Cameco Corporation (CCO) 2008年年度報告「TSX」.pdf

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1、what investors needthe Cameco advantageCameco2008 ANNUAL FiNANciAL REViEW Cameco 2008 ANNUAL FiNANciAL REViEW2008 ANNUAL FiNANciAL REViEW This managements discussion and analysis(MD&A)reflects information known to management as at February 16,2009.This MD&A is intended to supplement and complement o

2、ur audited consolidated financial statements and notes thereto for the year ended December 31,2008,prepared in accordance with canadian generally accepted accounting principles(GAAP)(collectively,our financial statements).We also prepare a reconciliation of our canadian GAAP annual financial stateme

3、nts to US GAAP,which is filed with securities regulatory authorities.You are encouraged to review our financial statements in conjunction with your review of this MD&A.Additional information relating to the company,including our most current annual information form,is available on SEDAR at .All doll

4、ar amounts are in canadian dollars,unless otherwise specified.The financial information in this MD&A has been prepared in accordance with canadian GAAP,unless otherwise indicated.in addition,we use non-GAAP financial measures as supplemental indicators of our operating performance and financial posi

5、tion.We use these non-GAAP financial measures internally for comparing actual results from one period to another,as well as for planning purposes.We have historically reported non-GAAP financial results as supplemental information,as we believe their use provides more insight into our performance.Wh

6、en non-GAAP measures are used in this MD&A,they are clearly identified as a non-GAAP measure and reconciled to the most closely corresponding GAAP measure.All sensitivity analysis discussions in this MD&A address the potential impact of changes to the variables discussed for the full 2009 year.State

7、ments contained in this MD&A,which are not current statements or historical facts,are forward-looking statements that are based on a number of assumptions and estimates believed to be reliable but involve risks,uncertainties and other factors that could cause actual results to differ materially from

8、 those expressed or implied by such forward-looking statements.For more detail on these factors,see the section titled“caution Regarding Forward-Looking information and Statements”in this MD&A.our profileCameco,with its head office in Saskatoon,Saskatchewan,is one of the worlds largest uranium produ

9、cers.The companys uranium products are used to generate electricity in nuclear energy plants around the world,providing one of the cleanest sources of energy available today.Camecos shares trade on the Toronto and New York stock exchanges.GLOSSARYBaseloadThe minimum amount of electric power delivere

10、d or required over a given period of time at a steady rate.Canducanada,Deuterium,Uranium.canadian designed and built pressure-tube nuclear reactor,which uses natural uranium as fuel and heavy water(deuterium oxide)as the moderator.Capacity FactorThe ratio of the electricity generated by a power plan

11、t compared to the electricity that could have been produced during a specific period if the plant had operated continuously at full power.CNSCcanadian Nuclear Safety commissionConversionThe chemical process that changes U3O8 to UF6 in preparation for enrichment.Conversion FactorsWeights and measures

12、 are indicated in the unit most commonly used in specific areas of the industry.These are noted with*and conversion factors are provided below.Take This:Do This To Obtain This t x 1.10 =T*T x 0.90 =t*oz/T x 34.28 =g/t*lb U3O8 2599.8=tU tU x 2599.8=lb U3O8*%U3O8 1.18 =%UDecommissioningAll stages foll

13、owing the shutdown of a nuclear facility,from final closure through the removal of radioactivity from the site,including physical dismantling and decontamination of all non-reusable facilities and equipment.Electricity Measurements1kW x 1000=1MW x 1000=1GW x 1000=1TWKilowatt(kW):kilowatt-hour(kWh)A

14、kilowatt is a unit of power representing the rate at which energy is used or produced.One kilowatt-hour is a unit of energy,and represents one hour of electricity consumption at a constant rate of 1kW.Megawatt(MW):megawatt-hour(MWh)A megawatt equals 1000 kW.One megawatt-hour represents one hour of e

15、lectricity consumption at a constant rate of 1MW.Gigawatt(GW):gigawatt-hour(GWh)A gigawatt equals 1000 MW.One gigawatt-hour represents one hour of electricity consumed at a constant rate of 1GW.Terawatt(TW):terawatt-hour(TWh)One terawatt equals 1000 GW.One terawatt-hour represents one hour of electr

16、icity consumption at a constant rate of 1TW.Enriched Uranium Uranium in which the content of the isotope uranium-235 has been increased above its natural value of 0.7%by weight.Typical low-enriched uranium for commercial power reactors is enriched in uranium-235 to the range of 3%to 5%.in highly enr

17、iched uranium,the uranium-235 has been increased to 20%or more.In Situ Recovery(ISR)A mining method that involves pumping a solution down an injection well where it flows through the deposit,dissolving uranium.The uranium-bearing solution is pumped to surface where the uranium is recovered from the

18、solution.Light Water ReactorA thermal reactor using ordinary water both as a moderator and as a coolant with enriched uranium as fuel.Long-Term PriceThe price for product sold or purchased under contract for multiple deliveries beginning after one year.Mineral Reservesis the economically mineable pa

19、rt of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study.This study must include adequate information on mining,processing,metallurgical,economic and other relevant factors that demonstrate,at the time of reporting,that economic extraction can be justif

20、ied.A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined.Mineral Resourcesis a concentration or occurrence of diamonds,natural solid inorganic material,or natural solid fossilized organic material,including base and precious metals,coal an

21、d industrial minerals in or on the Earths crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.The location,quantity,grade,geological characteristics and continuity of a mineral resource are known,estimated or interpreted from specif

22、ic geological evidence and knowledge.Ounce(oz)All ounces in this report are troy ounces.OutageA temporary suspension of electricity generation at a power plant.RadiationRadiation occurs naturally.it is a type of energy that travels through space in the form of waves,or particles,which give up all or

23、 part of their energy on contact with matter.Radiation can take the form of alpha or beta particles,X-rays or gamma rays,or neutrons.Spot Market PricePrice for product sold or purchased in the spot market rather than under a long-term contract.Spot market transactions are generally for delivery with

24、in one year.tTonne(metric ton)TTon(short ton)UO2Uranium dioxide.converted from UO3 at camecos Port Hope plant,then compressed to pellets and sintered by fuel fabricators to make fuel for candu reactors.UO3Uranium trioxide.An intermediate product produced at camecos Blind River refinery and used as f

25、eed to produce UO2 and UF6 at camecos Port Hope conversion plants.U3O8Triuranium octoxide.At cameco operations,it is in the form of concentrate,often called yellowcake.UF6Uranium hexafluoride.converted from UO3 at camecos Port Hope plant.Following enrichment,UF6 is converted to enriched UO2 suitable

26、 for fabrication into fuel for light-water reactors.Uraniumchemical element with atomic number 92 and atomic symbol U,which has three natural isotopes:U234,U235 and U238.The only naturally occurring fissile nuclide is U235,a quality that is exploited as a source of energy.Natural uranium contains 0.

27、7%of this isotope.the world needs energyenergy needs nuclearnuclear needs CamecoTABLE OF CONTENTS MANAGEMENTS DISCUSSION AND ANALYSIS EXECUTIVE SUMMARY.1 1.0 OUR BUSINESSES,OBJECTIVES&STRATEGIES.3 Our Businesses.3 Our Objectives and Strategies.4 2.0 THE NUCLEAR ENERGY,URANIUM AND FUEL SERVICES INDUS

28、TRIES.5 Nuclear Energy Trends.5 The Uranium Industry.8 The Fuel Services Industry.11 3.0 OUR KEY PERFORMANCE DRIVERS,BUSINESS STRATEGIES AND CAPABILITIES TO DELIVER RESULTS.12 Our Uranium Business.12 Our Fuel Services Business.27 Foreign Exchange.30 4.0 OUR PERFORMANCE AND OUTLOOK.31 2008 Consolidat

29、ed Financial Results.31 2008 Uranium Business Financial Results.35 2008 Fuel Services Business Financial Results.36 2008 Nuclear Electricity Generation Business Results.37 2008 Gold Business Results.38 Outlook for 2009.40 2008 Fourth Quarter Consolidated Results.46 2008 Fourth Quarter Business Segme

30、nt Financial Results.47 Liquidity and Capital Resources.51 Outstanding Share Data.53 5.0 OUR MINERAL RESERVES AND RESOURCES.54 Mineral Reserves and Resources.54 6.0 OUR RISKS AND RISK MANAGEMENT,PLUS CONTROLS AND PROCEDURES AND CRITICAL ACCOUNTING ESTIMATES.60 Risks and Risk Management.60 Controls A

31、nd Procedures.72 Critical Accounting Estimates.72 New Accounting Pronouncements.73 Use of Non-GAAP Financial Measures.74 QUALIFIED PERSONS.75 CAUTION REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS.75 ADDITIONAL INFORMATION.77 FINANCIAL INFORMATION Report of Managements Accountability.78 Audito

32、rs Report.79 Consolidated Financial Statements.80 Notes to Consolidated Statement.85 Glossary(Inside Back Cover)i EXECUTIVE SUMMARY($Cdn millions)2008 2007%Change Revenue 2,859 2,310 24 Net earnings 450 416 8 Earnings per share(EPS)basic($)1.29 1.18 9 Adjusted net earnings1 589 572 3 EPS-adjusted an

33、d diluted($)1 1.67 1.54 8 Cash provided by operations2708 801(12)Uranium production(millions of pounds U3O8)17.0 19.8(14)Uranium sales(millions of pounds U3O8)34.1 30.2 13 Average realized price($US/lb)39.52 37.47 5 Average realized price($Cdn/lb)43.91 41.68 5 Vision and Strategy Camecos vision is t

34、o be a dominant nuclear energy company producing uranium fuel and generating clean electricity.Our key strategy to deliver this vision is to sustain and grow uranium production in a way that is safe,clean,cost-effective and community supported,with a profitably integrated fuel services business.Cons

35、olidated Financial Performance in 2008 Cameco had record adjusted net earnings1 of$589 million in 2008,3%higher than adjusted net earnings of$572 million in 2007.We enjoyed record consolidated revenues of nearly$2.9 billion,24%higher than the previous record of$2.3 billion achieved in 2007.Cash prov

36、ided by operations in 2008 of$708 million,was down 12%from the record$801 million reached in 2007.This decrease of$93 million was mainly attributable to the higher working capital requirements in 2008.Key Achievements,Developments and Challenges in 2008 Achievements Cameco acquired a 70%interest in

37、Kintyre,an advanced exploration project in Australia,to further our strategy to expand our portfolio of uranium assets.If successfully developed,Kintyre will add potential for open pit production and offers geographic diversification.Cameco also acquired a 24%interest in Global Laser Enrichment(GLE)

