millions)	37	34	9
Earnings per share ($) basic (a)	0.21	0.20	5
Earnings per share ($) diluted (a)	0.21	0.20	5
(a) All per share amounts reflect the share split on December 31, 2004.

Consolidated revenue rose 33% to $361 million in the fourth quarter while net earnings increased 9% to $37 million or $0.21 per share. This quarterly result was unaffected by the aforementioned accounting change. The improvement in fourth quarter net earnings was primarily due to higher realized prices in the uranium and gold businesses as well as significantly higher gold production.

These improvements were partially offset by reduced earnings in the conversion business and higher charges for administration, exploration and interest. Administration costs increased by $5 million due to higher expenses associated with operating Centerra Gold Inc. as a separate publicly traded company and increased stock compensation expenses. Exploration expenses rose by $7 million reflecting the increased activity in the uranium and gold businesses. Interest and other costs were up $3 million as they included $7 million in deferred issue costs related to the redemption of Cameco’s 8.75% preferred securities in the quarter. The impact of this expense was partially offset by higher interest income earned on cash balances held by Centerra.

The effective tax rate decreased to 10% in the fourth quarter compared to 41% in the same period of 2003 due to a higher proportion of earnings coming from lower tax jurisdictions. The tax rate for the fourth quarter of 2003 reflected the impact of a change in Ontario tax legislation. Excluding the tax adjustment, the effective rate in the fourth quarter of 2003 was 32%.

Cameco’s average realized price for uranium increased 14% to $19.09 per pound of U₃O₈ compared to the fourth quarter of 2003, raising uranium revenue by 9% to $203 million. Spot prices ended the quarter at a 20-year high of $20.60 (US) per pound. Uranium contracts, which limit the benefit of spot price increases continue to be replaced with higher priced contracts reflecting the current market. Cameco anticipates a stronger impact from rising prices in the future, with a significant impact in 2006.

In Cameco’s conversion business, revenue was steady at $47 million in the quarter while earnings before taxes declined to $10 million from $17 million in the period one year ago. The earnings decline was due to higher costs as production resumed in October following a seven-week labour disruption in the summer. Fourth quarter production was 41% below the level of a year ago, but has since recovered. Deliveries during the quarter were filled from both inventory and production.

At Bruce Power, pre-tax earnings attributable to Cameco were $2 million in the fourth quarter compared to $6 million in the same period last year. Bruce Power experienced a slightly lower capacity factor (72%) and higher costs due to maintenance outages. Output increased 25% to 7.4 terawatt hours as two additional reactors have come online since October 2003.

Revenue at Centerra almost tripled to $110 million in the quarter compared to the same period in 2003 while gross profit increased 72% to $31 million. Based on owning a 53% interest in Centerra, Cameco fully consolidates the results of Centerra’s Kumtor and Boroo mines. Previously, Cameco recognized a one-third ownership of Kumtor, and Boroo did not begin commercial production until March 1, 2004. In addition, selling prices increased 15% to $430 ( US) per ounce in the fourth quarter due to rising spot prices and more exposure to market prices after closing out its hedge book in mid 2004.

Cash provided by operations in the fourth quarter was $59 million, compared to $79 million in the same period a year ago due to increased working capital requirements during the quarter.

In December 2004, Cameco completed a three-for-one split of its common shares and increased the annual dividend by 20% to a post-split rate of $0.24 per share. In the same month, the company received a full construction licence for the Cigar Lake project, the world’s largest undeveloped uranium mine. A decision was then made by the Cigar Lake Joint Venture to proceed with construction.

Accounting Change Description

The principal effect of this accounting change on Cameco’s consolidated financial statements was to record an increase of $86 million in net earnings from the dilution gain resulting from the restructuring and Centerra’s initial public offering (IPO). The dilution gain is a non-cash gain recorded by Cameco in accordance with accounting rules. The gain resulted from Cameco’s interest in Centerra being diluted from 100% to 53% by Centerra’s IPO and related restructuring transactions. The gain results from Centerra issuing shares for values in excess of Cameco’s historic carrying value of its investment in Centerra.

With the accounting change, the company has recorded $214 million in goodwill and increased the carrying value of the non-Cameco minority interest in Centerra by $101 million. While this accounting change has a significant effect on Cameco’s net earnings for 2004, there is no impact on cash flows other than an increase in capital taxes of less than $1 million.

The following table sets forth the significant effects of the accounting change on previously reported financial results:

	Qtr ended June 30, 2004		YTD at June 30, 2004		YTD at Sept 30, 2004
In $ millions, except per share	Revised	Previously Reported	Revised	Previously Reported	Revised	Previously Reported
Net earnings	$ 151	$ 65	$ 191	$ 105	$ 242	$ 156
Earnings per share*	0.88	0.38	1.12	0.61	1.42	0.91
* adjusted for December 31, 2004 stock split

The restructuring of Centerra prior to its IPO included the acquisition of a number of gold assets and the settlement of outstanding debt. The terms of these transactions, which were negotiated in the months leading up to the IPO, provided that Centerra issue its shares on closing of the transactions. With the concurrence of its external auditors, Centerra initially recorded these transactions using the negotiated values, which were based on discounted cash flow analyses of the tangible assets acquired and debt settled.

