Mr. Tim Gitzel reports

CAMECO REPORTS FOURTH QUARTER AND 2014 FINANCIAL RESULTS

Cameco Corp. has released its consolidated financial and operating results for the fourth quarter ended Dec. 31, 2014, in accordance with international financial reporting standards.

"The uncertainty in the uranium market has persisted for longer than expected, but 2014 was another year of strong financial and operational performance," said president and chief executive officer, Tim Gitzel. "We have continued to meet and, in several areas, exceed our annual guidance.

"When we look longer term, we continue to see exceptional growth on the horizon, as billions of dollars are being invested in reactor construction around the world reactors that will need uranium. With our world-class, low-cost assets, we believe that when the market signals a need for more uranium, we will be well positioned to benefit from that growing demand."

                      FINANCIAL HIGHLIGHTS
                ($ millions except per-share amounts)  

                                     Three months                            
                                          ended       Year ended        
                                        Dec. 31,       Dec. 31,             
                                      2014   2013    2014   2013

Revenue                               $889   $977  $2,398 $2,439
Gross profit                           251    185     638    607
Net earnings attributable to
equityholders                           73     64     185    318
$ per common share (basic and
diluted)                              0.18   0.16    0.47   0.81
Adjusted net earnings                  205    150     412    445
$ per common share (adjusted and
diluted)                              0.52   0.38    1.04   1.12
Cash provided by continuing
operations (after working capital
changes)                               236    163     480    524

Average realized prices                               
Uranium
$U.S./lb                            $50.57 447.76  $47.53 $48.35
$Cdn/lb                              56.78  49.80   52.37  49.81
Fuel
services 
$Cdn/kgU                             16.92  17.24   19.70  18.12
Nukem     
$Cdn/lb                              52.12  41.84   44.90  42.26

The 2014 annual financial statements have been audited; however, the fourth quarter 2013 and 2014 financial information presented is unaudited. You can find a copy of the company's 2014 audited financial statements on the company's website. The company's 2014 annual management's discussion and analysis will be posted on the company's website before markets open on Feb. 9, 2015.

Full year

The company's net earnings attributed to equityholders (net earnings) were $185-million (47 cents per share, diluted) compared with $318-million (81 cents per share, diluted) in 2013, mainly due to:

• Writedowns totalling $327-million of the company's investments in Eagle Point mine assets at Rabbit Lake: $126-million, GLE: $184-million and Goviex: $17-million;
• No earnings from Bruce Power Limited Partnership, which the company divested in the first quarter of 2014;
• The write-off of $41-million of assets under construction as a result of changes made to the scope of a number of projects;
• An early termination fee of $18-million incurred as a result of the cancellation of the company's toll conversion agreement with Springfields Fuels Ltd., which was to expire in 2016;
• Settlement costs of $12-million with respect to the early redemption of the company's Series C debentures;
• Lower earnings in the company's fuel services segment as a result of a decrease in sales volumes and higher unit cost of sales;
• Higher losses on foreign exchange derivatives due to the weakening of the Canadian dollar, partially offset by:
  • A $127-million gain on the sale of the company's interest in BPLP;
  • Higher earnings in the company's uranium segment due to higher average realized prices;
  • A favourable settlement of $66-million in a dispute regarding a long-term supply contract with a utility customer;
  • Lower exploration costs due to a more focused effort on the company's core projects in Saskatchewan, with decreases in activity elsewhere, particularly in Australia and at Inkai;
  • Higher tax recoveries resulting from pretax losses in Canada.

On an adjusted basis, the company's earnings were $412-million ($1.04 per share, diluted) compared with $445-million ($1.12 per share, diluted) in 2013, mainly due to:

• No earnings from BPLP due to divestiture of the company's interest in the first quarter of 2014;
• An early termination fee of $18-million incurred as a result of the cancellation of the company's toll conversion agreement with SFL, which was to expire in 2016;
• Settlement costs of $12-million with respect to the early redemption of the company's Series C debentures;
• Lower earnings from the company's fuel services business as a result of lower sales volumes and higher unit cost of sales;
• Higher losses on foreign exchange derivatives due to the weakening of the Canadian dollar, partially offset by:
  • Higher earnings in the company's uranium segment due to higher average realized prices;
  • A favourable settlement of $66-million with respect to a dispute regarding a long-term supply contract with a utility customer;
  • Lower exploration costs due to a more focused effort on the company's core projects in Saskatchewan, with decreases in activity elsewhere, particularly at the company's Kintyre project in Australia and at Inkai.

