6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

Under the Securities Exchange Act of 1934

For the month of April, 2018

Cameco Corporation

(Commission file No. 1-14228)

2121-11th Street West

Saskatoon, Saskatchewan, Canada S7M 1J3

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ☐            Form 40-F  ☒

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

Exhibit Index
Exhibit No.	Description	Page No.
99.1	Notice of 2018 Annual Meeting of Shareholders
99.2	Cameco Corporation Management Proxy Circular
99.3	Cameco Corporation Proxy Form
99.4	Cameco Corporation 2017 Annual Report

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: April 6, 2018	Cameco Corporation
	By:	“Sean A. Quinn”
		Sean A. Quinn
		Senior Vice-President, Chief Legal Officer and Corporate Secretary

Page 2

EX-99.1

Exhibit 99.1

Notice of our 2018 annual meeting of shareholders

You are invited to our 2018 annual meeting:

When

Wednesday, May 16, 2018

8:30 a.m. CST

Where

Cameco Corporation

2121 -11^th Street West

Saskatoon, Saskatchewan

We will webcast the meeting on our website at cameco.com.

Your vote is important

If you held Cameco common shares on March 19, 2018, you are entitled to receive notice of and to vote at this meeting.

You can vote in person at the meeting or by proxy.

See pages 6 through 8 of the attached management proxy

circular for information about what the meeting will cover, who can vote and how to vote.

By order of the board of directors,

Sean Quinn

Senior Vice-President,

Chief Legal Officer and Corporate Secretary

Saskatoon, Saskatchewan

April 6, 2018

FOR MORE INFORMATION
Read about the business of the meeting beginning on page 4 of the attached management proxy circular.
The deadline for submitting a shareholder proposal for our 2019 annual meeting is January 7, 2019 and we require advance notice for nominating directors.
Access our 2017 annual report and other documents and information online:
·   cameco.com
·   sedar.com (SEDAR)
·   sec.gov/edgar.shtml (EDGAR)
See pages 27 and 34 for more information.
COMMON SHARES OUTSTANDING
395,792,732	December 31, 2017
395,792,732	March 9, 2018
AST Trust Company (Canada) is our transfer agent and registrar for Canada and American Stock Transfer & Trust Company LLC is our transfer agent and registrar for the US.

EX-99.2

Exhibit 99.2

2018 Management Proxy Circular April 6, 2018 Cameco Energizing the World Notice of 2018 Annual Meeting of Shareholders on May 16, 2018

What’s inside
Letter to shareholders	1	Notice of our 2018 annual meeting	2
Management proxy circular	3	Business of the meeting   Voting   The nominated directors	4 6 10
Governance at Cameco	24	Compensation at Cameco	47
Our governance practices	24	Compensation governance	48
Our shareholder commitment	25	•  Compensation risk management	49
•  Shareholder engagement	25	•  Independent advice	50
•  Separate chair and CEO positions	25	Director compensation	51
•  Accountability	25	•  Compensation discussion and analysis	51
Governance principles	28	•  2017 Details	53
The board	30	Executive compensation	55
•  Board composition	30	•  Message to shareholders	55
•  Our expectations for directors	35	•  Cameco compensation practices	59
•  Role of the board	36	•  Executive compensation and strategy	60
Board committees	41	•  Share performance and executive compensation	61
		•  Compensation discussion and analysis	66
		•  2017 Details	84
		Appendices	95

Cameco is widely recognized for excellence in corporate governance:

·  Governance Professionals of Canada Excellence in Governance Awards – 2017 honourable mention for best practices to enhance boardroom diversity and 2015 award for best sustainability, ethics and environmental governance program

·  CPA Canada Awards of Excellence in Corporate Reporting – 2017 silver medal winner for high-quality reporting in all categories

·  Achievement in Private Sector Risk Management (Mastering Risk) – inaugural 2015 award for excellence in Canadian risk, control and audit management practices

·  New York Stock Exchange – 2014 inaugural leadership award for exemplary CD&A disclosure by a compensation committee

·  Canadian Coalition for Good Governance – two-time governance gavel award winner for best disclosure for approach to executive compensation and best disclosure of board governance practices and director qualifications for governance

2017 AWARDS

·    Corporate Knights Global 100 Most
Sustainable Corporations in the World

·    Top 100 Employers in Canada

(Mediacorp)

·    Saskatchewan’s Top Employers

·    Canada’s Best Diversity Employers

(Mediacorp)

·    Canada’s Top Employers for Young People

(Mediacorp)

Letter to shareholders

Dear fellow shareholder,

On behalf of Cameco’s board of directors, I am pleased to invite you to the 2018 annual meeting of shareholders. The meeting will be held on May 16, 2018 in Saskatoon, and available to all stakeholders by webcast.

The management proxy circular, which begins on page 3, has important information about this year’s items of business and the voting process. It also provides details about each of this year’s ten nominated directors, our governance practices and director and executive compensation.

Board focus

The board’s goal is to deliver the best value to shareholders. We pay particular attention to strategy and value creation, risk oversight, board governance and management succession – areas we see as fundamental to Cameco’s sustainability and future success.

Strategy

Cameco’s strategy continues to focus on our tier-one assets and preserving the value of those assets to strengthen the company in the long term. In 2017, management, with the support of the board, decided to suspend the McArthur River/Key Lake operation, the world’s largest high-grade uranium production source.

Management continues to focus on reducing costs, while emphasizing safety, people and the environment. The board works closely with management on the company’s strategic direction and evaluates the strategy at each regular board meeting.

Risk oversight

The board oversees Cameco’s strategic risks, and allocates the top-tier financial and operational risks to specific board committees for direct oversight.

Cameco has a well-established enterprise risk management (ERM) program. The board relies on the ERM program to make sure Cameco’s risks, and those related to safety, health and the environment in particular, are being appropriately managed and mitigated, particularly in the context of the significant cost reductions over the last few years.

Sound governance

The board reviews Cameco’s governance practices regularly to make sure the company continues to be well served and remains a leader in corporate governance. In 2017, the board underwent an

effectiveness assessment by leading board governance consultant, Patrick O’Callaghan.

In his assessment Mr. O’Callaghan noted “Cameco has an excellent management team, strong and effective board practices and diverse directors with relevant background and experience… One of the reasons the board is effective is because both management and the board have an ongoing ambition to be the best that they can be.”

Mr. O’Callaghan also provided some non-urgent recommendations that the nominating, corporate governance and risk committee will address.

The board is committed to having the right diversity mix – gender, skills, background and experience – and I am proud of the quality and experience of our board. We review our competency matrix, core attributes, diversity policy, term limits and retirement policy regularly to make sure the board’s composition is appropriate and continues to meet Cameco’s needs.

Looking ahead

I am sad to say that my time on the board is coming to an end. I have served as a Cameco director for 16 years, including the past five years as board chair. Despite the challenges of the prolonged weakness in the uranium market, I remain confident about the long-term prospects for both Cameco and the nuclear industry.