38、based in North Carolina.GLE is developing a third-generation uranium enrichment process using laser technology.This investment extends our involvement in the nuclear fuel cycle.Developments Despite supply shortages,construction and development of the Inkai project in Kazakhstan advanced and we expec

39、t to declare commercial production in 2009.At the McArthur River mine,the transition to new mining areas continued with production expected to begin in 2009 and 2010.1 Net earnings for the years ended December 31,2007 and 2008 have been adjusted to exclude a number of items.Adjusted net earnings and

40、 adjusted EPS are non-GAAP measures.See“Use of Non-GAAP Financial Measures”in this MD&A for a description and reconciliation to GAAP.2 Including changes in working capital.1Challenges During the year,our operating mines and mills experienced several production challenges.The challenges were largely

41、related to reagent supply and aging infrastructure.We have addressed the issues affecting 2008 production and,over the next several years,plan to continue refurbishing our asset base to ensure their long-term,efficient operation.In September,the Port Hope UF6 plant was restarted upon completion of a

42、 year-long rehabilitation program.However,operations were suspended at the end of November because we were unable to resolve a contract dispute with our sole supplier of hydrofluoric acid.Because of contract negotiations and logistical issues,supply arrangements are not expected to be established be

43、fore mid-2009,with production resuming thereafter.Cigar Lake rehabilitation continued.The original water inflow area was successfully sealed and dewatering of the mine began in the summer of 2008.However,in August a new inflow occurred,causing dewatering to be suspended.The location of this inflow h

44、as been identified on the 420 metre level,and preparation for sealing of the inflow area is underway.It is expected to take most of 2009.Uranium Industry Fundamentals Cameco remains optimistic about the prospects for nuclear energy around the world.Nuclear energy is widely recognized as a critical c

45、omponent of the solution to global environmental issues and concerns about energy security.We noted the following during 2008:In the global fleet of existing reactors,modest capacity growth continues with ongoing improvements in capacity factors,plant power uprates,and plant life extensions.New-buil

46、d projects continue to be announced in current nuclear power jurisdictions and also in the developing world,with some countries such as China,Russia and India pursuing aggressive construction programs.However,the current financial crisis may slow or delay the new build program.The NEI reported that

47、in 2007,US nuclear power plants continued to enjoy the lowest average direct costs of 1.76 cents(US)per kilowatt hour,for baseload,non-hydro,electricity production.Despite the significant decrease in the uranium price since the beginning of 2008,the long-term uranium market fundamentals remain posit

48、ive as:o Worldwide production continues to be outstripped by demand.o Demand that could not be satisfied through mine production was met by the consumption of various secondary supplies,including those of the Russian and US governments.The large majority of these secondary supplies are finite and ad

49、ditional primary production is required to meet future reactor requirements.21.0 OUR BUSINESSES,OBJECTIVES&STRATEGIES OUR BUSINESSES Cameco is involved in four business segments:uranium,fuel services,nuclear electricity generation,and gold.In 2008,we extended our involvement in the nuclear fuel cycl

50、e with an investment in the development of a third-generation uranium enrichment process.Testing of the innovative technology is planned to begin in mid-2009.The only significant commercial use for uranium is to fuel nuclear power plants for the generation of electricity.In recent years,nuclear plan

51、ts generated about 15%of the worlds electricity.The major stages in the production of nuclear fuel are uranium exploration,mining and milling,refining and conversion,enrichment and fuel fabrication.Once a commercial uranium deposit is discovered and mineral reserves delineated,regulatory approval to

52、 mine is sought.Following regulatory approval,the mine is developed,and ore is extracted and processed at a mill to produce uranium concentrates.Mining companies sell uranium concentrates to nuclear electricity generating companies around the world on the basis of the amount of uranium(U3O8)containe

53、d in the concentrates.These utilities then contract with converters,enrichers and fuel fabricators to produce the required reactor fuel.Uranium Cameco is one of the worlds largest uranium producers,accounting for approximately 15%of the worlds production in 2008 with about 500 million pounds of prov

54、en and probable mineral reserves of uranium.We have controlling ownership of the worlds largest high-grade uranium mineral reserves and low-cost operations located in northern Saskatchewan.Cameco operates four mines located in Canada and the United States,and has two mines under development,one in C

55、anada and the other in Kazakhstan.Fuel Services The company is an integrated uranium fuel supplier with refining facilities at Blind River and fuel services facilities(conversion and fuel manufacturing)at Port Hope and Cobourg,all located in Ontario,Canada.The Blind River facility refines uranium co

56、ncentrates into uranium trioxide(UO3),an intermediate product in the uranium conversion process.Our Port Hope conversion services plants chemically change the form of the UO3 to either uranium hexafluoride(UF6)or uranium dioxide(UO2).The Port Hope UF6 plant has the licensed capacity to produce about

57、 20%of the worlds annual requirements of UF6 used in making fuel for light water reactors.In 2005,Cameco signed a toll-conversion agreement to acquire UF6 conversion services from Springfields Fuels Ltd.(SFL)in Lancashire,United Kingdom.Under the 10-year agreement,SFL will annually convert a base qu

58、antity of up to 5 million kilograms of uranium(kgU)as UO3 to UF6 for Cameco.This arrangement increases our UF6 conversion capacity by 40%.In addition,Port Hope is the worlds only commercial producer of natural UO2,the fuel used by all Canadian-designed Candu reactors.Cameco manufactures fuel bundles

59、 for use in Candu reactors and participates in all stages(from uranium exploration and production to fuel fabrication)of the Candu nuclear fuel cycle.Enrichment On June 20,2008,Cameco entered an agreement with entities owned and controlled by General Electric(GE)and Hitachi Ltd.whereby we provided$1

60、24 million(US)in cash and issued a promissory note in the amount of$73 million(US)to acquire a 24%interest in Global Laser Enrichment LLC(GLE),a uranium enrichment development company based in Wilmington,North Carolina.The promissory note represents Camecos support for future development of the busi

61、ness.The remainder of GLE is owned indirectly by GE(51%)and Hitachi Ltd.(25%).We do not expect to incur further development and commercialization expenditures before 2010.GLE is developing a third-generation uranium enrichment process using laser technology to commercially enrich uranium for nuclear

62、 power plants.In 2009,the test loop phase is planned.This is the next important 3milestone for the technology,which is intended to verify performance and reliability data necessary to support the construction of a commercial-scale enrichment facility.In June 2008,when the agreement was announced,GLE

63、 expected to achieve commercial production in 2013.GLE will be responsible for marketing all the enrichment services from this plant.The target annual capacity of the proposed commercial facility is between 3.5 and 6.0 million separative work units.Uranium enrichment is a key step in the process of

64、producing fuel for light water nuclear power plants.Naturally occurring uranium is made up of two isotopes,approximately 99.3%U-238 and 0.7%U-235.Uranium enrichment is the process that increases the U-235 concentration from 0.7%.Most commercial reactors require uranium fuel to have a U-235 content o

65、f 3%to 5%.Nuclear Electricity Generation Cameco generates clean electricity through its 31.6%interest in the Bruce Power Limited Partnership(BPLP),which operates the four Bruce B nuclear reactors and manages the overall site located in southern Ontario.We are the fuel procurement manager for uranium

66、,conversion services and fuel fabrication for BPLPs four B nuclear reactors and for the two operating Bruce A reactors.Cameco provides 100%of the uranium concentrates for BPLP and under an agreement executed in 2008,we have agreed to supply Bruce Power A Limited Partnership(BALP)with the majority of

67、 its future uranium concentrates requirements.Cameco also supplies BPLP and BALP with all of their conversion services and fuel fabrication requirements.BPLPs four B reactors have a combined net generation capacity of about 3,260 megawatts(MW),supplying about 15%of Ontarios electricity.Gold Cameco h

68、as a 52.7%interest in Centerra Gold Inc.(Centerra),which began trading on the Toronto Stock Exchange(TSX)in June 2004.Cameco transferred substantially all its gold assets to Centerra as part of the strategy to maximize the value of those assets.Centerra is a growth-orientated Canadian-based gold pro

69、ducer focused on acquiring,exploring and developing gold properties in Central Asia,the former Soviet Union and other emerging markets.Centerra operates two gold mines located in the Kyrgyz Republic and Mongolia.Gold is not a core business for Cameco.Centerra was created as a vehicle for Cameco to e

70、ventually exit the gold business.OUR OBJECTIVES AND STRATEGIES Camecos goal is to be a dominant nuclear energy company the supplier,partner,employer and investment of choice in the nuclear industry.Having made significant progress in the past three years on our objectives for vertical integration in

71、cluding securing additional conversion capacity,acquiring fuel manufacturing facilities and investing in development of a third-generation enrichment process,our strategy has now become more focused on uranium production.We intend to sustain and grow our uranium production in a way that is safe,clea

72、n,cost-effective and community supported,with a profitably integrated fuel services business.We will maintain and enhance our operations and will achieve our growth objectives and strong financial performance by:continuously improving our ability to produce uranium fuel for nuclear reactors in a way

73、 that is safe,clean,cost-effective and reliable(operational excellence),maintaining the respect and support of communities,indigenous people,governments and regulators impacted by current and future operations,and building an engaged,qualified and diverse workforce capable of leading and implementin

74、g the required growth strategies.Our specific strategies in the uranium and fuel services businesses the companys core businesses are discussed under the sections“Uranium Strategies”and“Fuel Services Strategies,”respectively,in this MD&A.42.0 THE NUCLEAR ENERGY,URANIUM AND FUEL SERVICES INDUSTRIES N

75、UCLEAR ENERGY TRENDS The nuclear energy industry is experiencing stable growth in the form of capacity factor improvements,power uprates,refurbishments,life extensions and,in the developing world,aggressive new-build programs.The following discussion outlines a number of factors that may have a posi

76、tive or negative impact on the outlook for nuclear energy and,hence,the demand for uranium fuel.While it is difficult to determine which factors will dominate in the long term,the demand for nuclear energy is expected to accelerate in response to concerns about electricity supply,the need for non-em

77、itting baseload power,and security of fuel supply.Positive Factors North America A November 2008 US national public opinion survey by Bisconti Research for the Nuclear Energy Institute(NEI)indicates public support for nuclear electricity reached a record high of 74%.This compares to 63%in April 2008

78、.Those strongly in favour of nuclear energy outnumber those strongly opposed by nearly four to one(38%to 10%).Support for nuclear energy in Canada continues to grow.Canadians expressed support for nuclear energy in a national poll(Ipsos Reid)conducted for the Canadian Nuclear Association(CNA)in Sept

