Cameco Annual Report 2011

Power Shift - The New Face of Management

Tim Gitzel, President and CEO

President and CEO Tim Gitzel shares his thoughts on Cameco and the industry in 2011 and the years to come.

You have been CEO since July. What are your thoughts on your tenure thus far?
It's been a very busy and exciting time. We've made a lot of changes and progress in that time, including a seamless leadership transition and changes to senior management. We have a great team in place, and I'm looking forward to a good year in 2012.

What is your vision for the company?
Safety and the environment will always be number one for us. But we're also going to continue the strong production we've had over the past couple years and continue on the path of our Double U strategy—our plan to grow our annual uranium production to 40 million pounds by 2018. Of course, we'll pursue all of this with a focus on profitability.

What about the attempt to acquire Hathor this year? Is this a departure from the approach taken in the past? Will M&A be more of a focus for you as a CEO?
I don't see this as a departure. We're always scouring the globe for opportunities that fit our business, and this was a case that we thought would be a good fit for Cameco. What didn't end up corresponding to our view was the valuation it reached. We take a very disciplined financial approach, and so were not willing to go any higher on our offer. I think that the Hathor bid shows our continued commitment to growth, but in a way that corresponds to our financial discipline, all of which is right in line with the vision of the company.

What do you see as Cameco's greatest strengths?
Our primary strength is our world-class assets—we have over 435 million pounds of proven and probable reserves, which includes high-grade deposits like McArthur River and Cigar Lake.

Added to that is the talented workforce we have that gives us the ability to find innovative solutions to issues and to continue to produce safely at our existing operations around the world.

These combined strengths are what make us a world leader in our field.

The nuclear event in Japan was obviously the most significant occurrence of the year. What are your thoughts on the event and the impact it has had?
It was a very unfortunate event. The earthquake and tsunami were major tragedies that struck the Japanese people, and our thoughts and prayers are with the families affected by it.

Of course a lot of the focus turned to the nuclear reactors at Fukushima Daiichi and what happened there. The industry is learning from that, and applying the lessons learned to make the nuclear industry even safer. I had a chance to go over to Japan shortly after the accident to view the situation first-hand. I also met with our customers and partners to assure them of Cameco's support and to offer any assistance we could.

Some of the repercussions since then have been a questioning of the role of nuclear going forward, particularly in Japan and Germany. That has had an effect on the industry and on uranium demand in the short term, as well as on Cameco's share price. But we think these things are temporary. We keep looking longer term, and that longer term story for nuclear is good.

We see that attitudes are strengthening again towards nuclear, which bodes well for the future. Over time I think we will regain our pre-Fukushima position, but right now we're having to work through the effects it has had on the industry.

What is your perspective on the future of the nuclear industry?
I've been in the business for many years. I've been an advocate, a supporter and a proponent, and I see the future of the nuclear industry as very bright. Today in the world, we see 63 units under construction. That's the most growth we've seen in decades.

China is leading the way with 26 units under construction; Russia is building, as are India and South Korea, while many other countries are preparing to get into the nuclear business. Some of the Arab states are having to move away from burning oil and other fossil fuels, and are moving toward nuclear. All of that is good news for our business.

Cameco wants to remain the world leader in supplying uranium to utilities around the world. So, given the lead times required to bring new production on, we need to get moving now to supply this growing world appetite for uranium.

What have been the highlights of 2011?
There have been many. Certainly our strong environmental and safety records continue. Safety milestones were reached at our Blind River, Crow Butte and Cigar Lake operations.

Production was strong in 2011, and we keep getting closer to production at Cigar Lake. A lot of work was completed there in 2011, which was topped off by the shaft 2 breakthrough on the 480 level. That was a big accomplishment and important for work going forward.

We were very active on the corporate development side, and made a successful deal with AREVA and the other Cigar Lake partners to optimize the milling of Cigar Lake ore. We also signed a Memorandum of Understanding with our partner at Inkai to lay the groundwork to increase production there.

The biggest story this year, though, is our financial performance. We achieved a number of records, including annual revenue and gross profit from our nuclear business, driven by record results in our uranium segment.

I'm very proud of our results because they show that, even faced with a challenging environment, as we were in 2011, we are still able to deliver on our goals, and do it in a safe and responsible manner.

What is your road map for 2012 and the years to come?
We're going to continue doing what we've been doing. We need to work safely every day at our operations and protect the environment. We need to keep focus on our existing operations while we're working on our strategy to double production—to make sure we have our home base covered—but also keep working on developing new projects around the world.

It's also important to make sure we provide a good workplace for our people and to give back to the communities in which we operate. It's very important for us that we make a difference in our communities.

We did extraordinarily well in 2011 and will continue to do so in 2012.

Tim Gitzel
President and CEO