I would like to thank the management team and my fellow directors for their hard work and support over the years, and I extend my best wishes to Ian Bruce who will succeed me as board chair following this year’s annual meeting. Ian brings strong leadership, finance and risk management experience to the role and he currently serves as chair of Cameco’s human resources and compensation committee.

Your vote is important. Please take some time to read the management proxy circular before you decide how to vote your shares.

The board and management thank you for your continued confidence.

Sincerely,

Neil McMillan

Chair of the board

Cameco Corporation

2018 MANAGEMENT PROXY CIRCULAR      1

Notice of our 2018 annual meeting of shareholders

You are invited to our 2018 annual meeting:

When

Wednesday, May 16, 2018

8:30 a.m. CST

Where

Cameco Corporation

2121 – 11^th Street West

Saskatoon, Saskatchewan

We will webcast the meeting on our website at cameco.com.

Your vote is important

If you held Cameco common shares on March 19, 2018, you are entitled to receive notice of and to vote at this meeting.

You can vote in person at the meeting or by proxy.

See pages 6 through 8 of the attached management proxy circular for information about what the meeting will cover, who can vote and how to vote.

By order of the board of directors,

Sean Quinn

Senior Vice-President,

Chief Legal Officer and Corporate Secretary

Saskatoon, Saskatchewan

April 6, 2018

FOR MORE INFORMATION
Read about the business of the meeting beginning on page 4 of the attached management proxy circular.
The deadline for submitting a shareholder proposal for our 2019 annual meeting is January 7, 2019 and we require advance notice for nominating directors.
Access our 2017 annual report and other documents and information online:
●  cameco.com
●  sedar.com (SEDAR)
●  sec.gov/edgar.shtml (EDGAR)
See pages 27 and 34 for more information.
COMMON SHARES OUTSTANDING
395,792,732	December 31, 2017
395,792,732	March 9, 2018
AST Trust Company (Canada) is our transfer agent and registrar for Canada and American Stock Transfer & Trust Company LLC is our transfer agent and registrar for the US.

2     CAMECO CORPORATION

Management proxy circular You have received this circular because you owned Cameco common shares on March 19, 2018. Management is soliciting your proxy for our 2018 annual meeting of shareholders. As a shareholder, you have the right to attend the annual meeting of shareholders on May 16, 2018 and to vote your shares in person or by proxy. The board of directors has approved the contents of this document and has authorized us to send it to you. We have also sent a copy to each of our directors and to our auditors. You may have received with this circular a copy of our 2017 annual report (if you requested a copy or one was otherwise required to be sent to you). This information is also available on our website (cameco.com). The board of directors approved the content of this circular on March 9, 2018. Information is as of that date unless stated otherwise.	Read about the four items of business and how to vote your shares pages 4 to 8
	Learn about our governance practices and the board pages 24 to 46
	Find out what we paid our executive officers and directors in 2017 and why pages 47 to 94

1 BUSINESS OF THE MEETING 2 GOVERNANCE AT CAMECO 3 COMPENSATION AT CAMECO

     THINGS TO NOTE

Key terms in this document

•  you and your refer to the shareholder

•  we, us, our, the company and Cameco mean Cameco Corporation

•  shares and Cameco shares mean Cameco’s common shares, unless indicated otherwise

•  all dollar amounts are in Canadian dollars, unless indicated otherwise

•  information is as of March 9, 2018, unless indicated otherwise.

Your vote is important

This circular describes what the meeting will cover and how to vote. Please read it carefully and vote, either by completing the form included with this circular or voting in person at the meeting.

Cameco employees or representatives of Kingsdale Advisors (Kingsdale) may contact you to encourage you to vote. If you have any questions or need more information about voting your shares, call Kingsdale at 1.888.518.1558 (toll-free in North America) or 416.867.2272 (collect calls accepted) outside of North America. Or send an email to contactus@kingsdaleadvisors.com.

We are paying Kingsdale approximately $55,000 for their services.

2018 MANAGEMENT PROXY CIRCULAR      3

Business of the meeting

A quorum is required to hold the meeting and transact business. A quorum is met when the people at the meeting hold, or represent by proxy, at least 25% of Cameco’s total issued and outstanding common shares.

We require majority approval on the items of business, except for the election of directors, where we have a majority voting policy in place (see Majority voting for non-executive directors on page 10).

  Elect directors

Ten directors are nominated for election to our board to serve for a term of one year. All of the nominated directors currently serve on the board. You can vote for all of the nominated directors, vote for some of them and withhold votes for others, or withhold votes for all of them.

The director profiles starting on page 11 tell you about each director’s background and experience and membership on Cameco board committees.

We recommend you vote FOR all of the nominated directors.

  Reappoint the auditors

You will vote on reappointing the independent auditors. Auditors reinforce the importance of a diligent and transparent financial reporting process, and strengthen investor confidence in our financial reporting.

The board, on the recommendation of the audit and finance committee, has proposed that KPMG LLP (KPMG) be reappointed as our auditors until the end of our next annual meeting. KPMG, or its predecessor firms, have been our auditors since Cameco was incorporated in 1988. You can vote for reappointing KPMG, or you can withhold your vote.

We recommend you vote FOR reappointing KPMG as our auditors.

KPMG provides us with three types of services:

· audit services – generally relate to the audit and review of annual and interim financial statements and notes, conducting the annual audits of affiliates, auditing our internal controls over financial reporting and providing other services that may be required by regulators. These may include services for registration statements, prospectuses, reports and other documents that are filed with securities regulators, or other documents issued for securities offerings.

· audit-related services – include advising on accounting matters, attest services not directly linked to the financial statements that are required by regulators and conducting audits of employee benefit plans.

· tax services – relate to tax compliance and tax advice that are beyond the scope of the annual audit.

These include reviewing transfer-pricing documentation and correspondence with tax authorities, preparing corporate tax returns, and advice on international tax matters, tax implications of capital market transactions and capital tax.

The table below shows the fees we paid to KPMG and its affiliates for services in 2016 and 2017. The board has invited a representative of KPMG to attend the meeting.

	2017 ($)		% OF TOTAL FEES (%)		2016 ($)		% OF TOTAL FEES (%)
Audit fees
Cameco1		2,030,800		59.3		1,559,400	57.7
Subsidiaries2		864,900		25.3		628,500	23.3
Total audit fees		2,895,700		84.6		2,187,900	81.0
Audit-related fees
Pensions and other		27,300		0.8		28,700	1.1
Total audit-related fees		27,300		0.8		28,700	1.1
Tax fees
Compliance		151,200		4.4		158,000	5.8
Planning and advice3		295,800		8.6		327,300	12.1
Total tax fees		447,000		13.0		485,300	17.9
All other fees
Other non-audit fees4		55,300		1.6		–	0.0
Total fees		3,425,300		100.0		2,701,900	100.0

1. The increase in the fees we paid in 2017 from 2016 is mainly due to the timing of progress billings for year-end audit work.