In its year-end review, the company and its external auditors reviewed the accounting that had previously been used for these transactions. In the case of a public company issuing shares to acquire assets or settle debt, the appropriate accounting treatment would be to use the value of the acquiring company’s shares to record the transaction. While Centerra was not a publicly traded company at the time it negotiated its restructuring transactions, it subsequently became public and these transactions were contingent on the IPO proceeding. Therefore, Cameco concluded that the more appropriate accounting treatment would be to use Centerra’s IPO price to value the shares issued in these transactions.

This accounting change increased the purchase price by $214 million over the amount previously recorded by Centerra. The increase is reported as goodwill by Cameco and has the impacts noted above on the financial statements. If the carrying value of the goodwill cannot be supported in any future annual test, it will be written down. There is no expectation that this will be necessary for Cameco in the foreseeable future.

For the Year 2004

Financial Highlights	Year Ended Dec. 31/04	Year Ended Dec. 31/03	% Change
Revenue ($ millions)	1,048	827	27
Earnings from operations ($ millions)	125	75	67
Cash provided by operations ($ millions)	228	250	(9)
Net earnings ($ millions)	279	208	34
Earnings per share ($) basic (a)	1.63	1.24	31
Earnings per share ($) diluted (a)	1.56	1.22	28
Adjusted net earnings ($ millions) (b)	185	127	46

(a)	All per share amounts reflect the share split on December 31, 2004.
(b)	Excludes a net gain of $94 million ($0.55 per share) related to Centerra restructuring transactions in 2004.

The company enjoyed a banner year with record revenue in all four business segments and record production in all segments except conversion services. Uranium and conversion market prices surged to 20-year highs.

For the year ended December 31, 2004, revenue rose 27% to $1,048 million, a record for the company. Net earnings increased by 34% to $279 million or $1.63 per share due to strong performance and the accounting adjustment for Centerra described above. Net earnings in 2003 included a one-time tax adjustment of $81 million, reflecting a change in federal tax rates enacted in 2003. Excluding these accounting and tax adjustments, net earnings increased by $58 million or $0.34 per share in 2004 compared to 2003.

Cash provided by operations declined 9% to $228 million in 2004, primarily due to an increase in inventory levels, which more than offset the benefit of higher revenue. The company’s net debt to capitalization ratio was 13% at December 31, 2004 compared to 22% a year earlier.

Outlook for 2005

In 2005, consolidated revenue is expected to grow by about 10% over 2004 due to increases in the uranium and gold businesses. On a consolidated basis, the gross profit margin is projected to improve from the 23% reported in 2004.

In the uranium business, revenue is likely to be significantly higher due to a stronger realized price and increased volumes. Revenue from the conversion business is likely to be marginally higher than in 2004 due to an expected 5% increase in the average realized selling price largely offset by lower deliveries.

Bruce Power results in 2005 are anticipated to decline modestly from 2004 due to increased costs related to higher depreciation on the A units, higher outage costs and higher fuel costs.

Revenue in the gold business is expected to be higher due primarily to a full year of consolidating the results from Kumtor, However, gold results are anticipated to decline in 2005 from 2004 due to higher costs as a result of expected lower grades at Kumtor.

The consolidated income tax rate is expected to be between 10% and 15% for 2005.

Total capital expenditures for uranium and conversion services are expected to more than double to $300 million in 2005. Expenditures for new development projects are expected to total $167 million, $128 million more than last year. The increase is due to development at Cigar Lake and Inkai, planned construction of the slightly enriched uranium (SEU) blending facility at conversion services and expansion of production capacity at McArthur River and US ISL mines. Expansion at McArthur River and producing SEU at Port Hope are subject to regulatory approvals. Sustaining capital expenditures include mine development work, pumping and water treatment projects at McArthur River, well field expansions at the US ISL operations and projects at conversion services to improve production processes and meet new regulatory requirements.

Outlook for First Quarter 2005

Consolidated revenue in the first quarter of 2005 is expected to be about 60% higher than in the first quarter of 2004 reflecting increased deliveries and prices in the uranium and gold businesses and full consolidation of the Kumtor mine. Earnings from Bruce Power are expected to be about one-half of those in the first quarter of 2004 as the result of higher costs caused by planned outages. Consequently, consolidated earnings for the first quarter of 2005 are expected to be moderately lower than those recorded in the same period last year.

Dividend Notice
Cameco announced today that the company’s board of directors declared its regular quarterly dividend of $0.06 (CDN) per common share payable on April 15, 2005, to shareholders of record at the close of business on March 31, 2005.

Conference Call
Cameco invites you to join its fourth quarter conference call on Friday, January 28, 2005 from 9:00 a.m. to 10:00 a.m. Eastern time (8:00 a.m. to 9:00 a.m. Saskatoon time).