79、ember 2008.Support for nuclear energy was up 15%since February 2005.National support for refurbishing reactors and new builds are at historic levels:67%support refurbishment and 49%support new build.At the end of 2008,the US Nuclear Regulatory Commission(NRC)had received 17 applications for combined

80、 construction and operating licences(COL)for 26 new nuclear reactors.The NRC has stated that starting in 2009,it expects to receive additional applications for approval to construct at least seven reactors.Of these applications,we expect four to eight new reactors will be constructed in the US over

81、the next decade.In Canada,the province of Ontario has announced that it has chosen the Darlington nuclear power plant as the site for two new reactors.Ontario has stated that it plans to choose a preferred reactor vendor in 2009.Bruce Power is considering building reactors in Ontario and northern Al

82、berta and has recently completed a feasibility study to look at the possibility of building a nuclear power plant with two reactors in Saskatchewan.In addition,New Brunswick Power has publicly stated that it is considering the construction of a second nuclear reactor to produce electrical power for

83、export to the northeastern US.Hydro-Quebec announced that it will move forward with a refurbishment project to extend the life-span of the Gentilly-2 reactor,which began commercial operation in 1983.The refurbishment will enable the 675 megawatt Candu-6 reactor to operate until around 2040.Europe Th

84、e government of Sweden announced that it has reversed a decision to phase out the countrys 10 commercial reactors and stated that existing reactors could be replaced at the end of their operating lives.The UK government formally announced a decision to support a new generation of nuclear power plant

85、s.Reports indicate up to 10 nuclear reactors could be built by 2020.India In October 2008,the US government approved the Nuclear Cooperation Agreement(NCA)with India(123 Agreement).India has also completed NCAs with France and Russia.Nuclear trade missions to India have commenced and a number of cou

86、ntries(including Canada)are negotiating bilateral agreements.Negative Factors While nuclear power has finally been recognized as a non-emitting technology in US energy legislation,it still does not qualify internationally for greenhouse gas emission credits.Nuclear plant phase-out programs still exi

87、st in a number of European countries,including Germany,Belgium and Spain,although these plans are reportedly being reconsidered.5Although progress is being made in several countries on the management of radioactive waste from the nuclear fuel cycle,it remains a controversial issue.Concerns about the

88、 long-term management of radioactive waste continue to be an impediment to the nuclear renaissance.Many environmental groups continue to oppose the nuclear power industry.The first few new generation nuclear plants will face significant business risks,including“first-of-a-kind”costs,as well as possi

89、ble delays in financing,licensing and construction.Escalating costs of construction materials and uncertain regulatory environments present a major obstacle to new plant construction.It remains to be seen whether new plants can be competitive in all regions with other forms of baseload electricity g

90、eneration.The current global financial crisis may slow or delay new reactor builds and upgrades to existing facilities,however the demand for new baseload electricity still exists.The financial crisis is not expected to impact long-term climate change or energy security policies.Indeed government st

91、imulus packages may promote large projects like nuclear plants.Nuclear Power Share The International Atomic Energy Agency(IAEA)released its 2008 edition of Energy,Electricity and Nuclear Power Estimates for the period to 2030.The report estimates nuclear power generation in 2030,and both the low and

92、 high case projections are significantly higher than the estimates released in 2007.The high case estimates worldwide nuclear capacity in 2030 at 748 gigawatt electric(GWe),about twice the current level of 372 GWe.The low case predicts worldwide nuclear capacity in 2030 rising to 473 GWe.In comparis

93、on,the 2007 edition of the report put the high case estimate for 2030 at 691 GWe and put the low case estimate at 447 GWe.Under the high projection in the 2008 IAEA report,nuclear power will retain a 14%share of total worldwide electricity generation in 2030,and under the low projection nuclears sha

94、re of electricity generation is expected to decline to 12.5%.Nuclear Plant Performance Operating Costs In 2007,the last year for which data is available,the direct costs of US nuclear electricity production were the lowest for baseload(non-hydro)electricity production for the seventh consecutive yea

95、r.Production costs were 1.76 cents(US)per kilowatt hour for nuclear,2.47 cents(US)for coal,6.78 cents(US)for natural gas and 10.26 cents(US)for petroleum(Source:NEI).Reactors Operating,Planned and Under Construction There are 436 reactors operating worldwide and a total of 115 new reactors under con

96、struction or planned for completion within the next 10 years(as of January 2009).These more than offset 18 anticipated closures,for a net increase of 97 reactors during the period.Given that new reactors tend to be larger than older units,this represents a 28%growth in nuclear generating capacity.Hi

97、ghlights include:68 reactors are scheduled to be built in Asia,as energy demand is driven by economic expansion.About three-quarters of this growth is expected to occur in China and India,which have announced plans to build 31 and 18 reactors,respectively,o India is implementing plans with four sepa

98、rate nuclear plant vendors to build light water reactors,o China is debating increasing its nuclear construction program from 40 GWe to 60 or 70 GWe by 2020.in Russia,Ukraine and Armenia,it is anticipated that 23 reactors will be built,offset by one closure in Armenia and six in Russia,in Finland,a

99、new European Pressurized Water Reactor(EPR)is being constructed and,when completed,will bring the countrys total to five nuclear reactors.An application for a sixth unit has been filed,in France,the construction of a second EPR is expected to begin in 2012 and a third EPR is being considered,in Cana

100、da,BALP is refurbishing two A units that had previously been shutdown,and both Bruce Power and Ontario Power Generation Inc.(OPG)have initiated the regulatory process for new generating units.in the US,South Carolina and Georgia are likely to follow Florida in providing an encouraging nuclear plant

101、investment climate,and South Koreas generation blueprint anticipates that by 2020 roughly half the countries electricity will be nuclear generated.6Reactors Potential In 2008,there were no new reactors connected to the electricity grid,and three reactors were shutdown.There were seven countries that

102、 completed power uprates in 2008,totalling 1.2 GWe.The net result was a 0.5 GWe decrease in nuclear capacity.Construction of 10 reactors commenced in 2008(six in China,two in South Korea and two in Russia),which will add 11 GWe of new nuclear capacity when they connect to the electricity grid.The fo

103、llowing table summarizes Camecos estimate of world nuclear reactor status to 2018.World Nuclear Reactors(Cameco estimate,January 2009)1Nuclear Electricity 2007 2(%)Operating 2009NewShutdownOperating 2018GWe ChangeArgentina622041.5Brazil320020.0Canada151831202.3Mexico520020.0USA19104401085.0Americas

104、Total128911368.8China2113104233.9India3171803513.4Indonesia001011.0Iran002022.0Japan285341564.7Korea(South)3520802810.1Pakistan221120.2Taiwan1962082.7Turkey001011.0Asia Total10968217569.0Belgium5470070.0Bulgaria3222042.0Czech Republic3060060.0Finland2941051.7France775921603.1Germany261700170.0Hungar

105、y3740040.0Lithuania6411110.4Netherlands411021.1Romania1322041.4Slovakia5442060.9Spain1780080.0Slovenia4211021.1Sweden461000100.0Switzerland4350050.0UK15191614-1.6Europe Total15013815510.0Russia16312164619.0Armenia441010-0.4Ukraine481520172.0Russia and Eastern Europe Total472376320.6South Africa62204

106、0.3World Total1543611518533108.61 Estimated by Cameco,January 2009.Based on public announcements made prior to January 2009.2 World Nuclear Association(WNA).Outlook to 2018 7THE URANIUM INDUSTRY Worldwide Uranium Supply and Demand The uranium market supply and demand fundamentals remained strong in

107、2008,indicating a need for more primary mine production over the coming decade.During the past 23 years,uranium consumption has exceeded mine production by a wide margin,with the difference being made up from various types of inventory and recycled products,often collectively referred to as secondar

108、y sources.Based on Camecos 10 year supply and demand outlook,cumulative uranium consumption requirements are expected to reach about 2.0 billion pounds.Total existing mine supply and secondary supplies are expected to meet approximately 80%of this demand.The remaining 20%(approximately 400 million p

109、ounds)must come from new supplies,which may include expansions of existing mines,and new mines starting production.World Uranium Production and Consumption(Sources:World Nuclear Association and Cameco estimate*)115*107103172*174*177*020406080100120140160180200200620072008millions lbs U3O8Production

110、Consumption Uranium Demand Overall,nuclear power trends support moderately growing demand for uranium and conversion services in the next 10 years,with the potential for more rapid growth thereafter.Cameco estimates the world uranium consumption totalled about 172 million pounds in 2008,similar to 2

111、007.In 2009,we expect world uranium demand to increase to about 181 million pounds.We estimate annual world uranium consumption will reach 226 million pounds in 2018,reflecting an annual growth rate of almost 3%.Growth in demand could be tempered as uranium price increases encourage utilities to uti

112、lize more enrichment services and less uranium.Uranium demand is affected by the enrichment process,which is one of the steps in making most nuclear fuel.Utilities choose the amount of uranium and enrichment services they will use depending on the price of each.Utilities may to some extent substitut

113、e enrichment for uranium,thereby decreasing the demand for uranium and increasing the demand for enrichment.For example,when uranium prices rise,utilities tend to use more enrichment,assuming enrichment prices remain constant.If enrichment prices increase,utilities would likely use less enrichment a

114、nd more uranium.The tails assay(percentage of U-235 left in the waste stream after processing)is an indication of the mix of uranium and enrichment used.At different prices for uranium,conversion and enrichment services there is a combination that minimizes the fuel cost,which is called the optimal

115、tails assay.The lower the tails assay,the less uranium is being used.At December 31,2008,the uranium price had increased in excess of 250%since December 31,2003.Over the same period,enrichment prices had increased by only 47%.Thus,utilities,where permitted,are choosing lower tails assay under their

116、enrichment contracts,using less uranium and more enrichment services.8Based on current demand,a 0.01%decrease in tails assay would decrease uranium requirements by 2%,or about 3 million pounds of uranium per year,and increase the demand for enrichment services by 2%.It is important to note that ther

117、e is a limit to the enrichment capacity that is currently available.In addition,enrichment contracts generally limit the ability to substitute enrichment for uranium.In the past,enrichers offered a wide range of tails assay,much like volume flexibilities on uranium contracts.Currently,enrichers are

118、offering tails assays ranging from 0.25%to 0.30%,thus,over time,as old enrichment contracts expire,we expect that the average tails assay will move to this range.Uranium Supply World uranium supply comes from primary mine production and a number of secondary sources.Mine Production We estimate world