2. The increase in the fees we paid for subsidiary audits is due to an increase in audit activity for the NUKEM companies.

3. Includes fees paid for transfer pricing advisory.

4. Includes fees paid related to Cameco’s I-4 membership and ESTMA reporting.

4     CAMECO CORPORATION

Receive financial statements

Our consolidated financial statements for the year ended December 31, 2017 will be presented at the meeting.

You can download a copy of our 2017 annual report (which includes our consolidated financial statements for the year ended December 31, 2017, management’s discussion and analysis of these financial statements, and the auditors’ report) on our website (cameco.com/invest/financial-information). You received a copy of the annual report if you requested a copy or one was otherwise required to be sent to you.

Advisory vote on executive compensation (“say on pay”)

You will vote on our approach to executive compensation as disclosed in this circular. Please take some time to read about our compensation strategy, our compensation program, how we assess performance and how the board makes decisions. You can find a full discussion about executive compensation at Cameco starting on page 55.

The board believes this non-binding advisory vote gives shareholders a timely and effective way to give input to the board and the human resources and compensation committee on this important matter.

The board and the human resources and compensation committee discuss the results every year, as well as the nature of shareholders’ comments and the trend in shareholders’ views on our approach to executive compensation and consider this information when reviewing executive compensation and making their decisions.

Vote for or against our approach to executive compensation by voting on the following resolution:

Be it resolved that, on an advisory basis and not to diminish the role and responsibilities of the board of directors for executive compensation, the shareholders accept the approach to executive compensation disclosed in Cameco’s management proxy circular delivered in advance of the 2018 annual meeting of shareholders.

We recommend you vote FOR our approach to executive compensation.

Other business

We did not receive any shareholder proposals for this meeting, and are not aware of any other items of business to be considered at the meeting.

If other items of business are properly brought before the meeting, you (or your proxyholder) can vote as you deem appropriate.

	HOW CAMECO WAS FORMED
Cameco Corporation was formed in 1988 by privatizing two Crown corporations, combining the uranium mining and milling operations of Saskatchewan Mining Development Corporation and the uranium mining, refining and conversion operations of Eldorado Nuclear Limited.
Cameco received these assets in exchange for:
●   assuming substantially all of the current liabilities and certain other liabilities of the two Crown corporations
●   issuing common shares
●   issuing one class B share
●   issuing promissory notes.
The company was incorporated under the Canada Business Corporations Act (CBCA). You can find more information about our history in our most recent annual information form, which is available on our website (cameco.com/investors).

2018 MANAGEMENT PROXY CIRCULAR      5

Voting

Who can vote

Cameco has common shares and one class B share, but only holders of our common shares have full voting rights. If you held common shares at the close of business on March 19, 2018 (the record date), you or the person you appoint as your proxyholder can attend the annual meeting and vote your shares. Each Cameco common share you own represents one vote, except where ownership and voting restrictions apply. As of March 9, 2018, we had 395,792,732 common shares issued and outstanding.

Principal holders of common shares

We have one principal holder of our common shares as of December 31, 2017, as reported in a Schedule 13F filing made with the US Securities Exchange Commission – Beutel, Goodman & Company Ltd. of Toronto, ON (including its subsidiaries) held 23,202,911 common shares, or approximately 5.86%, of our total common shares outstanding.

Management is not aware of any other shareholder who holds 5% or more of our common shares.

Our class B share

The province of Saskatchewan holds our one class B share. This entitles the province to receive notices of and attend all meetings of shareholders, for any class or series. The class B shareholder can only vote at a meeting of class B shareholders, and votes as a separate class, if there is a proposal to:

(a) amend Part 1 of Schedule B of the articles, which states that: Cameco’s registered office and head office operations must be in Saskatchewan, the executive officers and generally all of the senior officers (vice-presidents and above) must live in Saskatchewan, and all annual meetings of shareholders must be held in Saskatchewan;

(b) amend the articles in a way that would change the rights of class B shareholders; or

(c) amalgamate, if it would require an amendment to Part 1 of Schedule B.

Ownership and voting restrictions

Restrictions on owning, controlling and voting Cameco common shares are set out in the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) (ENL Reorganization Act) and our company articles. See Appendix A on page 95 for the definitions in the ENL Reorganization Act, including definitions of resident and non-resident. Ownership restrictions for non-residents were put in place so that Cameco would remain Canadian controlled.

The following is a summary of the limitations listed in our company articles:

Residents – A Canadian resident, either individually or together with associates, cannot hold, beneficially own or control shares or other Cameco securities, directly or indirectly, representing more than 25% of the total votes that can be cast to elect directors.

Non-residents – A non-resident of Canada, either individually or together with associates, cannot hold, beneficially own or control shares or other Cameco securities, directly or indirectly, representing more than 15% of the total votes that can be cast to elect directors.

Voting restrictions – All votes cast at the meeting by non-residents, either beneficially or controlled directly or indirectly, will be counted and pro-rated collectively to limit the proportion of votes cast by non-residents to no more than 25% of the total shareholder votes cast at the meeting.

Residency declarations

Shareholders are required to declare their residency, ownership of Cameco shares, and other things relating to the restrictions, so we can verify compliance with the ownership of and voting restrictions on our shares. Nominees such as banks, trust companies, securities brokers or other financial institutions who hold the shares on behalf of non-registered shareholders need to make the declaration on their behalf.

If you own the shares in your name, you will need to complete the residency declaration on the enclosed proxy form. Copies will be available at the meeting if you are planning to attend the meeting. If we do not receive your residency declaration, we may consider you to be a non-resident of Canada.

The chair of the meeting may ask shareholders and their nominees for additional information to verify compliance with our ownership and voting restrictions. The chair of the meeting will use the declarations and other information to decide whether our ownership restrictions have been complied with.

6     CAMECO CORPORATION

Enforcement of ownership and voting restrictions

The company articles allow us to enforce the ownership and voting restrictions by suspending voting rights, forfeiting dividends, prohibiting the issue and transfer of Cameco shares, requiring the sale or disposition of Cameco shares, and suspending all other shareholder rights.

How to vote

You can vote by proxy, or you can attend the meeting and vote your shares in person. We send proxy materials directly to our registered shareholders and provide materials to intermediaries to forward to non-registered shareholders. We pay the cost of proxy solicitation for all registered and non-registered shareholders.

Send your completed proxy form right away. Make sure you allow enough time for it to reach our transfer agent if you are sending it by mail. AST Trust Company (Canada) must receive your proxy voting instructions before 8:30 a.m. CST on Monday, May 14, 2018 for it to be valid.