The call will be open to all investors and the media. Members of the media will be invited to ask questions at the end of the call. In order to join the conference call on Friday, January 28, please dial (416) 695-5259 or (877) 888-7019 ( Canada and US). An operator will put your call through. An audio feed of the conference call will be available on the Web site at www.cameco.com by using Windows Media Player or Real Player software. See the link on the home page on the day of the call. Please pass this invitation to colleagues in your organization who have an interest in Cameco.

A recorded version of the proceedings will be available:

on our Web site, www.cameco.com, shortly after the call, and
on post view until midnight on Friday, February 11 by calling (416) 695-5275 or (866) 518-1010.

Additional Information
Additional information on Cameco, including its annual information form, is available on SEDAR at www.sedar.com and the company’s Web site at www.cameco.com.

Profile
Cameco, with its head office in Saskatoon, Saskatchewan, is the world’s largest uranium producer as well as a significant supplier of conversion services. The company’s competitive position is based upon its controlling ownership of the world’s largest high-grade reserves and low-cost operations. Cameco’s uranium products are used to generate clean electricity in nuclear power plants around the world including Ontario where the company is a partner in North America’s largest nuclear electricity generating facility. The company also explores for uranium in North America, Australia and Asia, and holds a majority interest in Centerra Gold Inc., the fifth largest North American-based gold producer.

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For further information:

Investor & media inquiries:	Alice Wong (306) 956-6337
Investor inquiries:	Bob Lillie (306) 956-6639
Media inquiries:	Lyle Krahn (306) 956-6316

For a more detailed discussion of Cameco’s fourth quarter results, please see the management's discussion and analysis following this news release.

Fourth Quarter Management’s Discussion and Analysis

The following discussion of the financial condition and operating results of Cameco Corporation should be read in conjunction with the unaudited consolidated financial statements and notes for the period ending December 31, 2004.

HIGHLIGHTS

For the Quarter

Higher prices realized in all business segments
Received a full construction licence for the Cigar Lake mine in northern Saskatchewan
Announced three-for-one split of common shares and a 20% increase in annual dividend
Replaced 8.75% preferred securities with lower-cost commercial paper

For the Year 2004

Uranium market prices surge on tighter supply:

spot uranium price increased by 43%,
long-term uranium price indicator up by 61%
UF₆ conversion prices up about 50%

Records set:

consolidated revenue exceeds $1 billion for first time
uranium revenue
conversion revenue and sales volume
gold production and revenue

Inkai in situ leach (ISL) uranium project in Kazakhstan enters construction licensing phase
Bruce Power transitions to a six-unit fleet and sets generation record
Successful spin off of Centerra Gold Inc. (Centerra)
Change in accounting for Centerra IPO contributes net earnings of $86 million

Financial Highlights	3 Months Ended Dec. 31/04	3 Months Ended Dec. 31/03	Year Ended Dec. 31/04	Year Ended Dec. 31/03	Change (Y o Y) %
Revenue ($ millions)	361	272	1,048	827	27
Earnings from operations ($ millions)	46	48	125	75	67
Cash provided by operations ($ millions)	59	79	228	250	(9)
Net earnings ($ millions)	37	34	279	208	34
Earnings per share – basic ($)	0.21	0.20	1.63	1.24	31
Earnings per share – diluted ($)	0.21	0.20	1.56	1.22	28
Adjusted net earnings ($ millions) (a)	37	39	185	127	46
Average uranium spot price for the period ($US/lb U₃O₈)	20.44	13.62	18.60	11.54	61
Average realized uranium price for the period
$US/lb U₃O₈	14.08	11.50	12.89	10.99	17
$Cdn/lb U₃O₈	19.09	16.68	17.97	16.08	12
Average realized electricity price ($/MWh)	47	45	47	48	2
Average Ontario electricity spot price ($/MWh)	51	47	50	54	(7)
Average realized gold price for the period ($US/ounce)	430	375	397	334	19
Average spot market gold price for the period ($US/ounce)	434	392	409	363	13

Note:	All dollar amounts are expressed in Canadian dollars unless otherwise stated.
(a)	2004 excludes a net gain of $94 million ($0.55 per share) related to Centerra restructuring transactions. 2003 excludes a non-recurring tax adjustment of $81 million ($0.48 per share).

CONSOLIDATED FINANCIAL RESULTS

Consolidated Earnings

Fourth Quarter
For the three months ended December 31, 2004, net earnings increased to $37 million ($0.21 per share) from $34 million ($0.20 per share) in 2003. Improved results in the uranium business were partially offset by reduced earnings in the conversion business and higher charges for administration, exploration and interest.

The improvement in the uranium business was due primarily to a higher realized price, which was related to a significant increase in the spot market price for uranium. Administration costs increased by $5 million as a result of higher costs associated with operating Centerra as a separate public company, regulatory compliance and stock compensation expenses.