119、 mine production in 2008 was about 115 million pounds U3O8,up 7%from 107 million pounds in 2007.We expect world production to total in the range of 125 to 130 million pounds in 2009.However,production targets are not always easily achievable.We expect that,with higher uranium prices,new mines will c

120、ontinue to start up,but the lead time before they enter commercial production may be lengthy,often up to 10 years,depending on the region.As a result,primary supply will be less than world consumption in the near-term.The level of increase in primary mine production is dependent on a number of facto

121、rs,including:the strength of uranium prices,the efficiency of regulatory regimes in various regions,the quality and size of the mineral reserves,the availability and sufficiency of required infrastructure and skilled workforce,currency exchange rates in producer countries compared to the US dollar,p

122、rices for other mineral commodities produced in association with uranium(i.e.byproducts or co-products),and the availability of financing for exploration and mine development.2008 World Uranium Production by Country(Cameco estimate)Canada21%Australia19%Kazakhstan19%Namibia10%Russia8%Niger7%Uzbekista

123、n5%Other7%US4%9Secondary Sources Secondary sources of supply consist of surplus US,Russian and other military materials,excess commercial inventory and recycled products.Recycled products include reprocessed uranium,mixed oxide fuel and re-enriched tails material.Some utilities use reprocessed urani

124、um and mixed oxide fuel recovered from used reactor fuel.In recent years,another source of supply has been re-enriched depleted uranium tails generated using excess enrichment capacity.We estimate these recycled products will account for about 5%of world requirements over the next 10 years.With the

125、exception of recycled products,secondary supplies are finite.Currently,most recycled products are a high-cost fuel alternative and are used by utilities in only a few countries.One of the largest sources of secondary supply is the uranium derived from Russian highly enriched uranium(HEU).As a result

126、 of the 1993 HEU agreement between the US and Russia to reduce the number of nuclear weapons,additional supplies of uranium have been available to the market.Under the 20-year agreement,weapons-grade HEU is blended down in Russia to low enriched uranium capable of being used in western world nuclear

127、 power plants.We estimate that uranium derived from Russian HEU could meet about 6%of world consumption over the next 10 years based upon deliveries under the current Russian HEU commercial agreement.All deliveries are scheduled to be made by 2013,when the 1993 HEU agreement expires.In parallel,the

128、US has made some of its military inventories available to the market,although in quantities much smaller than those derived from the 1993 HEU agreement.We expect about 3%of world demand through 2018 will be met from this source.With respect to non-military excess inventories,we believe most of these

129、 have been consumed.In recent years,some utilities have been purchasing uranium to rebuild strategic inventories.Over the next 10 years,with new mines under development such as Cigar Lake and Inkai,this shortfall between consumption and production is expected to narrow slowly.The production response

130、 is expected to remain challenged,while demand is expected to continue growing due to better reactor operations,reactor uprates,life extensions and the construction of new units.There are a number of potential new mines and planned mine expansions that are expected to help meet this shortfall,but th

131、e timing and production rates are uncertain.Uranium production in 2008 met about 67%of global uranium requirements.Secondary supplies(such as recycling and blended down HEU)continue to bridge the gap and this is expected to continue in the near future.Uranium Markets Utilities secure a substantial p

132、ercentage of their uranium requirements by entering into long-term contracts with uranium suppliers.These contracts usually provide for deliveries to begin two to four years after contracts are finalized.In awarding contracts,utilities consider the commercial terms offered,including price,and the pr

133、oducers record of performance and uranium mineral reserves.There are a number of pricing formulas,including fixed prices adjusted by inflation indices and market referenced prices(spot and/or long-term indicators).Many contracts also contain floor prices,ceiling prices and other negotiated provision

134、s that affect the amount ultimately paid.Utilities acquire the remainder of their uranium requirements through spot purchases from producers and traders.Spot market purchases are those that call for delivery within one year.Traders and investors or investment funds are active in the market and gener

135、ally source their uranium from organizations holding excess inventory,including utilities,producers and governments.Uranium Spot Market The industry average spot price(TradeTech and Ux Consulting(UxC)on December 31,2008,was$52.50(US)per pound U3O8,a 41%decrease from the December 31,2007,price of$89.

136、50(US).Spot market volume in 2008 more than doubled to about 43 million pounds U3O8 from 20 million pounds U3O8 in 2007.The 2008 volume exceeded the previous high of 42 million pounds recorded in 1995.Historically,the volumes traded in the spot market have ranged from about 10%to 15%of annual consum

137、ption.The main spot sellers in 2008 were traders and financial players.The financial players liquidated volumes late in the year as a result of the world financial turmoil.As a result of the lower spot price in 2008 relative to 2007,utilities returned to the spot market and represented slightly less

138、 than half of all spot purchases.Since the utilities average inventory levels have increased over the last several years and financial restraint is likely,we expect more price volatility in 2009.10Spot and Long-term Uranium Contract Volumes(Sources:Ux and Cameco)3520432002501300501001502002503002006

139、20072008millions lbs U3O8Spot Market(Ux)Long-term Market(Cameco estimate)Long-Term Uranium Market The industry average long-term price(TradeTech and UxC)on December 31,2008,was$70.00(US)per pound U3O8,down 26%from$95.00(US)at December 31,2007.We estimate long-term contracting in 2008 to have been ab

140、out 130 million pounds U3O8,approximately half the volumes contracted in 2007,but still above the annual average levels prior to 2005.The increased volatility in the spot market,the large differential between spot and term market prices,as well as the fact that most utilities are well covered for th

141、e next several years contributed to the lower contracting level when compared to 2007.We estimate the 2009 long-term contracting volume will be comparable or lower than the 2008 level,but this is highly dependent upon supply developments,market expectations and market prices.THE FUEL SERVICES INDUST

142、RY Our activities in the fuel services industry include participation in uranium refining,conversion and fuel manufacturing.The industry practice for measuring conversion services is kilograms of uranium(kgU)rather than pounds of U3O8.For example,66 million kgU is equivalent to about 172 million pou

143、nds of U3O8.The following sections discuss the conversion services market only,as information on the other segments of the fuel services industry is not publicly available.Conversion Services Demand World demand for UF6 and natural UO2 conversion services was estimated to be about 66 million kgU in

144、2008.Western world demand accounted for about 58 million kgU,with the remaining 8 million kgU coming from the non-western world(Russia,China and eastern Europe).11Over the next 10 years,world demand is expected to increase by 32%to about 87 million kgU.In 2009,total world conversion services demand

145、is expected to increase by 5%.Conversion Services Supply The western world UF6 conversion industry consists of Cameco and three other significant producers,with an annual nameplate conversion capacity of about 51 million kgU.In 2005,Cameco signed a toll-conversion agreement to acquire UF6 conversion

146、 services from one of these other converters,SFL in Lancashire,United Kingdom.Under the 10-year agreement,SFL will annually convert a base quantity of up to 5 million kgU to UF6 for Cameco.Camecos Canadian UF6 plant capacity,coupled with our toll-conversion capacity with SFL,accounts for about 35%of

147、 the western world UF6 nameplate conversion capacity.In addition,supplies are available from secondary sources,including excess western inventories,Russian sales in the form of low enriched uranium,Russian re-enriched depleted tails,and Russian and US uranium derived from dismantling nuclear weapons

148、.Russia supplies most of the UF6 conversion requirements of the former Soviet Union and eastern Europe in the form of low enriched uranium.Conversion Services Markets Utilities contract a substantial percentage of their UF6 conversion services through long-term contracts,purchasing the remainder on

149、the spot market.Cameco is the only commercial supplier in the world of conversion for natural UO2 customers.In addition to the Canadian requirements,Cameco also exports UO2 to South Korea for its Candu reactors and to the US and Japan for use as blanket fuel in boiling water reactors.Cameco also sel

150、ls conversion services packaged with U3O8 as a UF6 or UO2 product.Spot/Long-Term UF6 Conversion Market In 2008,spot market prices decreased for North American UF6 conversion services and for European UF6 conversion services year-over-year.Outlined below are the industry average spot market prices(Tr

151、adeTech and UxC)for North American and European UF6 conversion services as at the dates specified.Dec 31/08 Dec 31/07%Change Average spot market price($US/kgU)North America Europe 8.50 9.75 8.75 10.25 (3)(5)Outlined in the following table are the industry average long-term prices(TradeTech and UxC)f

152、or North American and European conversion services as at the dates specified.The industry does not publish spot or long-term UO2 prices.Dec 31/08 Dec 31/07%Change Average long-term price($US/kgU)North America Europe 12.25 13.38 12.25 13.00 -3 3.0 OUR KEY PERFORMANCE DRIVERS,BUSINESS STRATEGIES AND C

153、APABILITIES TO DELIVER RESULTS OUR URANIUM BUSINESS Key Performance Drivers The major factors that drive Camecos uranium business results are:prices spot and long-term,volume sales,production and purchases,costs production and purchases,and the exchange rate between the US and Canadian dollars.12Pri

154、ces Spot/Long-Term Background While Cameco has historically not sold significant quantities in the spot market,Cameco occasionally buys and sells spot material to take advantage of trading opportunities.Cameco generally targets a 60/40 mix of market-related and base(or fixed-price)escalated pricing.

155、Recent contracting activity has resulted in a higher ratio of market-related contracts and currently our portfolio is 65/35 market-related and base escalated pricing.Uranium market price indicators are quoted by the industry in US dollars per pound U3O8.Uranium contract terms generally reflect marke

156、t conditions at the time the contract is negotiated.Historically,after a contract negotiation was completed,deliveries under that contract typically did not begin for two to four years.For example,a contract that was signed in 2003,when the spot price averaged less than$12.00(US),could have started

157、deliveries in 2005 and have deliveries through 2010.Typically these older contracts would protect the buyer with a price ceiling.Many of the contracts in our current portfolio reflect market conditions when uranium prices were significantly lower.As a result,Camecos average realized price for uraniu

158、m sales in 2008 was$39.52(US)per pound of uranium compared to an average spot price of$61.58(US)and average long-term price of$82.50(US).Our average realized selling price rose by 5%over 2007.For more information on Camecos contracting strategy,see the section titled“Uranium Strategies”in this MD&A.