	NON-REGISTERED (BENEFICIAL) SHAREHOLDERS	REGISTERED SHAREHOLDERS
The voting process is different depending on whether you are a registered or non-registered shareholder (see adjacent details).	You are a non-registered (beneficial) shareholder if your bank, trust company, securities broker, trustee or other financial institution holds your shares (your nominee). This means the shares are registered in your nominee’s name, and you are the beneficial shareholder. Many of our shareholders are non-registered shareholders.	You are a registered shareholder if your name appears on your share certificate.
If you do not plan to come to the meeting, vote your shares by proxy. Voting by proxy is the easiest way to vote – it means you are giving someone else the authority to attend the meeting and vote for you.	You can submit your voting instructions online or by fax or mail by following the instructions on your voting instruction form. Alternatively, you can appoint a proxyholder to attend the meeting and vote your shares for you by following the instructions on your voting instruction form. If you are appointing someone else to attend the meeting and vote your shares, make sure your appointee knows that he or she must attend the meeting and vote your shares, otherwise your vote will not be counted. Your nominee will likely need to receive instructions from you at least one business day before Monday, May 14, 2018. If you appoint someone other than the Cameco proxyholders without specifying how you want your appointee to vote, your appointee will have full discretionary authority to vote as they see fit.	You can vote your shares by proxy. Complete the proxy form and send it to AST Trust Company (Canada) or vote your shares online or by fax by following the instructions on your proxy form. Alternatively, you can appoint a proxyholder to attend the meeting and vote your shares for you by following the instructions on your proxy form. Make sure your appointee knows that he or she must attend the meeting and vote your shares, otherwise your vote will not be counted. AST Trust Company (Canada) will likely need to receive voting instructions from you at least one business day before Monday, May 14, 2018. If you appoint someone other than the Cameco proxyholders without specifying how you want your appointee to vote, your appointee will have full discretionary authority to vote as they see fit.
If you want to come to the meeting and vote in person.	Follow the instructions on your voting instruction form to appoint yourself as proxyholder, and return the voting instruction form as instructed by your intermediary (you may be able to do this online, or by fax or mail). You will need to register with a representative of AST Trust Company (Canada) when you arrive at the meeting.	Do not complete the enclosed proxy form. Your vote will be taken and counted at the meeting. If you vote in person at the meeting, any proxy previously given will be automatically revoked. Be sure to register with a representative of AST Trust Company (Canada) when you arrive at the meeting.
If you change your mind, you can revoke your proxy or voting instructions. Any new instructions will only take effect if they are received by AST Trust Company (Canada) before 8:30 a.m. on Monday, May 14, 2018 or 48 hours before the meeting is reconvened if the meeting is postponed or adjourned.	Contact your nominee if you need help providing new voting instructions, if you want to revoke your voting instructions (without giving new instructions) or if you want to vote in person instead.	You can revoke your proxy without providing new voting instructions by: ·  sending a notice in writing to the corporate secretary at Cameco, at 2121 - 11th Street West, Saskatoon, Saskatchewan S7M 1J3, so he receives it by 5 p.m. CST on the last business day before the meeting (Tuesday, May 15, 2018) ·  giving a notice in writing to the chair of the meeting before the start of the meeting ·  giving notice in any other manner permitted by law. The notice can be from you or your attorney, if he or she has your written authorization. If your shares are owned by a corporation, the written notice must be from its authorized officer or attorney.

2018 MANAGEMENT PROXY CIRCULAR      7

Voting by proxy

Voting by proxy is the easiest way to vote. It means you are giving someone else the authority to attend the meeting and vote for you (called your proxyholder).

If you are a registered shareholder, Tim Gitzel, president and CEO of Cameco, or in his absence Sean Quinn, senior vice-president, chief legal officer and corporate secretary of Cameco (the Cameco proxyholders), have agreed to act as proxyholder to vote your shares for you at the meeting according to your instructions. Or you can appoint someone else to represent you and vote your shares at the meeting (see instructions in the table on page 7).

If you appoint the Cameco proxyholders but do not tell them how you want to vote your shares, your shares will be voted:

· for electing each nominated director

· for appointing KPMG LLP as auditors

· for the advisory vote on our approach to executive compensation.

Other important things to know

If for any reason a nominated director becomes unable to serve, your proxyholder has the right to vote for another nominated director at their discretion, unless you have indicated that you want to withhold your shares from voting on the election of directors.

If there are amendments or other items of business that properly come before the meeting, your proxyholder can vote on each matter as they see fit, as permitted by law, whether or not it is a routine matter, an amendment or contested item of business.

The chair of the meeting has the discretion to accept or reject any late proxies, and can waive or extend the deadline for receiving proxy voting instructions without notice.

If the meeting is postponed or adjourned, the deadline for AST Trust Company (Canada) to receive your voting instructions will be extended to 48 hours (excluding Saturdays, Sundays and statutory holidays) before the meeting is reconvened for your new voting instructions to be valid. See the table on page 7 for further instructions. If you are revoking your proxy without giving new voting instructions, the corporate secretary must receive the notice by 5 p.m. CST on the day before the meeting is reconvened or you must give notice to the chair of the meeting before the start of the reconvened meeting.

Questions

If you have questions about voting, completing the proxy form or residency declaration, or about the meeting in general, please contact Kingsdale Advisors, our strategic shareholder services advisor and proxy solicitation agent:

Phone:	1.888.518.1558
	(toll free within North America)
	1.416.867.2272
	(collect from outside North America)
Email:	contactus@kingsdaleadvisors.com

8     CAMECO CORPORATION

Nominated directors at a glance

  Experience

Average Tenure 6.2yrs Average Age 63 Tenure (excluding Tim Gitzel ) <5 years 6 - 10 years > 10 years Nominee Age 55 - 60 61 - 65 66 - 71 Diversity and independence USA(1) BC(2) ON(2) AB(2) SK(2) QC(1) CDN(10) Geographic mix of nominee directors Diversity 4 of 10 nominees are women or of indigenous descent Independence 9 of 10 nominees are Independent Expertise and skills % of board having expert and strong working knowledge of 100% board/corporate governance, international, investments, mergers & acquisitions, investor relations, risk oversight 90% enterprise leadership, HR and executive compensation, legal/regulatory, uranium/nuclear 80% capital projects, financial acumen, safety, health, environment, corporate responsibility, stakeholder relations, government and public policy 70% mining, exploration and operations, operational excellence Commitment 2017 9 board meetings 100% attendance 2017 25 committee meetings 99% attendance

2018 MANAGEMENT PROXY CIRCULAR      9

The nominated directors

Our board of directors is responsible for overseeing management and our business affairs. As shareholders, you elect the board to act in the best interests of Cameco. This year the board has nominated ten directors.

All nominated directors currently serve on the board and have agreed to stand for re-election. For more on the nomination process, see Board refreshment and the nomination process on page 34.

Profiles

The following pages tell you about each nominated director as of March 9, 2018, including their background, skills, experience, other public company boards they sit on, 2017 meeting attendance, share ownership levels, and voting results at last year’s annual meeting.