Exploration expenditures rose by $7 million reflecting increased activity in the uranium and gold businesses. Interest and other costs were $3 million higher than in the previous year due to the redemption of the 8.75% preferred securities in the quarter. As a result of the redemption, Cameco expensed $7 million in deferred issue costs, which were previously being amortized over the 49-year life of the preferred securities. The impact of this expense was partially offset by higher interest income earned on cash balances held by Centerra.

For details on the uranium, conversion services, electricity and gold businesses, see “Business Segment Results” later in this report.

The effective tax rate decreased to 10% in the fourth quarter from 41% in the same period of 2003 due to a higher proportion of earnings coming from lower tax jurisdictions. In addition, the tax rate for the fourth quarter of 2003 reflected the impact of a change in the Ontario provincial tax legislation, which caused Cameco to increase its provision for future taxes by $5 million. Excluding the tax adjustment, the effective tax rate in the fourth quarter of 2003 was 32%.

Earnings from operations were $46 million in the fourth quarter of 2004 compared to $48 million in 2003. The aggregate gross profit margin decreased to 24% from 27% in 2003.

Accounting Change

The following table sets forth the significant effects of the accounting change on previously reported financial results:

	Qtr ended June 30, 2004		YTD at June 30, 2004		YTD at Sept 30, 2004
In $ millions, except per share	Revised	Previously Reported	Revised	Previously Reported	Revised	Previously Reported
Net earnings	$ 151	$ 65	$ 191	$ 105	$ 242	$ 156
Earnings per share*	0.88	0.38	1.12	0.61	1.42	0.91
* adjusted for December 31, 2004 stock split

For the Year 2004
For 2004, Cameco’s net earnings were $279 million ($1.63 per share) compared to $208 million ($1.24 per share) in 2003. The earnings for each of these years include unusual items, which make comparisons difficult. In 2004, Cameco recorded a net gain of $94 million related to the Centerra restructuring transactions and the results for 2003 included an $81 million tax adjustment as a result of changes in Canadian federal and Ontario provincial tax legislation.

Excluding these items, Cameco recorded adjusted net earnings of $185 million ($1.08 per share) compared to $127 million ($0.75 per share) recorded in 2003. This $58 million increase was attributable to improved results in the uranium and gold businesses as well as stronger performance at Bruce Power.

The improvement in the uranium business was due to a higher realized price, which was related mainly to the significant increase in the spot price for uranium. Earnings from Bruce Power benefited from a 37% increase in generation as a result of the restart of two A reactors (units 3 and 4). Results from the gold business improved due to increased production and a higher realized selling price.

In 2004, total costs for administration, exploration, interest and other were about $120 million, $34 million higher than 2003. Administration costs increased by $22 million due to a combination of higher costs in establishing and operating Centerra ($9 million), increased stock compensation expenses ($5 million) and higher expenditures for regulatory compliance.

Exploration expenditures rose by $14 million to $36 million due to increased exploration activity in both the gold and uranium businesses. In uranium exploration, programs around existing mines in the Athabasca basin and in other areas accounted for total costs of $17 million in 2004 compared to $13 million in 2003. Cameco’s 53% owned gold subsidiary, Centerra, also increased exploration expenditures during the year of its initial public offering to $19 million for 2004 compared to $9 million in 2003.

Excluding the tax adjustment in 2003, the effective rate for income taxes in 2004 decreased to 19% from 33% as a higher proportion of earnings came from lower tax jurisdictions.

Earnings from operations were $125 million compared to $75 million in 2003 and the aggregate gross profit margin increased to 23% from 20% in 2003.

Quarterly Consolidated Financial Results ($ millions except per share amounts)

Highlights	2004				2003
	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Revenue	361	313	242	132	272	232	220	103
Net Earnings	37	52	151 (b)	39	34	33	104	37
Earnings per share (a)	0.21	0.30	0.88 (b)	0.23	0.20	0.20	0.62	0.22
Cash from operations	59	140	(19)	49	79	79	35	56

(a)	Per share amount reflects the share split on December 31, 2004.
(b)	Reflects changes related to Centerra restructuring. See note 10 of the financial statements.

Cash Flow

In 2004, Cameco generated cash from operations of $228 million compared to $250 million in 2003. This decrease of $22 million was primarily due to an increase in inventory levels, which more than offset the benefit of higher revenue.

Cameco’s cash from operations does not include its pro rata interest in Bruce Power’s operating cash flow. The pro rata share was $139 million in 2004 compared to $117 million in 2003. Cameco accounts for this investment using the equity method and thus Bruce Power’s operating cash flows are not consolidated with Cameco’s. For further information, refer to note 2 of the unaudited interim consolidated financial statements and notes for the period ending December 31, 2004 (financial statements).

Balance Sheet

On December 17, 2004, Cameco redeemed its 8.75% preferred securities, due September 30, 2047, in the principal amount of $125 million (US). The redemption of the principal amount plus accrued and unpaid interest was funded with lower-cost commercial paper.

At December 31, 2004, total long-term debt was $519 million, a decrease of $87 million compared to December 31, 2003. At December 31, 2004, Cameco’s consolidated net debt to capitalization ratio was 13%, down from 22% at the end of 2003.