159、Volume Sales,Production and Purchases Sales Volume In 2008,Cameco reported sales of 34.1 million pounds of uranium,representing a 13%increase from 2007 sales of 30.2 million pounds.The higher reported volumes were the result of accounting adjustments related to the termination of product loan agreem

160、ents,higher spot sales and shifting customer requirements.Cameco sells more uranium than it produces from its mines and meets its contractual delivery commitments through a combination of mine production,long-term purchase arrangements,spot purchases and inventory.Sales of the companys uranium are r

161、outinely denominated in US dollars,while production costs are largely denominated in Canadian dollars.A discussion about Camecos currency hedging program can be found under the heading“Foreign Exchange”in this MD&A.Production Volumes URANIUM OPERATIONS Camecos share of production (million lbs U3O8)2

162、009 Planned1 2008 Actual McArthur River/Key Lake 13.1 11.6 Rabbit Lake 3.6 3.6 Smith Ranch Highland 1.8 1.2 Crow Butte 0.7 0.6 Inkai2 0.9 0.3 Total 20.1 17.3 1 See the section titled“Camecos Uranium Supply Outlook”in this MD&A for more information about assumptions and risk factors associated with t

163、his production forecast.2 Inkais 2008 production is not considered commercial.Inkai is expected to reach commercial production in 2009.13MCARTHUR RIVER/KEY LAKE(ownership interest 70%/83%)Camecos 70%share of production of U3O8 at McArthur River/Key Lake in Saskatchewan was 11.6 million pounds for 20

164、08,0.4 million pounds less than our previous estimate of 12.0 million pounds.The production shortfall resulted from various process and equipment problems experienced at Key Lake.The problems encountered were corrected and Camecos share of production for 2009 is expected to be 13.1 million pounds.In

165、 2008,Cameco successfully renewed Canadian Nuclear Safety Commission(CNSC)facility operating licences for McArthur River and Key Lake for five-year terms that expire on October 31,2013.Saskatchewan Ministry of Environment(SMOE)five-year operating permits expire October 31,2009 for McArthur River and

166、 November 30,2009 for Key Lake.In 2009,we intend to apply to renew the SMOE permits.Cameco plans to increase the annual production licence capacity at the McArthur River/Key Lake operations to 22 million pounds from 18.7 million pounds.As the first step,in November 2004,we submitted an environmental

167、 assessment for an increase in the annual licensed capacity.The environmental assessment was delayed due to discussions with the regulator regarding how to deal with the local accumulation of molybdenum and selenium in the Key Lake mill downstream environment.We expect that reducing the current leve

168、l of these metals in our effluent will help advance the environmental assessment.Cameco has developed an action plan to modify the effluent treatment process to reduce concentrations of molybdenum and selenium discharged to the environment.The CNSC facility operating licence includes a condition for

169、 the Key Lake mill to implement this action plan.Pursuant to this action plan Cameco has been proceeding to modify the mill effluent treatment process in order to reduce molybdenum and selenium levels to very low concentrations.The project,originally planned to be complete in the first part of 2008,

170、experienced difficulties in commissioning that have subsequently required further project changes.We now expect this project to be completed and the new process changes optimized in the first half of 2009.Cameco will update the CNSC in April 2009 with respect to the indicative performance of the mol

171、ybdenum and selenium removal circuit.Depending on the relative success of this project in reducing molybdenum and selenium concentrations in the Key Lake mill effluent,further work identified in the action plan referred to in the licence condition may or may not be required.In addition to obtaining

172、approval for the environmental assessment(which has to be resubmitted at the appropriate time)and licence approval to operate at higher production levels,we need to move to new mining areas at McArthur River and to implement various mill process modifications at Key Lake in order to sustain increase

173、d production levels.Mine planning,development and freezehole drilling for the McArthur River mining area transition are ongoing and only after this transition is complete can we fully assess the production rate capacity of the new mining areas.A significant milestone was achieved at McArthur River d

174、uring the fourth quarter of 2008.The brine distribution system in zone 2,panel 5 was activated and formation of the new freezewall is in progress.By mid-2009,the ground should be sufficiently frozen to begin developing the raisebore chamber.We intend to produce over 85 million pounds of U3O8 from th

175、is area,and initial production is anticipated in the latter part of 2009.Development work in lower zone 4 also progressed in 2008.This area is classified as higher risk development and we have adjusted our development and production schedules to recognize and mitigate these risks.In 2009,development

176、 of this zone will continue and freeze hole drilling is expected to take place.Production is now scheduled for 2010.During the fourth quarter of 2008,access was successfully re-established along the previously backfilled zone 2,panel 3 freezewall on the 530 metre level.This mining area will be used

177、to extend the life of panel 3 and is part of the revised production plan for 2009 to address the rescheduling of production from lower zone 4.A revitalization assessment of the Key Lake mill was completed in the first part of 2008.Subsequently,engineering commenced and further assessment of alternat

178、ive options began.The Key Lake revitalization plan includes upgrading circuits with new technology for simplified operation,increased production capacity and improved environmental performance.The engineering and project planning for replacement of the acid and oxygen plants was further advanced.Con

179、struction of these replacement plants is planned to start in 2009,subject to regulatory approvals.14If approval for the increased production limit is received,annual production is expected to range between current planned production of 18.7 million pounds and 20 million pounds U3O8 until such time a

180、s revitalization is complete at Key Lake.Annual production levels after mill revitalization are expected to be largely dependent on mine production.As such,Cameco anticipates it will be a number of years before it can achieve a sustainable increased production rate at these operations.For more infor

181、mation about McArthur River/Key Lake,refer to the section titled“Uranium-Capability to Deliver Results”in this MD&A.Underground exploration drilling and development at McArthur River continued in 2008.Activity for 2009 will focus on evaluation of mineral resources,mainly to the south of the mine.In

182、2008,we concluded mineral resources to the south of the mine have greater near-term development potential for future mining due to established infrastructure and were made a higher priority exploration target.Mineral resources to the north of the mine are planned for further evaluation in either lat

183、e-2009 or 2010,depending on progress made south of the mine.Refer to the section titled“Uranium Exploration”in this MD&A for information on exploration programs near McArthur River.RABBIT LAKE(ownership interest 100%)Rabbit Lake achieved expected production of 3.6 million pounds U3O8 for 2008.Reduce

184、d mill head grade was addressed through increased tonnage.In 2008,we were successful in adding mineral reserves at Rabbit Lake,extending the expected mine life by one year,to 2013.From initial startup in 1975 to the end of 2008,Rabbit Lake has produced a total of approximately 175 million pounds.On

185、November 1,2008,we successfully renewed the Rabbit Lake CNSC facility operating licence and SMOE operating permit for five-year terms,expiring on October 31,2013.In early 2008,uranium in groundwater seepage was detected in an excavation for a new effluent treatment circuit adjacent to the Rabbit Lak

186、e mill.Subsequent to investigation,concrete repairs and restoration of various containment areas in the mill were carried out.The investigation determined that the uranium in groundwater seepage was localized to the immediate vicinity of the mill where it was detected,and that the nearby Rabbit Lake

187、 in-pit tailings management facility(RLITMF)afforded regional control as groundwater near the mill flows to the RLITMF.At Rabbit Lake substantial work has been carried out to renew the mill and associated facilities.A full replacement of the mill-distributed control system was completed in 2008.Sele

188、cted plant equipment and process vessel replacement is ongoing.Extensive projects to reduce mill effluent concentrations of uranium(completed in 2006)and molybdenum and selenium(scheduled to be completed in 2009)are expected to meet current regulatory requirements.A milestone for the future of Rabbi

189、t Lake was regulatory approval of the Rabbit Lake solution processing project environmental assessment in the summer of 2008.This will allow for extension of the operation of the Rabbit Lake mill,allowing it to process uranium solution from Cigar Lake.This environmental assessment included expansion

190、 of the RLITMF.In September,the expansion of the RLITMF was initiated and completion is planned in the second quarter of 2009.In addition to sufficient capacity to contain all the tailings expected from future processing of Rabbit Lakes share of Cigar Lake uranium solution,we expect that the expande

191、d facility will have sufficient capacity to support continued mine and mill production from Eagle Point ore to 2013(based upon expected ore grades and milling rates).Refer to the section titled“Uranium Exploration”in this MD&A for information on exploration programs near Rabbit Lake.SMITH RANCH-HIGH

192、LAND AND CROW BUTTE(ownership interest 100%)Smith Ranch-Highland and Crow Butte in situ recovery(ISR)mines,located in Wyoming and Nebraska collectively produced 1.8 million pounds U3O8 in 2008,slightly below our previous target of 1.9 million pounds.In 2009,the two operations are expected to produce

193、 approximately 2.5 million pounds.15In 2008,Smith Ranch-Highland received regulatory approval for construction of an additional satellite facility(SR-2),which will extend the life of the Smith Ranch-Highland operation.The new SR-2 facility was started up in December 2008 and is expected to operate f

194、or about nine years.The operating environment in the US for Camecos ISR facilities has become more complex as a result of increased public interest and regulatory oversight.In 2008,Cameco reached a settlement agreement with the Wyoming Department of Environmental Quality(WDEQ)related to the Notice o

195、f Violation received in March 2008.Cameco Resources agreed to increase the level of bonding to$80 million(US)from$40.7 million(US)to guarantee financing of restoration and reclamation activity.The settlement allows Smith Ranch-Highland to apply for an increase in production after March 1,2009.The in

196、creasing complexity may have a negative impact on our ISR operations in the US,including on our plans to increase production.URANIUM PROJECTS CIGAR LAKE(ownership interest 50%)Site crews at Cigar Lake continue to make progress on the remediation plan following a rockfall that caused a flood of the u

197、nderground development in October 2006.Construction was about 60%complete at that time.The inflow area was successfully sealed and dewatering of the mine commenced in the summer of 2008.A new source of increased water inflow developed in the mine on August 12,2008,which caused remediation work to be

198、 suspended.We have confirmed that the main source of the increased water inflow observed on August 12,2008,is from a fissure located in the top of the tunnel on the 420 metre level.Cameco has developed a remediation plan to seal the tunnel.The plan includes remotely installing bulkheads on either si

199、de of the inflow location and then injecting concrete and grout into the tunnel and ultimately into the rock through holes drilled from surface.The equipment necessary to accomplish this has been mobilized and some initial work both on surface and on the 420 metre level has started.The work on the 4

200、20 metre level involves removal of pipes,doors,ventilation ducting,loose sand and other miscellaneous items.This is being done using submersible,remotely operated vehicles(ROVs)that are commercially available for this type of work.We estimate that sealing of the August 12,2008,inflow will take most

201、of 2009.Remediation of shaft 2 continues following a water inflow at the base of the shaft in April 2006.The water inflow resulted in flooding and cessation of activities in the shaft.The water inflow was limited to shaft 2 as it was not connected to the mine.The inflow sources have been sealed and