Skills, experience, conflicts and independence

This year’s nominated directors have been selected based on their collective ability to provide expertise on a broad range of issues the board faces when carrying out its responsibilities in overseeing our business and affairs. All of our directors are screened annually for conflicts of interest.

All of our directors, except the CEO, are independent (90%). All of the nominated directors are Canadian residents and citizens, except for Ms. Jackson who is a US citizen and resident. Mr. Camus holds Canadian and French citizenship.

Share ownership

We require our directors to build ownership of Cameco shares or deferred share units (DSUs) to align their interests with those of shareholders. All directors must hold at least three times their annual retainer within five years of joining the board. All directors are in compliance with our share ownership guidelines. Tim Gitzel, our CEO, meets his executive share ownership guidelines (see page 68).

Non-executive directors receive all or part of their compensation in DSUs. We report each director’s holdings of shares and DSUs and their total value, including the Cameco shares they own or exercise control or direction over. Holdings are as of December 31, 2017, and we have calculated their value by using $11.61 for 2017 and $14.04 for 2016, the year-end closing prices of Cameco shares on the Toronto Stock Exchange (TSX). When reviewing compliance with our share ownership guidelines, we use our year-end share price on the TSX or the price the shares or units were acquired at, whichever is higher.

See page 53 for the portion of the total retainer that each non-executive director received in DSUs in 2017.

Majority voting for non-executive directors

Under corporate law, a nominated director can be elected with a single vote cast in his or her favour, no matter how many votes were withheld.

The board adopted a majority voting policy in 2006 to govern the election of directors in an uncontested election (where the number of nominated directors equals the number of board positions). It requires each director to receive a majority of votes cast in his or her favour in order to be elected. A director who does not receive a majority of votes cast in his or her favour in an uncontested election must submit his or her resignation to the board.

Our nominating, corporate governance and risk committee will review the voting result and recommend to the board whether to accept the resignation or not within 90 days of the meeting. Unless there are exceptional circumstances, the committee and the board will accept the resignation and it will then take effect. The director who submitted a resignation does not participate in any board or committee deliberations on the matter.

The board will announce its decision immediately. If it rejects the resignation, it will fully explain why. If the board accepts the resignation, it may appoint a new director to fill the vacancy.

10     CAMECO CORPORATION

Ian Bruce, incoming chair of the board

    Calgary, AB

    Canadian

    Director since 2012

    Independent

    Age 64

    Experience

• CEO experience

• Finance

• Investment banking

• Mergers and acquisitions

• Risk management

Ian brings a strong finance and investment banking background as well as board, executive, energy sector and leadership experience to the Cameco board. He also chairs the audit committee of one other public company.

Ian Bruce is the former president and CEO of Peters & Co. Limited, an independent investment dealer. He has more than 30 years of experience in investment banking with specialization in corporate finance and mergers and acquisitions, predominantly in the oil and gas industry.

Ian is a fellow of the Chartered Professional Accountants of Alberta, a recognized Specialist in Valuation under Canadian CPA rules, and a chartered business valuator. He is a past member of the Expert Panel on Securities Regulation for the Minister of Finance of Canada. Ian is also a past board member and chair of the Investment Industry Association of Canada.

Ian is a director of the private company, Production Plus Energy Services Inc. (formerly TriAxon Oil Corp.)

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Audit and finance		6 of 6		2 of 2		100%
Human resources and compensation (chair)		5 of 5				100%

Other public company boards in past five years
and current committee memberships
Cona Resources Ltd. (TSX)	Audit (chair), Compensation,	2014 to present
	Technical
Logan International Inc. (TSX)		2011 to 2016
Hardy Oil & Gas plc (LSE)		2008 to 2012

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		75,000		38,446		113,446		$1,317,107		6.6x		11.7x
2016		75,000		28,284		103,284		$1,450,109
Change		–		10,162		10,162		$(133,002)		3.5x2		6.2x2

1 For share ownership compliance, Ian’s shares and DSUs held at December 31, 2017 are valued at $2,340,001.

2 Represents his level of compliance with the board chair retainer, which is $375,000.

2017 Voting results
	88.3% votes for	11.7% votes withheld

Ian was director of Laricina Energy Limited (Laricina), a junior oil sands private company, from 2013 to 2017. Laricina was under Companies’ Creditors Arrangement Act (Canada) (CCAA) protection from March 26, 2015 until February 1, 2016, when it exited from CCAA protection. Its restructuring plan was approved by the Alberta Court of Queen’s Bench on July 22, 2015.

2018 MANAGEMENT PROXY CIRCULAR      11

Daniel Camus

    Westmount, QC

    Canadian and French

    Director since 2011

    Independent

    Age 65

    Experience

• Nuclear industry

• Finance

• Electricity industry

• Executive compensation

• International

• Mergers and acquisitions

• Risk management

Daniel brings CFO, international business and energy sector experience, in particular in nuclear, to the Cameco board and the three committees he sits on. He also chairs the audit committee of one other public company.

Daniel Camus is the former group CFO and head of strategy and international activities of Electricité de France SA (EDF). Based in France, EDF is an integrated energy operator active in the generation (including nuclear generation), distribution, transmission, supply and trading of electrical energy with international subsidiaries. He is also the former CFO of the humanitarian finance organization, The Global Fund to Fight AIDS, Tuberculosis and Malaria, a position he held from 2013 to 2017.

Daniel holds a PhD in Economics from Sorbonne University, and an MBA in finance and economics from the Institute d’Études Politiques de Paris. Over the past 25 years, he has held various senior roles with the Aventis and Hoechst AG Groups in Germany, the US, Canada and France. He has been chair of several audit committees and brings experience in human resources and executive compensation through his senior executive roles at international companies where he worked on business integrations in Germany, the US, Canada and France. He is the audit committee chair and board member of the non-governmental organization, FIND Diagnostics.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Audit and finance		6 of 6		2 of 2		100%
Human resources and compensation		5 of 5				100%
Nominating, corporate governance and risk		4 of 4				100%

Other public company boards in past five years
and current committee memberships
Valeo SA, Paris (NYX)	Audit and risks (chair)	2006 to May 2018
SGL Carbon SE, Wiesbaden (Xetra)	Governance and ethics (chair), Nomination, Strategy/technology	2008 to present
Contour Global Plc, London (LSE)	Compensation (chair), Audit	2016 to present
Vivendi SA, Paris (NYX)		2010 to 2015
Morphosys AG, Munich (TecDAX)		2003 to 2015

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		–		72,227		72,227		$838,559		4.2x		6.5x
2016		–		61,214		61,214		$859,443
Change		–		11,013		11,013		$(20,884)

1 For share ownership compliance, Daniel’s shares and DSUs held at December 31, 2017 are valued at $1,294,003.

2017 Voting results
	88.1% votes for	11.9% votes withheld

12     CAMECO CORPORATION

John Clappison

    Toronto, ON

    Canadian

    Director since 2006

    Independent

    Age 71

    Experience

• Finance

• Risk management

• Corporate governance

• Executive compensation

John brings extensive financial experience as well as governance, risk management, compensation and other business experience to the Cameco board. He serves on two of our board committees, including as chair of the audit and finance committee.