Effective January 1, 2004, Cameco changed its accounting policy for financial instruments. This change resulted in the preferred securities and convertible debentures being classified as debt rather than equity. See note 1 to the financial statements.

Compared to the end of 2003, product inventories increased by $71 million as production and purchases of uranium exceeded sales during the year. Of this increase, about $30 million was related to higher uranium inventory levels and about $25 million was due to an increase in unit costs for uranium. The remainder was related to higher gold inventory levels.

At December 31, 2004, the consolidated cash balance totalled $190 million and Centerra held substantially the entire amount.

Cameco has a number of investments in publicly traded entities. The following table illustrates the book and market values for its more significant holdings.


	Book Value		Market Value
Investment	($ millions)

Centerra Gold Inc.		$436		$845
UEX Corporation		8		81
Energy Resources of Australia Ltd.		18		79

Total		$462		$1,005

Foreign Exchange Update

Cameco sells most of its uranium and conversion services in US dollars while most of its uranium and conversion services are produced in Canada. As such, the company’s uranium and conversion services revenue is denominated mostly in US dollars, while its production costs are denominated primarily in Canadian dollars.

The company attempts to provide some protection against exchange rate fluctuations by planned hedging activity designed to smooth volatility. Therefore, Cameco’s uranium and conversion revenues are partly sheltered against declines in the US dollar in the shorter term.

In addition, Cameco has a portion of its annual cash outlays denominated in US dollars, including uranium and conversion services purchases, which provide a natural hedge against US currency fluctuations. While natural hedges provide cash flow protection against exchange rate fluctuations, the influence on earnings from purchased material that has been inventoried, may be dispersed over several fiscal periods and is more difficult to identify.

During the quarter, the Canadian dollar strengthened against the US dollar from $1.2639 at September 30, 2004 to $1.2036 at December 31, 2004.

At December 31, 2004, Cameco had a foreign currency hedge portfolio of $748 million ( US). The schedule of designations, by year, is as follows:

Designations	2005	2006	2007	2008
($ US millions)	348	185	130	85

These hedges are expected to yield an average exchange rate of $1.3010 ($0.77 (US) = $1.00 Cdn). The net mark-to-market gain on these hedge positions was $74 million at December 31, 2004.

Timing differences between the settlement and designation dates of hedge contracts may result in deferred revenue or deferred charges. At December 31, 2004, deferred revenue totalled $23 million. The schedule for deferred revenue to be released to earnings, by year, is as follows:

Deferred revenue	2005	2006	2007	2008
($Cdn millions)	30	8	(8)	(7)

In 2004, most of the net inflows of US dollars were hedged with currency derivatives. Net inflows represent forecast uranium and conversion sales less expected outlays (denominated in US dollars). For the uranium and conversion services businesses in the fourth quarter of 2004, the effective exchange rate, after allowing for hedging, was about $1.36 compared to $1.39 in the third quarter of 2004 and $1.43 in the fourth quarter of 2003. Results from the gold business are converted into Canadian dollars at prevailing exchange rates.

For 2005, every one-cent change in the US to Canadian dollar exchange rate would change net earnings by about $2 million (Cdn).

Consolidated Outlook for 2005

Bruce Power results in 2005 are anticipated to decline modestly from 2004 due to increased costs related to higher depreciation and amortization on the A units, higher outage costs and higher fuel costs.

Revenue in the gold business is expected to be higher due primarily to a full year of consolidating the results from Kumtor, a wholly owned subsidiary of Centerra. However, gold results are anticipated to decline in 2005 from 2004 due to higher costs as a result of expected lower grades at Kumtor.

In 2005, total capital expenditures are expected to more than double to $300 million. Capital expenditures are classified as growth or sustaining. Growth capital is defined to be capital spent to bring on incremental production. Everything else is sustaining capital.

For growth projects, total expenditures are projected to be $167 million, an increase of $128 million compared to 2004. The increase is attributable to:

development activity at Cigar Lake and Inkai,
construction of the slightly enriched uranium (SEU) blending facility at Port Hope, and
expansion of production capacity at McArthur River and US ISL mines.

Expansion at McArthur River, producing SEU at Port Hope and development at Inkai are subject to regulatory approvals.

Sustaining capital expenditures are expected to be higher in 2005 than in 2004 due to ongoing mine development work, pumping and water treatment projects at McArthur River, and well field expansions at the US ISL operations. Sustaining capital expenditures will also increase at conversion services to improve production processes and meet new regulatory requirements.

Capital Expenditures* (Cameco's share in $ millions)		2005 Plan	2004 Actual
Growth Capital
	McArthur River	$4	$2
	US ISL	3	0
	Cigar Lake	114	28
	Conversion Services	20	5
	Inkai	26	4
Total Development		$167	$39

Sustaining Capital
	McArthur River/Key Lake	$42	$34
	US ISL	22	10
	Rabbit Lake	16	7
	Conversion Services	32	9
	Other	1	2
Total Sustaining		$113	$62

Capitalized interest		20	25
Total		$300	$126
*The table excludes expenditures in the gold business amounting to $30 million (Cdn) for 2005 and $17 million (Cdn) for 2004.

