Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

8. Inventories

  2015 2014
Concentrate $887,083 $500,342
Broken ore 41,722 21,289
  928,805 521,631
NUKEM 216,361 251,942
Fuel services 140,100 128,705
Total $1,285,266 $902,278

In the second quarter of 2015, the production stage was reached at Cameco’s Cigar Lake operation. Effective May 1, 2015, we commenced charging all production costs, including depreciation, to inventory and subsequently recognizing in cost of sales as the product is sold.

Cameco expensed $1,935,000,000 of inventory as cost of sales during 2015 (2014 – $1,698,000,000). Included in cost of sales is a $3,400,000 net recovery, resulting from the reversal of previous NUKEM inventory write-downs to reflect net realizable value (2014 – $4,300,000).

NUKEM enters into financing arrangements where future receivables arising from certain sales contracts are sold to financial institutions in exchange for cash. These arrangements require NUKEM to satisfy its delivery obligations under the sales contracts, which are recognized as deferred sales (note 16). In addition, NUKEM is required to pledge the underlying inventory as security against these performance obligations. As of December 31, 2015, NUKEM had $97,945,000 ($70,770,000 (US)) of inventory pledged as security under financing arrangements ((2014 – $94,378,000 ($81,353,000 (US)).