John Clappison is a corporate director and the former managing partner of the Greater Toronto Area office of PricewaterhouseCoopers LLP, where he spent 37 years. He is a fellow of the Chartered Professional Accountants of Ontario.

In addition to his extensive financial experience, John brings to Cameco’s board his experience in governance, risk management and executive compensation. He also brings international business acumen as a senior member of the PwC executive team.

In addition to the public company board listed below, John serves as a director of the private company, Summitt Energy Holdings GP Inc. and was formerly a director of the public company Canadian Real Estate Investment Trust. He chairs the audit and risk committee for Rogers Communications Inc. and is a board member, chair of the audit committee and a member of the risk and conduct review committees of Rogers Bank, a wholly-owned subsidiary of Rogers Communications Inc.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Audit and finance (chair)		6 of 6		2 of 2		100%
Nominating, corporate governance and risk		4 of 4				100%

Other public company boards in past five years
and current committee memberships
Rogers Communications Inc. (TSX)	Audit and risk (chair), Pension,	2006 to present
	Corporate governance
Sun Life Financial Inc. (TSX)		2006 to 2017
Inmet Mining Corporation (TSX)		2010 to 2013

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		3,000		49,342		52,342		$607,695		3.0x		5.9x
2016		3,000		43,328		46,328		$650,443
Change		–		6,014		6,014		$(42,748)

1 For share ownership compliance, John’s shares and DSUs held at December 31, 2017 are valued at $1,185,867.

2017 Voting results
	96.2% votes for	3.8% votes withheld

2018 MANAGEMENT PROXY CIRCULAR      13

Donald Deranger

    Prince Albert, SK

    Canadian

    Director since 2009

    Independent

    Age 62

    Experience

• Aboriginal affairs

• First Nations

• Corporate governance

Donald’s experience as a contractor in northern Saskatchewan and a leader in the Saskatchewan aboriginal community provides a rich, valuable and unique perspective to the Cameco board and his work on two of our board committees.

Donald Deranger is an advisor to the Athabasca Basin Development Corporation and non-executive chair of the board of Points Athabasca Contracting Limited Partnership, a northern Saskatchewan aboriginal contractor, which does business with Cameco. He is also a governance advisor to Fond Du Lac, a Dené Nation located in the Athabasca basin.

Donald is the past president of Learning Together, a non-profit aboriginal organization that works to build relationships with the mining industry, which he continues to assist in an ex-officio capacity. He was the Athabasca vice chief of the Prince Albert Grand Council from 2003 to 2012. Donald serves as a director of the Sylvia Fedorchuk Centre for Nuclear Innovation since 2014. He also served as a director of the Tazi Twe Hydroelectric Project from 2014 to 2016.

An award-winning leader in the Saskatchewan aboriginal community, Donald brings to the board a deep understanding of the culture and peoples of northern Saskatchewan where our richest assets are located.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Reserves oversight		2 of 2		2 of 2		100%
Safety, health and environment		4 of 4				100%

 Other public company boards in past five years

 and current committee memberships

 None

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		–		51,246		51,246		$594,964		3.0x		4.8x
2016		–		41,899		41,899		$588,266
Change		–		9,347		9,347		$6,698

1 For share ownership compliance, Donald’s shares and DSUs held at December 31, 2017 are valued at $958,514.

2017 Voting results
	96.9% votes for	3.1% votes withheld

14     CAMECO CORPORATION

Catherine Gignac

    Mississauga, ON

    Canadian

    Director since 2014

    Independent

    Age 56

    Experience

• Mining, exploration and operations

• Investment industry

• Mineral resource estimation

• Project value analysis

Catherine’s extensive career as a mining equity research analyst and geologist, and experience in project value analysis and mergers and acquisitions expand the range of the board’s skills. She is chair of our reserves oversight committee and also serves on two other board committees.

Catherine Gignac has been a corporate director since 2011. She has more than 30 years of experience in capital markets and the mining industry. Catherine has held senior positions as a mining equity research analyst with leading global brokerage firms and independent boutiques. She has extensive experience in project value and investment analysis, and spent her early working years as a geologist.

Catherine is a member of the Institute of Corporate Directors, the CFA Institute, the Mineral Resource Analyst Group, the Canadian Institute of Mining & Metallurgy and the Prospectors and Developers Association of Canada (PDAC).

Catherine was the principal of Catherine Gignac & Associates from 2011 to 2015. She volunteers with the Canadian Securities Administrators’ mining technical advisory and monitoring committee, the convention planning committee for the PDAC, Women in Mining Canada, and Crohn’s & Colitis Canada.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Audit and finance		6 of 6		2 of 2		100%
Reserves oversight (chair)		2 of 2		2 of 2		100%
Safety, health and environment		4 of 4				100%

Other public company boards in past five years
and current committee memberships
Corvus Gold Inc. (TSX)	Board chair, Compensation, Corporate governance and nominating	2013 to present
Trevali Mining Corporation (TSX)		2012 to 2017
St. Andrew Goldfields Ltd. (TSX)		2012 to 2015
Azul Ventures Inc. (TSXV)		2012 to 2013

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		15,000		27,508		42,508		$493,520		2.5x		3.3x
2016		15,000		17,266		32,266		$453,012
Change		–		10,242		10,242		$40,508

1 For share ownership compliance, Catherine’s shares and DSUs held at December 31, 2017 are valued at $655,795.

2017 Voting results
	97.4% votes for	2.6% votes withheld

2018 MANAGEMENT PROXY CIRCULAR      15

Tim Gitzel

    Saskatoon, SK

    Canadian

    Director since 2011

    President and CEO

    Not independent

    Age 55

    Experience

• International

• Mining

• Nuclear industry

• Risk management

As Cameco’s president and CEO, Tim brings the day-to-day business and operations perspective to the board, and is responsible for executing Cameco’s strategy. Tim has over two decades of industry experience and brings added perspective as a member of the boards of the World Nuclear Association and Nuclear Energy Institute.

Tim Gitzel has been president and CEO of Cameco since 2011. He was appointed president in 2010 and prior to that served as senior vice-president and chief operating officer (COO). Tim has more than 20 years of senior management experience in Canadian and international uranium activities. Prior to joining Cameco, he was executive vice-president, mining business unit for AREVA in Paris, France, where he was responsible for global uranium, gold, exploration and decommissioning operations in 11 countries.