Consolidated Outlook for First Quarter 2005

BUSINESS SEGMENT RESULTS

Cameco’s results come from four business segments:

Uranium
Conversion services
Nuclear electricity generation
Gold

URANIUM

Highlights
	Three Months Ended Dec. 31/04	Three Months Ended Dec. 31/03	Year Ended Dec. 31/04	Year Ended Dec. 31/03
Revenue ($ millions)	203	186	581	570
Gross profit ($ millions)	45	38	104	83
Gross profit %	22	20	18	15
Earnings before taxes ($ millions)	41	34	91	70
Average realized price ($US/lb) ($Cdn/lb)	14.08 19.09	11.50 16.68	12.89 17.97	10.99 16.08
Sales volume (million lbs)	10.6	11.1	32.3	35.4
Production volume (million lbs)	6.2	6.0	20.5	18.5

Uranium Earnings

Fourth Quarter
Revenue from the uranium business increased by 9% to $203 million in the fourth quarter of 2004 due to an increase in the average realized selling price, which rose 22% in US dollar terms (but only14% in Canadian dollars) over the fourth quarter of 2003. The difference in the percentage price increase is due to a less favourable foreign exchange rate. The increase of 14% in the average realized price was mainly the result of a higher uranium spot price, which averaged $20.44 ( US) per pound in the fourth quarter of 2004 compared to $13.62 ( US) in the fourth quarter of 2003.

The benefit of the improved price was partially offset by a 4% reduction in deliveries. As the timing of deliveries of nuclear products within a calendar year is at the discretion of customers, Cameco’s quarterly delivery patterns can vary significantly.

The total cost of products and services sold, including depreciation, depletion and reclamation (DDR) was $159 million in the fourth quarter of 2004 compared to $148 million in 2003. The difference in costs is due to a $7 million provincial royalty adjustment, which lowered costs in 2003. In addition, the unit cost for material acquired in the spot market rose in comparison to 2003 due to the increase in the spot price.

Earnings before taxes from the uranium business increased by $7 million in the fourth quarter of 2004, while the profit margin improved to 25% from 20% in 2003 due to the higher realized selling price.

For the Year 2004
In 2004, Cameco established a new record for uranium revenue for the third consecutive year. Revenue from the uranium business increased by 2% to $581 million from $570 million in 2003, due to a 12% increase in the Canadian dollar realized selling price. This improvement was the result of an increase in the uranium spot price, which averaged $18.60 ( US) in 2004 compared to $11.54 (US) in 2003. The benefit of the improved spot price was partially offset by contract price ceilings and a less favourable foreign exchange rate.

Also offsetting the price improvement was a deliberate reduction in sales volume to better reflect production and inventory levels. In 2004, uranium deliveries amounted to about 32 million pounds representing a 9% decline from last year’s record quantity of 35 million pounds.

For 2004, the total cost of products and services sold, including DDR was $477 million compared to $488 million in 2003, reflecting the 9% decline in sales volume. On a per unit basis, the cost of product sold was about 7% higher than in the previous year. The cost of sales for 2003 included $24 million in rehabilitation costs due to the water inflow incident at McArthur River. Excluding these costs and the $7 million royalty adjustment in 2003, the unit cost of sale rose by 11% due to higher costs for purchased uranium and higher production costs at Rabbit Lake.

Earnings before taxes from the uranium business increased by $21 million in 2004 and the profit margin improved to 18% from 15% in 2003.

Uranium Outlook for 2005

In 2005, Cameco’s uranium revenue is expected to be about 10% higher than in 2004 due to a projected 6% improvement in the Canadian dollar selling price and a 4% increase in deliveries. Uranium sales volume is expected to total more than 33 million pounds in 2005. About 35% of uranium deliveries are expected to occur in the last quarter of the year. In 2005, Cameco’s share of uranium production is projected to increase to 21 million pounds U₃O₈.

Uranium margins are expected to improve to nearly 25% compared to 19% in 2004.

Uranium Outlook for First Quarter 2005

Earnings from the uranium segment are expected to be significantly greater than in the first quarter of 2004 due to higher realized prices and volumes. The realized price is expected to be about 20% greater than in the first quarter of 2004 due largely to higher spot prices. Deliveries are likely to be about 10% higher than in 2004.

Uranium Price Sensitivity 2005

For deliveries in 2005, a $1.00 (US) per pound change in the U₃O₈ spot price from its current level of $20.60 (US) per pound would change revenue by about $5 million (Cdn), net earnings by about $3 million (Cdn) and cash flows by about $4 million. This sensitivity assumes that 1.00 US dollar is equivalent to 1.32 Canadian dollars. Please see uranium price sensitivity discussion below.

Uranium Price Sensitivity Analysis 2005 to 2008

Over the past several years, Cameco’s strategy was to ensure adequate cash flow in the near term, while preserving upside potential with a mix of market-price related and fixed-price contracts.