202、effectiveness of the seal demonstrated.During the fourth quarter,dewatering of shaft 2 commenced.The water level was pumped down to the 260 metre level and held there for several weeks.The inflow measured during this time was very low and stable,confirming that the sources of the inflow have been se

203、aled.In preparation for further lowering the water level,the installation of ventilation and water pumping infrastructure began in the shaft.It is anticipated that the removal of all water in the shaft will be complete in the second quarter of 2009.Cameco obtained an amended CNSC construction licenc

204、e for Cigar Lake in 2007,which expires December 31,2009.We will be applying to amend the licence to extend the term to allow for completion of the mine remediation work.In December 2008,Cameco submitted to the CNSC a project description for measures intended to effectively manage the increased quant

205、ities of water inflow that can potentially be experienced during the construction and operation of the Cigar Lake mine.The project involves modification of water handling and effluent treatment facilities and will require an environmental assessment under the provisions of the Canadian Environmental

206、 Assessment Act.Cameco has incurred$359 million in capital costs to develop Cigar Lake to the end of 2008.We no longer anticipate production startup in 2011 and are assessing the impact of the August inflow on the planned production date and capital cost estimate.We will provide new estimates after

207、the mine has been dewatered,the condition of the underground has been evaluated,and the resulting information has been incorporated in a new mining plan.In addition to capital costs,Camecos share of remediation expenses is now expected to total$92 million,of which$46 million has been expensed to the

208、 end of 2008.In 2009,Cameco expects to spend$21 million on remediation expenses for Cigar Lake.16INKAI(ownership interest 60%)Two areas are currently in production development(blocks 1 and 2)at the Inkai ISR project in Kazakhstan and there is one exploration area(block 3).In 2008,Camecos share of pr

209、oduction at Inkai was 0.3 million pounds U3O8.Production during the year was hampered by supply shortages,including sulphuric acid,compounded by a slower uranium dissolution rate at block 1 than was experienced in the test mine conducted in block 2.Work to accelerate the dissolution rate and increas

210、e the production rate in block 1 continued through the fourth quarter.At block 1,construction of a commercial processing facility is underway.During the fourth quarter of 2008,commissioning of the front half of the main processing plant was completed and the processing of solutions from block 1 was

211、initiated.We expect to complete construction and begin commissioning the facility in the first half of 2009.Construction of a satellite plant to process solution recovered from block 2 was also initiated in 2008 and was about 50%complete by the end of the year.Commissioning of this facility is antic

212、ipated in the second half of 2009.Once the facilities are commissioned,we expect to declare commercial production in 2009,subject to the availability of acid as noted below.During the third quarter of 2007,the availability of sulphuric acid required for ISR mining was restricted due to a fire at one

213、 sulphuric acid plant in Kazakhstan and delays in the startup of a new plant.As a result,Inkai and other ISR operations in Kazakhstan were subject to reduced acid allotments.This shortage continued throughout 2008.At the very end of the year additional supplies became available from both inside and

214、outside the country.With this additional supply the project is currently receiving an adequate supply to acidify the wellfields in preparation for commercial production in 2009.Production from blocks 1 and 2 is expected to total 5.2 million pounds(Camecos share is 60%or 3.1 million pounds)per year b

215、y 2012,subject to availability of sulphuric acid and regulatory approval.However,a non-binding memorandum of understanding(MOU)signed between Cameco and Kazatomprom(Camecos state owned joint venture partner)in May 2007 targets the doubling of future production capacity from the Inkai uranium deposit

216、,raising the total annual production capacity to 10.4 million pounds on a timeframe yet to be confirmed.While the existing project ownership would not change,Camecos share of the additional capacity under the MOU would be 50%,raising Camecos expected share of the future annual production at Inkai to

217、 5.7 million pounds if the 10.4 million pound production target is achieved.The production increase was approved by both partners at an Inkai board meeting in July 2008.A binding agreement to finalize the terms of the MOU and various government approvals will be required to implement this production

218、 increase.This MOU also contemplates studying the feasibility of constructing a uranium conversion facility as well as considering other collaborations in uranium conversion.For more information,refer to the section titled“Fuel Services Business Key Performance Drivers Production Volume”in this MD&A

219、.The total cost to bring Inkai to commercial production(100%basis)is now projected to be about$271 million(US).The development expenditures for Inkai in 2009 are expected to total about$13 million(US).The production obtained from the Inkai mine is being sold and proceeds from the sales are being use

220、d to fund the construction and operation of the project.Including the recoveries related to these sales,the net cost of development at Inkai is expected to be about$128 million(US).Cameco provides funding to Inkai for project development.In September 2008,we increased our loan facility to Inkai from

221、$250 million(US)to$300 million(US).As of December 31,2008,$226 million(US)was outstanding on the loan with accrued interest of$31 million(US).Of the cash available for distribution each year,80%is used to repay the loan until it is repaid in full.In 2008,Inkai received an initial approval for the mi

222、ning licence for block 2 to replace its exploration licence.Final approval is subject to completion of an amendment to the Resource Use Contract.The mining licence for block 1 expires in 2024 and the mining licence for block 2,if granted,will expire in 2030.In addition,Inkai applied for and received

223、 an initial approval for a two-year extension of its exploration licence for block 3.The final approval is subject to completion of an amendment to the Resource Use Contract.Under Kazakh law,in order for a further extension of the licence to be obtained,there must be a commercial discovery.In 2009,I

224、nkai plans to spend$2.5 million(US)for exploration drilling at block 3.In our annual information form(AIF),we describe the Kazakh tax regime that applies for the purpose of determining the taxes and other governmental charges payable by Inkai.A new tax code became law on January 1,2009.Inkai has rec

225、eived a letter from the Ministry of Energy and Mineral Resources(MEMR)requiring that Inkai amend the existing Resource Use Contract to reflect the new tax regime despite the fact that Inkais Resource Use Contract contains provisions stabilizing the tax regime that 17was in effect at the date the con

226、tract was signed(2000).We are in discussions with the MEMR over this matter and are assessing the impact of the new tax code,including on the tax stabilization provisions of the Resource Use Contract,pending the issuance of the detailed calculation of the applicable taxes.Obtaining necessary ongoing

227、 government approvals and amendments to the Resource Use Contract may be dependent on Inkais acceptance of the new tax regime.In our AIF,we also describe the Kazakh Subsoil Law,which defines the framework and procedures connected with the granting of subsoil rights,and the regulation of activities o

228、f subsoil users,which applies to Inkai.The Kazakh Parliament is considering a draft of a new Subsoil Law.It is contemplated that this new Subsoil Law will enter into force six months after its adoption by parliament and signature by the president.The new Subsoil Law introduces significant changes in

229、 terms of the regulation of the activities of subsoil users,including the abolition of the existing stabilization regime for all subsoil users,except for those operating under product sharing agreements and subsoil use contracts approved by the Kazakh President.We do not know if the exemption descri

230、bed above will apply to Inkai,when the proposed legislation will be adopted or what will be contained in the final provisions of any new law.The most recent draft law provides that disputes among the subsoil user and the government are to be resolved through the courts in Kazakhstan and does not pro

231、vide for international arbitration,as is the case under the current Resource Use Contract.We are assessing the implications for Inkai,including the stabilization provisions of its Resource Use Contract.See the section titled“Camecos Uranium Supply Outlook”in this MD&A for more information about assu

232、mptions and risk factors associated with the forward-looking information regarding Inkai discussed above.Purchase Volumes Cameco also has purchase commitments for uranium products and services from various sources.Most of these purchase commitments are in the form of UF6.At the end of 2008,these pur

233、chase commitments totalled 39 million pounds uranium equivalent from 2009 to 2013.Of the total purchase commitments,36 million pounds(about 7 million pounds uranium equivalent annually to 2013)are from our agreement with Techsnabexport(Tenex)to purchase uranium from dismantled Russian weapons(the Ru

234、ssian HEU commercial agreement).In 2008,Cameco and its partners agreed with Tenex to a new pricing structure for the period 2011 to 2013,affecting approximately 7 million pounds during that time frame.The US government has approved the new pricing structure.We expect Russian government approval will

235、 be received in the first quarter of 2009.Camecos Uranium Supply Outlook An update for our near-term production outlook is provided in the table below.Camecos Share of Production(million pounds U3O8)Excluding Cigar Lake1 Current Forecast 2009 2010 2011 2012 2013 McArthur River/Key Lake2 13.1 13.1 13

236、.1 13.1 13.1 Rabbit Lake 3.6 3.6 3.6 2.8 1.7 US ISR3 2.5 2.4 2.6 3.1 3.7 Inkai4 0.9 2.3 3.1 3.1 3.1 Total*20.1 21.4 22.4 22.1 21.6*While a single estimate has been included for each year of the production outlook,actual production may differ significantly from these estimates as forecasting producti

237、on is inherently uncertain.1 A revised production forecast for Cigar Lake will be provided after the mine has been dewatered,the condition of the underground development has been assessed,and the findings incorporated in the new mine development and production plans.2 Cameco has applied to increase

238、its licensed capacity from 18.7 million pounds to 22 million pounds(Camecos share 70%),but is awaiting regulatory approval.Until approval has been received,the production forecast has assumed the current licensed capacity.(See discussion in“Uranium Operations”in this MD&A).3 Refers to Camecos Smith

239、Ranch-Highland and Crow Butte ISR operations in the US and other ISR development projects in the US.4 Inkai mineral reserves assume production at an annual rate of 5.2 million pounds of U3O8.Inkai currently has regulatory approval to produce at an annual rate of 2.6 million pounds and an application

240、 for regulatory approval to increase annual production to 5.2 million pounds was made in 2005.Cameco is familiar with the statutory,regulatory and procedural framework governing new mining projects in Kazakhstan and,based upon its experience to date,Cameco believes that it is reasonably likely that

241、all permits and approvals required for the construction and operation of its new ISR mine at Inkai including approvals for increased annual production to 5.2 million pounds will be obtained.However,there can be no certainty that permits or approvals will be forthcoming.18The current uranium producti

242、on and HEU purchase forecast noted above for the company are forward-looking information.This forward-looking information is based upon the key assumptions and subject to the material risks that could cause results to differ materially,and which are discussed under the heading“Caution Regarding Forw

243、ard-Looking Information and Statements”.In particular,we have assumed that:the companys forecast production for each operation is achieved;the companys schedule for the development and rampup of production from Inkai is achieved,which requires,among other things,resolution of the issues surrounding

244、acid availability required for mining;the successful transition to new mining areas at McArthur River beginning in 2009;the company is able to obtain or maintain the necessary permits and approvals from government authorities(other than the approval necessary to increase capacity at McArthur River/K