Tim received his bachelor of arts and law degrees from the University of Saskatchewan. He participated in an executive education programme facilitated by INSEAD in France. He was appointed to the board of the Nuclear Energy Institute in 2011 and to The Mosaic Company board in October 2013. He served as chair of the World Nuclear Association from 2012 to 2014 and continues to serve as a member of the board. He is also a member of the Business Council of Canada.

Tim is past president of the Saskatchewan Mining Association, and has served on the boards of SaskEnergy Corporation, the Saskatchewan Chamber of Commerce and Junior Achievement of Saskatchewan. He serves our community in numerous capacities, including several current and past leadership positions with charitable and non-profit organizations.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%

Other public company boards in past five years
and current committee memberships
The Mosaic Company (NYSE)	Audit, Compensation	2013 to present

Securities held
Year	Cameco shares		PSUs*		Total shares and PSUs		Total value of shares and PSUs**		Ownership                 guideline compliance
2017		256,638		281,800		538,438		$6,251,265	✓
2016		221,854		234,300		456,154		$6,404,402	(for CEO, see page 68)
Change		34,784		47,500		82,284		$(153,137)

 * Excludes PSUs that vested on December 31 of the year.

** Value of shares ($2,979,567) and PSUs ($3,271,698) for 2017 are calculated using $11.61 for 2017 and $14.04 for 2016, the year-end closing prices of Cameco shares on the TSX. This is the total value of Tim’s accumulated shares and other equity-based holdings.

Options held: See Incentive plan awards on page 86.

2017 Voting results
	97.2% votes for	2.8% votes withheld

16     CAMECO CORPORATION

Jim Gowans

    Surrey, BC

    Canadian

    Director since 2009

    Independent

    Age 66

    Experience

• CEO experience

• Mining and exploration

• Executive compensation

• International

Jim brings strong experience in the resource sector to Cameco’s board through an extensive career as a senior executive with several major mining companies and his role as past chair of The Mining Association of Canada. He serves on three of our board committees including as chair of the safety, health and environment committee.

Jim Gowans has been president, CEO and a director of Arizona Mining Inc. since January 2016. He was senior advisor to the chair of the board of Barrick Gold Corporation from August to December 2015, co-president from July 2014 to August 2015 and executive vice-president and COO from January to July 2014. He served as managing director of the Debswana Diamond Company in Botswana from 2011 to 2014. He has extensive experience as a senior executive in the mining industry, including holding executive positions at DeBeers SA, DeBeers Canada Inc. and PT Inco in Indonesia, and with Placer Dome Ltd. Jim is the past chair of the Mining Association of Canada.

Jim received a bachelor of applied science degree in mineral engineering from the University of British Columbia and attended the Banff School of Advanced Management. He has extensive mining knowledge and perspective on the importance of corporate social responsibility and brings human resources experience as a former vice-president, human resources at Placer Dome.

While Jim served on the board of the public company PhosCan Chemical Corp., he served on its compensation committee for the full tenure. In addition to the public company board listed below, Jim has been a director of the private company, Gedex Technologies Inc. since 2015.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Nominating, corporate governance and risk		4 of 4				100%
Reserves oversight		2 of 2		2 of 2		100%
Safety, health and environment (chair)		4 of 4				100%

Other public company boards in past five years
and current committee memberships
Arizona Mining Inc. (TSX)	2016 to present
Dominion Diamond Corporation (TSX)	2016 to 2017
NewCastle Gold Ltd. (TSX)	2016 to 2017
PhosCan Chemical Corp. (TSXV)	2008 to 2014

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		9,000		59,769		68,769		$798,412		4.0x		6.4x
2016		1,000		58,057		59,057		$829,167
Change		8,000		1,712		9,712		$(30,755)

1 For share ownership compliance, Jim’s shares and DSUs held at December 31, 2017 are valued at $1,278,268.

2017 Voting results
	94.4% votes for	5.6% votes withheld

2018 MANAGEMENT PROXY CIRCULAR      17

Kathryn (Kate) Jackson

    Pittsburgh, PA USA

    American

    Director since 2017

    Independent

    Age 60

    Experience

• Nuclear industry

• Risk management

• Operational excellence

• Technology

Kate was appointed to Cameco’s board in January 2017 and serves on three of our board committees. She brings extensive senior management and board experience in highly technical industries, including nuclear power generation, and has worked on both the utility and supplier side of the industry.

Kate Jackson has been a corporate director since 2008. She is the former senior vice-president and chief technology officer of RTI International Metals Inc. (from 2014 to 2015) and prior to that, senior vice-president and chief technology officer for Westinghouse Electric Company (from 2008 to 2014), which included responsibility for sustainability and environment, health and safety. She has held various senior positions at the Tennessee Valley Authority and Alcoa Corporation.

Kate received a doctorate and a master’s degree in engineering and public policy from Carnegie Mellon University. She also holds a master’s degree in industrial engineering management from the University of Pittsburgh and a bachelor’s degree in physics from Grove City College.

Kate chaired the ISO New England Inc. board from 2008 to 2014. ISO New England Inc. is an independent non-profit regional transmission organization serving a number of Eastern US states. Kate is a member of Carnegie Mellon University School of Engineering Dean’s Advisory Council and the advisory board of the Carnegie Mellon Electricity Industry Centre. She is a member of the University of Pittsburgh Engineering School Board of Visitors.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Human resources and compensation		5 of 5				100%
Nominating, corporate governance and risk		4 of 4		1 of 1		100%
Safety, health and environment		3 of 4				75%

Kate was appointed to three committees in May 2017. She also attended committee meetings from February through May as part of her director orientation.

Other public company boards in past five years
and current committee memberships
Hydro One Limited (TSX)	Nominating, corporate governance, public policy & regulatory, Health, safety, environment and First Nations & Métis	2015 to present
Portland General Electric Company (NYSE)	Compensation and human resources, Finance	2014 to present
Rice Energy, Inc. (NYSE)		Apr. to Nov. 2017

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		90		9,733		9,823		$114,049		0.6x		0.6x
2016		90		–		90		$1,264
Change		–		9,733		9,733		$112,785

1 For share ownership compliance, Kate’s shares and DSUs held at December 31, 2017 are valued at $122,597.

2017 Voting results
	97.3% votes for	2.7% votes withheld

18     CAMECO CORPORATION

Don Kayne

    Delta, BC

    Canadian

    Director since 2016

    Independent

    Age 60

    Experience

• CEO experience

• International

• Executive compensation

• Safety, health and environment

• Mergers and acquisitions

Don brings many years of experience as a business executive in Canada’s resource industry to the Cameco board as well as valuable insights into emerging Asian markets where Cameco does business.

Don Kayne has been the president and CEO of Canfor Corporation since May 2011. He has also been the CEO of Canfor Pulp Products Incorporated since September 2012. He has been a director of both Canfor companies since August 2017.