Market-price related contracts
In early 2004, Cameco announced that its sensitivity to quickly rising market prices was limited for the near term by ceiling prices in many contracts. These contracts were signed in recent years when spot prices, and related ceiling prices, were much lower than today's price levels. For example, 2003 was the first year this decade in which the average spot price rose above $10.00 ( US) per pound U₃O₈ . Accordingly, even though spot market prices have continued their rise above $20.00 ( US), the benefit to Cameco under these contracts will be limited by the ceiling prices until the contracts expire.

Fixed-price contracts
Long-term price indicators provide guidance as to the level of fixed prices being signed in the long-term contract market. From 2001 to 2003, the long-term price indicator averaged less than $11.00 ( US) per pound, and some of Cameco’s current fixed-price contracts reflect the low long-term prices from that period. In 2004, the long-term price averaged more than $20.00 ( US) per pound, ending the year at $25.00 ( US).

Cameco future contract prices
Given the level of sales targeted each year (32.3 million pounds in 2004), the company is continually in the market signing new contracts for deliveries beginning in two to three years. About 25% to 30% of the current contract portfolio rolls off each year, and is therefore replaced in large part with contracts that were entered into in the past two to three years.

During this period of rapidly increasing prices, both spot and long-term, the company has continued to enter into new multi-year contracts. The new contract portfolio will reflect a mix of fixed and market-related prices. For the time being the company continues to target its traditional blend of pricing mechanism, that is 40% of sales volume with fixed pricing and 60% sensitive to market pricing. Contracts with market related pricing will reference the spot or long-term price indicators quoted near the time of delivery.

The fixed-price contracts will have prices that were fixed at the time of contract signing. This means the company has contracts at fixed prices below and above the current spot market prices and they fall into the category of “insensitive” to market price.

The following table indicates the approximate percentage of targeted sales volume that will be impacted by further increases in the market price above $20.60 ( US) per pound U₃O₈ . As shown in the table below, the proportion of targeted sales that is sensitive to further increases in the market price grows significantly in 2006 and continues in 2007 and 2008.

	% Sales Target
	2005	2006	2007	2008
Price Insensitive ¹	91%	65%	59%	43%
Price Sensitive ²	9%	35%	41%	57%

1	fixed-price contracts and market-related contracts not sensitive to increases in the spot price above year-end 2004 level of $20.60 (US) per pound
2	market-related contracts plus uncommitted volumes

Uranium Market Update

Uranium Spot Market
The industry average spot price (TradeTech and Ux) on December 31, 2004 was $20.60 ( US) per pound U₃O₈, up 3% from $20.00 ( US) at September 30, 2004. This compares to $14.45 (US) at the end of 2003.

Total spot market volume reported for the fourth quarter of 2004 was 1.9 million pounds U₃O₈, much lower than the 6.2 million pounds for the fourth quarter of 2003. As spot sellers offered limited volumes, prices continued their upward movement, increasing modestly throughout the quarter.

Reported spot market volume for 2004 totalled 18.2 million pounds U₃O₈, a decrease from 21.7 million pounds U₃O₈ in 2003.

Lower spot demand in 2004 can be attributed to buyers with near-term requirements exercising upward volume flexibilities under existing contracts in an effort to avoid paying higher prices. In 2004, about 88% of spot market transactions were conducted off-market as buyers attempted to minimize upward pressure on prices. Discretionary buying represented a higher proportion of spot buying in 2004 than in 2003, indicating that some market participants anticipate continued spot price increases.

Uranium Long-term Market
The long-term market continued to be active in the last quarter. Long-term contracting in 2004 is estimated to have been about 90 million pounds U₃O₈, an increase over the 75 million pounds U₃O₈ estimated for 2003.

The industry average long-term price (TradeTech and Ux) on December 31, 2004 was $25.00 ( US) per pound U₃O₈, up from $23.00 ( US) at the end of the third quarter, and $15.50 ( US) at the end of 2003.

Uranium Operations Update

Uranium Production

Cameco’s Share of Production (million lbs U₃O₈)	Three Months Ended Dec. 31/04	Three Months Ended Dec. 31/03	Year Ended Dec. 31/04	Year Ended Dec. 31/03
McArthur River/Key Lake	4.0	3.7	13.1	10.6
Rabbit Lake	1.6	1.8	5.4	5.9
Smith Ranch/Highland	0.4	0.3	1.2	1.2
Crow Butte	0.2	0.2	0.8	0.8
Total	6.2	6.0	20.5	18.5

McArthur River/Key Lake
Production at McArthur River/Key Lake totalled 5.7 million pounds for the fourth quarter of 2004. Cameco’s share was 4.0 million pounds. McArthur River/Key Lake completed 2004 with U₃O₈ production of 18.7 million pounds (Cameco’s share was 13.1 million pounds). The last three months of 2004 resulted in the highest production quarter ever achieved at these sites.

The Canadian Nuclear Safety Commission (CNSC) approved renewal of the operating licences for Key Lake and McArthur River on October 25, 2004 and they are valid until October 31, 2008.

