Cameco Annual Report 2011
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Uranium Production overview

Our production was 2% lower in 2011 than it was in 2010, but 3% higher than the guidance we provided in our third quarter MD&A. We had a number of successes at our mining operations in 2011.

At McArthur River/Key Lake:

  • 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

At Inkai:

  • received government approval allowing us to increase production to 3.9 million pounds (100% basis)
  • signed an MOA to increase production to 5.2 million pounds (100% basis)

Uranium production

  Three months ended
December 31		 Year ended
December 31		  
Cameco's share
(million lbs)		 2011 2010 2011 2010 2011 plan
  1. (1) We updated our 2011 plan in our Q3 MD&A to 21.7 million pounds from 21.9 million pounds at the beginning of 2011.
McArthur River/Key Lake 3.9 4.0 13.9 13.9 13.3
Rabbit Lake 1.6 1.3 3.8 3.8 3.6
Smith Ranch-Highland 0.2 0.4 1.4 1.8 1.6
Crow Butte 0.2 0.2 0.8 0.7 0.7
Inkai 0.7 0.5 2.5 2.6 2.5
Total 6.6 6.4 22.4 22.8 21.71

Outlook

We have geographically diverse sources of production. Our strategy is to increase our annual production to 40 million pounds by 2018, which we expect will come from our operating properties, development projects and projects under evaluation.

Cameco's share of production — annual forecast to 2016
Current forecast
(million lbs)		 2012 2013 2014 2015 2016
  1. (1) We have signed an MOA with Kazatomprom to increase annual production to 5.2 million pounds (100% basis). Once implemented, we will receive the right to purchase 2.9 million pounds of Inkai's annual production and receive profits on 3.0 million pounds. See Inkai for more information.
  2. (2) We have adjusted the production table to reflect the share of Inkai's production we will use to calculate our profits under the MOA. See Inkai for more information.
McArthur River/Key Lake 13.1 13.1 13.1 13.1 13.1
Rabbit Lake 3.7 3.7 3.7 3.7 3.4
US ISR 2.4 3.0 3.1 3.7 3.8
Inkai1 2.5 2.9 2.9 2.9 2.9
Cigar Lake – 0.3 1.9 5.5 7.9
Total share of production 21.7 23.0 24.7 28.9 31.1
Cameco's share of Inkai's production on which profits are generated2
Inkai1 2.6 3.0 3.0 3.0 3.0
Total2 21.8 23.1 24.8 29.0 31.2

In 2013, production at McArthur River may be lower as we transition to mining upper zone 4.

Our 2012 and future annual production targets for Inkai assume, and we expect:

  • Inkai will obtain the necessary government permits and approvals to produce at an annual rate of 5.2 million pounds (100% basis), including an amendment to the resource use contract
  • we reach a binding agreement with Kazatomprom to finalize the terms of the MOA
  • Inkai will ramp up production to an annual rate of 5.2 million pounds (100% basis)

There is no certainty Inkai will receive these permits or approvals or we will reach a binding agreement with Kazatomprom or that Inkai will be able to ramp up production. If Inkai does not, or if the permits and approvals are delayed, Inkai may be unable to achieve its 2012 and future annual production targets and we may have to recatagorize some of Inkai's mineral reserves as resources.

This forecast is forward-looking information. It is based on the assumptions and subject to the material risks discussed here, and specifically on the assumptions and risks noted above and listed here. Actual production may be significantly different from this forecast.

Assumptions

  • we achieve our forecast production for each operation, which requires, among other things, that our mining plans succeed, processing plants and equipment are available and function as designed, we have sufficient tailings capacity and our mineral reserve estimates are reliable
  • we obtain or maintain the necessary permits and approvals from government authorities
  • our production is not disrupted or reduced as a result of natural phenomena, labour disputes, political risks, blockades or other acts of social or political activism, shortage or lack of supplies critical to production, equipment failures or other development and operation risks

Material risks that could cause actual results to differ materially

  • we do not achieve forecast production levels for each operation because of a change in our mining plans, processing plants or equipment are not available or do not function as designed, lack of tailings capacity or for other reasons
  • we cannot obtain or maintain necessary permits or approvals from government authorities
  • natural phenomena, labour disputes, political risks, blockades or other acts of social or political activism, shortage or lack of supplies critical to production, equipment failures or other development and operation risks disrupt or reduce our production