Fourth quarter

In the fourth quarter of 2014, the company's net earnings were $73-million (18 cents per share, diluted), an increase of $9-million, compared with $64-million (16 cents per share, diluted) in 2013, mainly due to:

• Higher uranium gross profits resulting from higher average realized prices and lower average unit cost of sales;
• A favourable settlement of $37-million with respect to a dispute regarding a long-term supply contract with a utility customer;
• Lower exploration expenditures;
• Higher income tax recovery, partially offset by:
  • The impact of a $126-million writedown of the company's investments in the Eagle Point mine assets at Rabbit Lake;
  • The write-off of $41-million of assets under construction as a result of changes made to the scope of a number of projects;
  • No earnings from BPLP due to divestiture of the company's interest in the first quarter of 2014;
  • Higher losses on foreign exchange derivatives resulting from the weakening of the Canadian dollar.

On an adjusted basis, the company's earnings this quarter were $205-million (52 cents per share, diluted), compared with $150-million (38 cents per share, diluted) in the fourth quarter of 2013, mainly due to:

• Higher uranium gross profits due to higher average realized price and lower average unit cost of sales;
• A favourable settlement of $37-million with respect to a dispute regarding a long-term supply contract with a utility customer;
• Lower exploration expenditures, partially offset by:
  • No earnings from BPLP due to divestiture of the company's interest in the first quarter of 2014.

Impairment charge on producing assets

During the fourth quarter of 2014, the company recognized a $126-million impairment charge related to the company's Rabbit Lake operation. The impairment was due to the deferral of various projects that were related to planned production over the remaining life of the Eagle Point mine. The amount of the charge was determined as the excess of the carrying value over the recoverable amount. The recoverable amount of the mine was determined to be $29-million.

Market developments in 2014

Today, the uranium market is in a state of oversupply, and there are a number of factors contributing: primary supply continues to perform relatively well; enrichers are underfeeding their plants in reaction to excess enrichment capacity, which creates another source of uranium that is being put onto the spot market; and Japanese reactors remain idled, meaning their inventories continue to grow. The company does not believe those inventories are coming to market, but they remove Japanese utilities from the market as buyers for the time being.

Supply and demand

Market conditions remained depressed in 2014. In particular, the slower than expected pace of Japanese reactor restarts and generally sluggish reactor construction and start-ups globally led to demand erosion. Unlike 2013, the company did observe supply contraction during the year as several existing production centres were shut down and some uranium projects were delayed or cancelled in response to poor market conditions. However, this was more than offset by demand erosion and steady flows of secondary supply. The impact of these conditions was the continuation of the inventory overhang and depressed prices resulting from the 2011 events at the Fukushima-Daiichi nuclear power plant in Japan.

Contracting

Market contracting activity was modest. Spot volumes were normal, but long-term contracting was well below historical averages, and current consumption levels were about half of current annual reactor consumption estimates, albeit higher than in 2013. Long-term contracting is a key factor in the timing of market recovery, and its pace will depend on the respective coverage levels, market views, and risk appetite of both buyers and sellers.

Japan

There were several positive indications for the long term in 2014. Japanese utilities and the Nuclear Regulatory Authority began implementing the regulatory process required for reactor restarts. Currently, 11 restart applications have been submitted by 11 utilities covering 21 reactors. The front-runners are the two Sendai reactors, which appear poised for restart in the first half of 2015, following a few final regulatory confirmations and safety checks. Beyond Sendai, two Takahama units were granted preliminary safety approval from the NRA in late 2014, moving these reactors into the final regulatory approval stages. More broadly, the company continues to see a high degree of confidence from Japanese utilities, which are spending billions of dollars on plant upgrades in anticipation of a positive restart environment.

Other regions

China's remarkable nuclear growth program remains on track, and the United Kingdom continues to be a bright spot for the industry, as plans for new reactor construction move forward. India, Russia and South Korea are also among several key regions, increasing their nuclear generation fleet.

In 2014, growth was tangible as five reactors came on-line: three in China, one in Argentina and one in Russia. It was also exciting to see two emerging nuclear countries start construction on reactors: one in the United Arab Emirates and one in Belarus.

Outlook for 2015

The company's strategy is to profitably produce at a pace aligned with market signals, while maintaining the ability to respond to conditions as they evolve.