The CNSC has indicated that the proposed production capacity increase to 22 million pounds U₃O₈ per year will require a screening level environmental assessment (EA) under the Canadian Environmental Assessment Act. The company expects a decision from the CNSC on the proposed production capacity increase late in 2005. If approval is received, Cameco expects it will take a couple of years to ramp up production. The company is developing a plan to determine the optimal sustainable production rate, which may be less than full capacity.

Rabbit Lake
Rabbit Lake produced 1.6 million pounds U₃O₈ during the fourth quarter of 2004 and a total of 5.4 million pounds U₃O₈ for the year. Production for both the fourth quarter and the year was lower than in 2003. Annual production was down approximately 9% due mainly to difficult mining conditions resulting in lower mill feed.

Significant exploration drilling occurred in 2004 with over 52,500 metres drilled. The program has been successful to date, extending the mine life to 2007. Additional underground and surface drilling will take place in 2005.

Smith Ranch-Highland and Crow Butte
Smith Ranch-Highland and Crow Butte ISL mines produced 0.6 million pounds U₃O₈ during the fourth quarter of 2004. The operations produced 2.0 million pounds collectively for the year.

Planned Production for 2005
Cameco’s share of production (million lbs U₃O₈)	2005 Planned	2004 Actual
McArthur River/Key Lake	13.1*	13.1
Rabbit Lake	5.8	5.4
Smith Ranch/Highland	1.5	1.2
Crow Butte	0.8	0.8
Total	21.2	20.5
* Production would rise modestly for the year if CNSC approves the capacity increase at McArthur/Key late in 2005.

Uranium Projects Update

Cigar Lake
The second of two hearings for the full construction licence occurred on November 17, 2004 and the CNSC approved theconstruction of the project on December 20, 2004. On December 21, 2004, the Cigar Lake joint venture decided to proceed with construction of the mine. Construction began on January 1, 2005 and will take about 27 months to complete. Assuming production begins in 2007, there will be a ramp up period of up to three years before the mine reaches expected full production of 18 million pounds per year.

In making the development decision, the Cigar Lake joint venture approved a construction budget of $450 million (Cameco’s share is $225 million) that includes surface and underground facilities at Cigar Lake as well as changes to the milling facilities at McClean Lake and Rabbit Lake. Proposed changes to the Rabbit Lake facilities are subject to regulatory approvals.

Inkai
The ISL test mine at Inkai in Kazakhstan produced about 0.13 million pounds U₃O₈ during the fourth quarter of 2004 and 0.47 million pounds for the year (Cameco’s share is 60%). The Inkai Joint Venture has notified the Kazakh government that it intends to increase Inkai production to 5.2 million pounds per year at full capacity, up from the previous plan of 2.6 million pounds.

The Inkai Joint Venture partners have decided to proceed with construction of the Inkai in situ leach mine. The Inkai Joint Venture intends to submit an environmental assessment and a design plan for the commercial facility to Kazakh regulatory authorities in the coming months, with approval expected by third quarter 2005. Following approval, construction will begin with commercial production scheduled for 2007. The costs, net of sales proceeds from Inkai production, are capitalized until commercial production is achieved. The test mine at Inkai is projected to produce 0.45 million pounds U₃O₈ in 2005.

The capital cost to bring the Inkai project to production is now estimated at $83 million ( US) up from the earlier estimate of $38 million ( US). The increase is due to the decision to double the plant production capacity and to the rise in the costs of construction materials and plant equipment. Cameco has agreed to fund up to $40 million ( US) of development, which includes the original test mine, with an interest-bearing loan. The Inkai Joint Venture will fund the remainder. Repayment of the principal amount of the loan is expected to start once commercial production commences. The Inkai Joint Venture is obligated to repay the loan and interest.

Uranium Exploration Update

The uranium exploration division completed field programs in Australia during the early part of the fourth quarter. Surface exploration also took place at the Rabbit Lake site during the quarter, seeking additional mineral reserves in and near the Eagle Point mine. (See discussion earlier under Rabbit Lake).

Cameco has succeeded in adding reserves at Eagle Point and resources, for the first time, at the Millenium deposit. There were also positive results achieved at several early stage projects in Saskatchewan. The 2004 rise in uranium prices has resulted in significant land staking in the Athabasca basin by new companies. Cameco continues to hold a large and well-selected land position in the Athabasca basin, and has also acquired additional land in other regions.

Cameco plans to invest approximately $20 million in uranium exploration during 2005 as part of its long-term strategy to maintain its leadership position in uranium production.

CONVERSION SERVICES

Highlights
	Three Months Ended Dec. 31/04	Three Months Ended Dec. 31/03	Year Ended Dec. 31/04	Year Ended Dec. 31/03
Revenue ($ millions)	47	47	144	142
Gross profit ($ millions)	11	18	33	40
Gross profit %	23	38	23	28
Earnings before taxes ($ millions)	10	17	31	38
Sales volume (million kgU)	5.4	5.4	16.9	16.7
Production volume (million kgU)	2.4