245、ey Lake referred to in note 2 above)to achieve the forecast production;there is no disruption in production due to natural phenomena,labour disputes,political risks or other development and operation risks;and the HEU supplier complies with its delivery commitments.Material risks that could cause ac

246、tual results to differ materially include our inability to achieve forecast production levels for each operation;our development and rampup of production from Inkai does not proceed as anticipated;the transition to new mining areas at McArthur River is not successful;the inability to obtain or maint

247、ain necessary permits or government approvals;and a disruption or reduction in production or the failure of the HEU supplier to comply with its delivery commitments.No assurance can be given that the indicated quantities will be produced or purchased.Expected future production estimates are inherent

248、ly uncertain,particularly in the later years of the forecast,and could materially change over time.Costs Camecos cost of supply is influenced by its mix of produced mine material and uranium purchases.Production costs at our Saskatchewan uranium mines,our largest source of production,are primarily f

249、ixed,with about 33%attributable to labour.The largest variable operating cost is production supplies,which includes items such as propane,diesel and lime and accounts for about 29%.Another large component of production costs is contracted services,which was 29%of the total for 2008.Contracted servic

250、es include items such as mining,maintenance,air charters,security and ground freight.These three components(labour,production supplies and contracted services)make up 91%of the production costs at our Saskatchewan uranium mines.Uranium mine production costs are driven mostly by the complexity of the

251、 operation.Unit costs of production are driven primarily by the grade and volume of material mined.McArthur River is the worlds largest,high-grade uranium mine.At about 100 times the world average,its grade averages 21%U3O8,which means it can produce more than 18 million pounds per year by extractin

252、g only 100 to 120 tonnes of high-grade ore per day.While Rabbit Lakes average grade of around 1%U3O8 is much lower,it compares favourably to other operating mines in the world where grades are generally below 0.5%.ISR extraction methods can make even lower grade mineralization commercially attractiv

253、e.Worldwide,ISR mines typically recover uranium from orebodies with an average grade in the range of 0.1%U3O8.Camecos cost of supply is influenced only modestly by the two US ISR operations.In 2008,US ISR production accounted for about 11%of the companys primary output.Purchased product also affects

254、 Camecos cost of supply.Most of Camecos purchase commitments are under long-term,fixed-price arrangements reflecting prices significantly lower than the current published spot and long-term prices.These purchase commitments totalled almost$623 million(US)at December 31,2008.Refer to note 24 in the f

255、inancial statements.A significant portion of these purchased pounds will be delivered into existing sales contracts.Uranium Strategies Camecos overall objective is to leverage our competitive advantage in uranium.In doing so,we strive to meet four major goals:remain one of the low-cost producers,exp

256、and our market position,increase supply flexibility,and maximize realized prices over time.19There are a number of key strategies the company uses to achieve these goals.We strive to maintain our low-cost position by adding economically attractive mineral reserves and improving our margins.We look t

257、o expand our low-cost mineral reserves through acquisition,exploration around existing operations and identifying geological regions that will provide the next tier of low-cost production.We work to improve our margins by optimizing production to yield the highest rate of return possible,gaining cos

258、t efficiencies through quality and business process improvements,and pursuing fundamental productivity gains through technological development.We seek to grow our market position by acquisition,accelerating production from existing operations,and participating in new uranium opportunities at explora

259、tion and development stages.To increase our supply flexibility,we are building a geographically diverse production base.This includes accelerating production at Inkai,which is expected to achieve commercial production in 2009,working to bring Cigar Lake into production,and continuing to pursue a glo

260、bal exploration program.Our program seeks to identify the most prospective regions and maximize options to access and/or control land positions for future business advantage.To ensure we have adequate production,we look to identify the optimal resource mix(i.e.different types of deposits such as unc

261、onformity versus ISR),and replace mineral reserves through exploration and acquisition.To grow our market position,we build on our customer relationships and expand the range of services available to customers while maintaining the companys reputation as a reliable supplier.In addition,we maintain p

262、articipation in secondary supplies,including enhancing our relationship with Russia,influencing the timing of sales of secondary supplies to the market,and using market intelligence to achieve early notice of new supply sources.A key element for maximizing our realized price is our contracting strat

263、egy,which is influenced by the supply and demand outlook for uranium.Since mid-2003,the supply side of the industry has experienced significant impacts that caused uranium prices to rise rapidly.This upward trend has been due,in large part,to the realization by market participants that excess second

264、ary supplies will not contribute as much to future uranium supply as they had previously expected.Consequently,a greater volume of new primary mine production will be needed.The rise in prices has triggered predictable supply side responses.The most notable are the increase in companies exploring fo

265、r new uranium deposits,the construction of new mines and the proposed expansion of existing ones.However,this is a recent phenomenon.Given the low prices of the last two decades,very little exploration was undertaken on a global basis,and relatively little investment was made in advancing new uraniu

266、m projects.Producers were operating at close to full capacity to minimize unit costs.Undeveloped deposits,identified in previous exploration cycles,were mostly uneconomic or located in jurisdictions with political challenges.With higher prices,existing projects are being expanded and newly discovere

267、d deposits will be developed,but the lead time for commercial production may be lengthy depending on the region,especially because of the current worldwide economic downturn.Due to the difficulty in raising capital in the current market environment,the volatility of the uranium spot price and the ri

268、se in mining costs,several uranium mining companies have announced the temporary shutdown of mines,delay in project startup or a reduction in planned production.Consequently,the primary supply industry will be challenged to significantly increase supply in the near-term.Future market prices will dep

269、end on a number of supply and demand factors,the more notable ones being:additional production from the successful expansion of existing mines,startup of mines currently under construction and development of known deposits,the success of exploration programs in identifying new commercial uranium dep

270、osits that can be developed in a reasonable period of time,the exchange rate in various producer country currencies relative to the US dollar,the timing and extent of expansion of uranium produced as a byproduct or co-product of other commodities,particularly in Australia and South Africa,availabili

271、ty of existing and possible new secondary materials,such as blended down uranium from military stock,including dismantled weapons,the manner in which investment funds liquidate their holdings,ultimate sales by the US DOE,20 the extent enrichment services are substituted for natural uranium feed,the

272、growth rate of nuclear power,and inventory policies of market participants.Given the uncertainty surrounding the foregoing supply/demand factors and the impact on price,we believe it is appropriate to continue to target a mix of market-related and fixed-price mechanisms.Our contracting objective is

273、to secure a solid base of earnings and cash flow to allow us to maintain our core asset base and pursue growth opportunities over the long term.Our contracting strategy focuses on reducing the volatility in our future earnings and cash flow,while providing both protection against decreases in market

274、 price and retention of exposure to future market price increases.This is a balanced approach,which we believe delivers the best value to our shareholders over the long term.The overall strategy will continue to focus on achieving longer contract terms of up to 10 years or more,floor prices that pro

275、vide downside protection,and retaining an appropriate level of upside potential.In general,most new offers include price mechanisms with both market-related and fixed components.The fixed-price component generally is equal to the industry long-term price indicator at the time of offer and is adjuste

276、d by inflation.The market-related component references either the spot price or the long-term price in effect near the time of delivery.The market-related component may include a floor price(escalated by inflation),and while the level of floor prices secured will depend on the prevailing market pric

277、es at the time of signing,recently,they have been in the mid-$40(US)range.Utilities are increasingly unwilling to accept unlimited upside price risk and as a result some recent awards have contained ceiling prices in excess of$100(US).Today,Cameco is heavily committed under long-term contracts,and t

278、herefore has become increasingly selective in adding additional commitments.In the current volatile market environment and recent history of increasing uranium prices,this strategy has allowed Cameco to add increasingly favourable contracts to its portfolio while maintaining sensitivity to future pr

279、ice movements.Cameco has a variety of supply sources,including primary production,firm commitments for long-term purchases,inventories of about six months forward sales and uranium from opportunistic purchases in the spot market.Given our multiple sources of supply,Cameco generally includes supply i

280、nterruption language in our contracts.This language provides Cameco with the right to reduce,defer or cancel volumes on a pro-rata basis if we experience a shortfall in planned production or deliveries of purchases under the highly enriched uranium agreement.Today,in addition to standard force majeu

281、re language,new contracts generally include this supply interruption language.In 2009,for those contracts that are impacted by supply interruption language,we generally plan to defer a portion of deliveries for a five to seven-year period.Contract specific decisions are made in consultation with eac

282、h of our customers.In 2008,no deliveries were deferred as a result of the supply interruption provisions in our contracts.In addition,the baseload contracts put in place to support the development of Cigar Lake contain provisions which allow Cameco to reduce,defer or terminate deliveries in the even

283、t of any delay or shortfall in Cigar Lake production.Cameco continues to discuss with its customers the possible effect of the uranium production delay at Cigar Lake.For the Cigar Lake baseload contracts with deliveries in 2009 and 2010,these volumes(as well as 2007 and 2008 delivery volumes)have be

284、en deferred to the end of the respective contracts.Uranium-Capability to Deliver Results Cameco will continue to enhance its capabilities in a number of areas to execute our strategies and deliver on our goals to remain one of the low-cost producers,protect and expand our market position and increas

285、e supply flexibility.We will seek to achieve these goals by:transitioning successfully from current mining areas to new ones,advancing other mining methods and technologies,ensuring availability of critical production supplies,proceeding with revitalization plans for our milling operations,obtaining

286、 timely regulatory approvals,21 securing sufficient human resources to replace an aging workforce,including ensuring the availability of skilled tradespeople,ensuring capital is readily available over the longer term to support our expansion plans,allocating adequate resources to exploration,and eva

287、luating and acting upon opportunities that we expect to add value.Transition to New Mining Areas Underground drilling at McArthur River has delineated four mineralized zones with mineral reserves(zones 1 to 4).Since mine startup in 2000,only zone 2 has been mined.Zone 2 is divided into four panels(p

288、anels 1,2,3 and 5).The McArthur River mine schematic above illustrates the location of six mineralized zones.The four described above and mineralized zones A and B,which are drilled from surface only and are currently categorized as inferred mineral resources.As extraction of zone 2(panels 1,2 and 3

289、)progresses,we expect to place lower zone 1,zone 2,panel 5 and the lower mining area of zone 4 into production in stages between 2009 and late-2010.We plan to continue using the current raiseboring method to extract ore in these zones.Freeze drilling and raisebore access for lower zone 1 have been d

290、eveloped on the 530 metre level.As a precautionary measure,the 560 metre level extraction chamber development will not be initiated until the production freezewall has been established.Freeze drilling for lower zone 1 is scheduled to begin in the second quarter of 2009.At zone 2,panel 5,the brine sy