The company's outlook for 2015 reflects the expenditures necessary to help the company achieve its strategy.

                            FINANCIAL OUTLOOK 2015

                         Consolidated     Uranium    Fuel services     Nukem

Production (in millions)             25.3 to 26.3          9 to 10              
                                   --          lb              kgU        --
Sales volume (in millions)                                            7 to 8
                                   --    31 to 33         Decrease        lb
                                               lb         5% to 10%     U3O8
Revenue compared with        Decrease    Decrease         Decrease  Increase 
2014                          0% to 5%   5% to 10%         0% to 5% 5% to 10%
Average unit cost of                     Increase         Increase  Increase 
sales (including D&A)              --    5% to 10%        5% to 10%  0% to 5%
Direct administration                                                       
costs compared with          Increase          --               --  Decrease 
2014                          0% to 5%                               0% to 5%
Exploration costs                        Decrease                           
compared with 2014                 --    5% to 10%              --        --
Tax rate                  Recovery of                             Expense of 
                            60% to 65%         --               -- 30% to 35%
Capital expenditures     $370-million          --               --        --

Consolidated outlook

The company expects consolidated revenue to decrease up to 5 per cent in 2015, due to an expected decrease in uranium and fuel services sales volumes.

The company expects administration costs (not including stock-based compensation) to be up to 5 per cent higher compared with 2014.

The company expects exploration expenses to be about 5 per cent to 10 per cent lower than they were in 2014 due to decreased spending at Inkai.

The company has contractual arrangements to sell uranium produced at the company's Canadian mining operations to a trading and marketing company located in a foreign jurisdiction. These arrangements reflect the uranium markets at the time they were signed, with the risk and benefit of subsequent movements in uranium prices accruing to the foreign trading and marketing company.

On an adjusted net earnings basis, the company expects a tax recovery of 60 per cent to 65 per cent in 2015 from the company's uranium, fuel services and Nukem segments, as taxable income in Canada is expected to decline. In 2016, the older contractual arrangements under the company's portfolio of intercompany sale and purchase arrangements largely expire, and the company expects its portfolio to be increasingly reflective of the market at the time transactions occur under the contracts. As this transition occurs, the company expects its consolidated tax rate to increase from a recovery to an expense; however, the rate of change will depend on market conditions at the time new contracts are put in place and when transactions occur under the contracts.

Uranium outlook

The company expects to produce 25.3 million to 26.3 million pounds in 2015 and has commitments under long-term contracts to purchase approximately two million pounds.

Based on the contracts the company has in place and not including sales between the company's segments, the company expects to deliver between 31 million and 33 million pounds of triuranium octoxide in 2015. The company expects the unit cost of sales to be 5 per cent to 10 per cent higher than in 2014, primarily due to higher costs for produced material. As Cigar Lake ramps up to full production, the cash cost of material produced from the mine will initially be higher. If the company makes additional discretionary purchases in 2015 at a cost different from the company's other sources of supply, then the company expects the overall unit cost of sales to be affected.

The company expects revenue to be 5 per cent to 10 per cent lower than it was in 2014, as a result of an expected decrease in deliveries, not including sales between the company's segments, and a lower average realized price.

In the company's uranium and fuel services segments, the company's customers choose when in the year to receive deliveries, so the company's quarterly delivery patterns, and therefore the company's sales volumes and revenue, can vary significantly. The company expects the quarterly distribution of uranium deliveries to be relatively balanced in 2015. However, not all delivery notices have been received to date, which could alter the delivery pattern. Typically, the company receives notices six months in advance of the requested delivery date.

Conference call

The company invites you to join the company's fourth quarter conference call on Feb. 9, 2015, at 11 a.m. Eastern Time.

The call will be open to all investors and the media. To join the call, please dial 800-769-8320 (Canada and the United States) or 416-340-8530. An operator will put your call through. A live audio feed of the conference call will be available from a link at the Cameco website. See the link on the company's home page on the day of the call.

A recorded version of the proceedings will be available:

• On the company's website shortly after the call;
• On postview until midnight, Eastern Time, March 15, 2015, by calling 800-408-3053 (Canada and the United States) or 905-694-9451 (passcode 5846753 followed by the number sign).

Additional information

The company's 2014 annual management's discussion and analysis and annual audited financial statements will be available shortly on SEDAR, on EDGAR and on the company's website. The company's 2014 annual information form is expected to be available later in February.

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