Cameco Annual Report 2011

2011 Highlights

After a year of global economic, political and environmental challenges, we reassessed our corporate growth strategy and found it to be as relevant today as it was in 2008 when we set our Double U course. We remain confident in the long-term fundamentals of the nuclear industry. World demand for safe, clean, reliable and affordable energy continues to grow and the need for nuclear energy as part of the world's energy mix remains compelling.

We are preparing our assets to ensure we can be among the first to respond when the market signals new production is needed and to maintain our position as one of the world's largest uranium producers.

We demonstrated our financial strength again this year and we continued to make good progress on our pipeline of projects in development and under evaluation, hitting some key milestones along the way.

Strong financial performance

Our financial results were better than expected and we achieved a number of performance records for the year and during the fourth quarter, including:

  • annual revenue of $2.4 billion and quarterly revenue of $977 million from our nuclear business
  • annual gross profit of $776 million and quarterly gross profit of $353 million from our nuclear business
  • annual revenue of $1.6 billion and quarterly revenue of $731 million from our uranium segment
  • annual average realized price of $49.18 per pound ($49.17 US per pound) in our uranium segment

Net earnings attributable to our shareholders (net earnings) in 2011 were $450 million. In 2010, net earnings were higher by $66 million, mainly due to higher earnings in both our electricity and fuel services segments.

December 31
($ millions except where indicated)
    2011 2010 change
Revenue 2,384 2,124 12%
Gross profit 776 771 1%
Net earnings 450 516 (13)%
$ per common share (diluted) 1.14 1.31 (13)%
Adjusted net earnings (non-IFRS) 509 497 2%
$ per common share (adjusted and diluted) 1.29 1.26 2%
Cash provided by operations (after working capital changes) 732 521 40%
Average realized prices Uranium $US/lb 49.17 43.63 13%
$Cdn/lb 49.18 45.81 7%
Fuel services $Cdn/kgU 16.71 16.86 (1)%
Electricity $Cdn/MWh 54 58 (7)%

Excellent progress in our uranium segment this year

In our uranium segment this year, production was 3% higher than the guidance we provided in our 2011 third quarter MD&A. We had a number of successes at our mining operations, development projects and projects under evaluation. Key highlights:

  • realized benefits of production flexibility provisions in our McArthur River/Key Lake licences, matching our 2010 production record and exceeding our production target by 5%
  • realized benefits of improved efficiency and reliability of equipment at Key Lake
  • completed construction of the acid, steam and oxygen plants at Key Lake
  • signed a memorandum of agreement (MOA) to increase production at Inkai from 3.9 million pounds (100% basis) to 5.2 million pounds (100% basis). See Uranium – operating properties – Inkai for more information.
  • signed an agreement to process all Cigar Lake ore at the McClean Lake mill, which is expected to result in a significant reduction in the operating cost of the project. See Uranium – development project – Cigar Lake for more information.
  • completed remediation of the underground and sinking of shaft 2 to the 480 metre level at Cigar Lake
  • received regulatory approval for our Cigar Lake mine plan and to begin work on our project to allow the release of treated water directly to Seru Bay
  • completed a memorandum of understanding (MOU) for a mine development agreement with the Martu (the local indigenous people) at our Kintyre project

We continued to advance our exploration activities, spending $10 million on five brownfield exploration projects, and $38 million for resource delineation at Kintyre and Cigar Lake. We spent about $48 million on regional exploration programs, mostly in Saskatchewan, followed by Australia, northern Canada, Asia and South America.

Updates on our other segments

In our fuel services segment, we decreased production due to unfavourable market conditions for UF6.

In our electricity segment, Bruce Power Limited Partnership (BPLP) generated 24.9 terawatt hours (TWh) of electricity, at a capacity factor of 87%. Our share of earnings before taxes was $92 million.

Our investment in Global Laser Enrichment (GLE) continues to progress. GLE is continuing its testing activities and engineering design work for a commercial facility. The US Nuclear Regulatory Commission is assessing GLE's application for a commercial facility construction and operating licence.

Highlights   2011 2010 change
Uranium Production volume (million lbs) 22.4 22.8 (2)%
Sales volume (million lbs) 32.9 29.6 11%
Revenue ($ millions) 1,616 1,358 19%
Gross profit ($ millions) 632 532 19%
Fuel services Production volume (million kgU) 14.7 15.4 (5)%
Sales volume (million kgU) 18.3 17.0 8%
Revenue ($ millions) 305 287 6%
Gross profit ($ millions) 54 65 (17)%
Electricity Output (100%) (TWh) 24.9 25.9 (4)%
Revenue (100%) 1,354 1,509 (10)%
Our share of earnings before taxes ($ millions) 92 172 (47)%