291、stem to form the new freeze wall was activated in the fourth quarter of 2008.Approximately six months of freeze time are required before the raisebore chamber can be safely developed.For more information,refer to the section titled“Uranium Operations McArthur River/Key Lake”in this MD&A.In November

292、2008,the lower extraction area for lower zone 4 development on the 590 metre level encountered a small inflow of water that was quickly captured and controlled.This area was considered low-risk development which is defined as having an inflow potential of less than 100 cubic metres per hour or an or

293、der of magnitude below our pump and treat capacity.The inflow has not caused Cameco to alter any planned mining in this area.However,full grouting of the inflow area is required before development in the area resumes.22Mining Methods Currently,McArthur River uses raiseboring to extract ore from the

294、mine.As we expected from the start of mining,other mining methods will be used to maintain or expand production.In 2005,we determined that the boxhole boring method would be better suited for the upper zone 4 at McArthur River because it would allow development from a preferred location.Production f

295、rom upper zone 4 is scheduled to begin in 2013.Cameco plans to develop and test the boxhole boring method over the next four years.In 2006,we placed an order for a boxhole borer for delivery in the first half of 2008,and in 2007 we completed the mine plan for the boxhole boring test area.The first t

296、est raise was setup at the end of 2008 and pilot hole drilling commenced in January 2009.Three raises in waste are planned for 2009 as is completion of freeze drilling for a boxhole boring ore extraction test area.We expect to install the brine distribution system for this area in 2009 as part of th

297、e plan for test raise excavation in 2010.At Cigar Lake,we plan to use the jet boring method,which has been examined through test mining programs.Overall,the test mine programs were considered highly successful with all initial objectives fulfilled.However,as the jet boring mining method is new to th

298、e uranium mining industry,the potential for technical challenges exists.We expect we will be able to solve the challenges that may arise during the initial rampup period.Availability of Supplies Our production is dependent upon the availability of certain critical supplies.For example,at Inkai,produ

299、ction is dependent on an adequate supply of sulphuric acid.We are examining our entire supply chain to reduce vulnerability to shortages in any of our critical supplies.Revitalization of Mills The Key Lake and Rabbit Lake mills commenced operations in 1983 and 1975 respectively.We plan to renew both

300、 these mills to help maintain our uranium production capability.A revitalization assessment for the Key Lake mill was completed in the first part of 2008.For more information,refer to the section titled“Uranium Operations McArthur River/Key Lake”in this MD&A.At Rabbit Lake substantial work has been

301、carried out to renew the mill and associated facilities.For more information,refer to the section titled“Uranium Operations Rabbit Lake”in this MD&A.Regulatory Approval Camecos growth plans depend on regulatory approvals such as environmental assessments,and obtaining construction and operating lice

302、nces in various jurisdictions,including Canada,Australia,Kazakhstan and the US.The timing for approvals can be impacted by various factors,such as the regulators assessment of current performance,the comprehensiveness of the documentation submitted to support the application,assessment of the signif

303、icance of any anticipated incremental impacts,the number of industry approval applications being assessed at any given time by the regulator,changing regulatory practices and other factors.Human Resources Camecos workforce reflects the national demographics where a significant number of the eligible

304、 workforce is nearing retirement age.Approximately 25%of the workforce at our Saskatchewan uranium mines was age 50 or older at December 31,2008.Camecos challenge is to compete for the limited number of people entering the workforce to replace retiring employees,as well as to retain our current trai

305、ned workforce and to adequately resource our growth plans.We have identified critical workforce segments and developed a long-term people strategy that includes workforce planning to meet this challenge.Ready Access to Capital Cameco has an ambitious plan to grow its uranium operations.Opportunities

306、 to invest are unpredictable and often capital intensive.In the current economic environment raising new funds is a challenge for most companies.However,we believe Camecos history of strong financial discipline will enable us to maintain financial flexibility and access additional funding to pursue

307、opportunities as they arise.We are prepared to go above our target level of 25%net debt to total capital to pursue attractive opportunities,but would then return to this benchmark over time.23Uranium Exploration A significant part of Camecos future production is expected to result from our global ex

308、ploration activities.We have maintained an active exploration program even during the bottom of the uranium price cycle,reflecting our long-term commitment to the industry.Over the past five years,we have significantly increased our investment in exploration programs.We invested about$57 million in

309、direct uranium exploration during 2008.An additional$32 million was invested in three strategic partnerships with junior exploration companies,complementing our own exploration program.We have skilled and experienced exploration staff with more than 100 professionals searching for the next generatio

310、n of economic deposits.Our landholdings are substantial,with approximately 5.2 million hectares(12.8 million acres)of Cameco and partner-operated land,primarily in Canada,Australia,Kazakhstan,the US,and Mongolia.Our activities include both brownfields and greenfields prospects and we monitor potenti

311、al acquisition targets.At year-end 2008,Cameco operated approximately 80%of our exploration projects,including joint ventures.The majority of Camecos exploration projects are early to middle stage,on which indications of economic grades or quantities of uranium have not yet been identified.The natur

312、e of mineral exploration is such that discovery of economic deposits on new projects is uncertain and can take many years.Exploration Acquisition/Merger Approach Camecos approach to future resource replacement is to combine its own exploration activities with partnerships,joint ventures,or equity ho

313、ldings in other companies with assets that meet the companys investment criteria.The recovery of the world uranium market,and corresponding higher prices for uranium particularly between 2004 and 2007,resulted in the creation of more than 400 uranium exploration companies listed on stock exchanges w

314、orldwide,with most of these companies actively funding new exploration programs in Canada and other regions.Cameco maintains an ongoing dialogue with numerous companies,with the objective of positioning the company for future participation in areas with promising results and leveraging Camecos posit

315、ion in the sustainable development of uranium resources worldwide.We will continue to use Camecos industry leadership position and specifically our exploration expertise to leverage investments as the partner of choice in the junior sector and with larger players.We also intend to create a portfolio

316、 of future options for Cameco through the structure of the strategic alliances we are developing,and with our high quality exploration and development projects.Our strategic alliances with junior exploration companies typically involve investments in publicly listed or private companies,which themse

317、lves hold exploration land in which Cameco wishes to participate.In return for these investments,Cameco typically obtains the right to own a majority in and develop a successful discovery,resulting from exploration on the junior companies lands.The lower uranium prices of 2008,and reduced availabili

318、ty of financing and credit worldwide,are expected to reduce the uranium expenditures of most junior uranium companies,potentially opening up new growth opportunities for Cameco.Junior Exploration Companies At December 31,2008,Cameco owned interests in the following junior exploration companies:Inves

319、tment Location of Assets Interest Dec.31,2008%UEX Corporation Athabasca Basin,SK 21.3 UNOR Inc.Nunavut,Canada 18.7 MINERGIA SAC Peru 25.0 Western Uranium Corporation Nevada,US and Nunavut 9.4 Cue Resources Ltd.Paraguay 10.9 GoviEx Uranium Inc.Niger 10.9 242008 Exploration Program Brownfield Explorat

320、ion Brownfield exploration refers to uranium exploration activity undertaken near existing operations and on advanced projects.In 2008,Cameco invested$13 million on our brownfield exploration program,all in Saskatchewan,with the largest programs being on McArthur River and Rabbit Lake.We continue dr

321、illing programs intended to add mineral resources at both operations,intending to extend their mine lives.The diamond drilling program evaluating the P2 trend north of the McArthur River mine continued in 2008.The P2 structure has now been tested at approximately 200-metre intervals for a distance o

322、f 4.3 kilometres north of the mine.Results continue to be encouraging and will require follow-up drilling.We have been successful at extending the mine life at Rabbit Lake by finding incremental mineral reserves.The underground drilling reserve replacement program has been extended to include drilli

323、ng throughout 2009.Surface drilling was undertaken both in support of the Eagle Point operation as well as to test more regional targets.Encouraging results were obtained east and north-east of the mine that will be tested in the first quarter of 2009.On the Dawn Lake project,the Tamarack deposit pr

324、ogram to define the deposit at 25-metre drill spacings is on target for completion in 2009.Pre-feasibility activities and an environmental baseline study were initiated in 2008 and will continue in 2009.At the Millennium deposit and surrounding area,drilling was completed targeting key sections of t

325、he deposit,and replacing some of the drill core destroyed by a forest fire in 2007.Feasibility work continued during the year with additional testing of two potential shaft pilot holes which were drilled in 2007.Preliminary results of the detailed 3-D seismic survey have been obtained,and will likel

326、y be valuable in identifying and mitigating problematic structures in the planned development area.Studies required to collect the necessary baseline data to support the preparation of the environmental impact statement were conducted through the year in support of the Millennium project.Work contin

327、ued on a slower pace on the feasibility study pending resolution of a number of issues including the impact and status of a Treaty Land Entitlement(TLE)claim filed by the English River First Nation on the lands overlaying the Millennium deposit,the availability of tailing storage space at Key Lake a

328、nd the structure of the Millennium project for the purposes of the environmental assessment process.The filing of the project description for the environmental assessment process was not done pending resolution of these issues.For more information on the TLE,refer to the section titled“Business Risk

329、s Aboriginal Title and Consultation Issues”in this MD&A.Regional Exploration During 2008,Camecos exploration investment on regional exploration programs,along with support costs,was about$44 million.Australia was the largest single region,followed by Saskatchewan,northern Canada and the rest of the

330、global program.Testing of regional targets on the Read Lake project has led to the discovery of a new zone of uranium mineralization intersected on a three hole fence drilled at Fox Lake located approximately nine kilometres west of the McArthur River mine.The uranium mineralization discovered to da

331、te is entirely located in the sandstone,between 90 and 150 metres above the unconformity.Exploration in 2009 will attempt to discover the unconformity or basement-hosted expression of this mineralization.Cameco has a 78.24%interest and is the project operator while AREVA holds the remaining interest

332、.In 2008,exploration activities were conducted on 65 projects worldwide including Nunavut,the Northwest Territories,Quebec,Northern Territory(Australia),Western Australia,South Australia and Mongolia.New Investments and Acquisitions in 2008 KINTYRE(WESTERN AUSTRALIA)In August,Cameco acquired a 70%in

333、terest in the Kintyre project located in Western Australia(WA).Development of this project is subject to state government approval and reaching an agreement with the traditional land owners.Mitsubishi Development Pty.owns the remaining 30%interest.25On November 17,2008,the government of WA officially lifted the state ban on uranium mining in WA,giving companies the ability to obtain exploration li