Don has spent his entire career at Canfor, starting out as a regional sales representative in 1979. Prior to being appointed CEO, Don spent 10 years as Canfor’s vice-president of sales and marketing, and is one of the lead architects of the market for British Columbia lumber in China. Don’s work growing markets for Canfor products around the world has provided him with deep connections to markets and customers in every region Canfor serves.

Don is a director of the Bi-National Softwood Lumber Council, Forest Products Association of Canada, Council of Forest Industries, Alberta Forest Products Association and the BC Lumber Trade Council. Don is vice chair of the Bi-National Softwood Lumber Council and serves as chair of its programs committee. He is an audit committee member and the former board chair of the Forest Products Association of Canada. He is also chair of the charitable organization Educating Girls of Rural China Foundation, which works to transform the lives of women and communities in rural areas of western China by providing access to education.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Human resources and compensation		5 of 5				100%
Reserves oversight		2 of 2		2 of 2		100%
Safety, health and environment		4 of 4				100%

Other public company boards in past five years
and current committee memberships
Canfor Corporation* (TSX)	2017 to present
Canfor Pulp Products Incorporated* (TSX)	2017 to present

* Canfor Corporation and Canfor Pulp Products Incorporated are affiliated

companies within the Canfor group. Don is the CEO of both companies.

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		–		32,935		32,935		$382,378		1.9x		2.2x
2016		–		14,911		14,911		$209,346
Change		–		18,024		18,024		$173,032

1 For share ownership compliance, Don’s shares and DSUs held at December 31, 2017 are valued at $431,899.

2017 Voting results
	88.0% votes for	12.0% votes withheld

2018 MANAGEMENT PROXY CIRCULAR      19

Anne McLellan

    Edmonton, AB

    Canadian

    Director since 2006

    Independent

    Age 67

    Experience

• Corporate governance

• Corporate social responsibility

• Executive compensation

• Government relations

• Health and safety

Anne is a lawyer and corporate director and brings a rich and broad perspective on business and governance to Cameco’s board through her work experience and distinguished career in public service and higher education in Canada. Anne held a number of ministerial portfolios and also served as former deputy prime minister of Canada.

The Honourable Anne McLellan is a former deputy prime minister of Canada and has held several senior cabinet positions, including federal Minister of Natural Resources, Minister of Health, Minister of Justice and Attorney General of Canada, and federal interlocutor of Métis and non-status Indians. She was also a distinguished scholar in residence at the University of Alberta in the Alberta Institute for American Studies from 2006 to 2013 and is senior advisor in the national law firm Bennett Jones LLP. Anne has been the Chancellor of Dalhousie University since May 2015.

Anne holds a bachelor of arts degree and a law degree from Dalhousie University, and a master of laws degree from King’s College, University of London. In addition to her extensive experience in federal administration and policy, Anne is the board chair of Pearson College. Anne also served on the board of the Edmonton Regional Airport Authority, Canada’s fifth largest airport, from 2008 to 2015 where she served as chair of the governance and compensation committee. Anne served as chair of the environment, health, safety and security committee at Agrium Inc. prior to its merger with Potash Corporation of Saskatchewan Inc.

			2017 Attendance
Board and committee membership	Regular		Special		Overall
Board of directors		8 of 8		1 of 1		100%
Human resources and compensation		5 of 5				100%
Nominating, corporate governance and risk (chair)		4 of 4				100%

Other public company boards in past five years
and current committee memberships
Nutrien Ltd.* (TSX)	Compensation, Safety, health, environment and security	2006 to present
Nexen Inc. (TSX)		2006 to 2013

* Anne was a director of Agrium Inc., a predecessor company to Nutrien Ltd., from 2006 to 2017, and continued as a director of the newly-formed company following the merger effective January 1, 2018.

Securities held
Year	Cameco shares		DSUs		Total shares and DSUs		Total value of shares and DSUs		Multiple of 2017 annual retainer		Ownership guideline compliance1
2017		100		43,761		43,861		$509,227		2.6x		5.0x
2016		100		38,253		38,353		$538,478
Change		–		5,508		5,508		$(29,251)

1 For share ownership compliance, Anne’s shares and DSUs held at December 31, 2017 are valued at $995,214.

2017 Voting results
	88.2% votes for	11.8% votes withheld

20     CAMECO CORPORATION

2017 Meetings and attendance

We believe that an active board governs more effectively. We expect our directors to attend all board meetings, all of their committee meetings and the annual meeting of shareholders.

Directors can participate by teleconference if they are unable to attend a meeting in person. The board must have a majority of directors in attendance to hold a meeting and transact business.

The table below is a summary of the 2017 meetings and attendance.

	NUMBER OF MEETINGS
	REGULAR		SPECIAL		OVERALL MEETING ATTENDANCE
Board		8		1		100%
Audit and finance		6		2		100%
Human resources and compensation		5				100%
Nominating, corporate governance and risk		4				100%
Reserves oversight		2		2		100%
Safety, health and environment		4				95%
Total number of meetings held		30		4		99%

The table below summarizes the meeting attendance for each director in 2017. The board and committees met in camera at each meeting without management present, and the independent directors met at least once.

As board chair, Neil McMillan was an ex-officio member of each board committee and attended 25 committee meetings in 2017. Board committees function separately from management, so Tim Gitzel, our president and CEO, is not a member of any board committee.

NAME	BOARD MEETINGS			COMMITTEE MEETINGS			TOTAL BOARD AND COMMITTEE MEETINGS
Ian Bruce		9 of 9	100%		13 of 13	100%		22 of 22	100%
Daniel Camus		9 of 9	100%		17 of 17	100%		26 of 26	100%
John Clappison		9 of 9	100%		12 of 12	100%		21 of 21	100%
Donald Deranger		9 of 9	100%		8 of 8	100%		17 of 17	100%
Catherine Gignac		9 of 9	100%		16 of 16	100%		25 of 25	100%
Tim Gitzel		9 of 9	100%					9 of 9	100%
Jim Gowans		9 of 9	100%		12 of 12	100%		21 of 21	100%
Kathryn Jackson		9 of 9	100%		12 of 13	92%		21 of 22	95%
Don Kayne		9 of 9	100%		13 of 13	100%		22 of 22	100%
Anne McLellan		9 of 9	100%		9 of 9	100%		18 of 18	100%
Neil McMillan		9 of 9	100%		25 of 25	100%		34 of 34	100%

2018 MANAGEMENT PROXY CIRCULAR     21

Director development

Our directors are knowledgeable about issues affecting our business, the nuclear industry, governance, compensation, and related matters. We believe that our education program gives them additional knowledge to help effectively oversee our affairs and stay abreast of important developments and issues within the context of our business.

Orientation

Our onboarding and orientation program familiarizes new directors with Cameco, its issues, strategy, culture and values, and what we expect of individual directors, the board, and committees. All new directors receive orientation so they can be fully engaged and contribute to the board and committees in meaningful ways. New directors receive orientation that includes:

· a company and board orientation on corporate organization and history, culture and values, strategy and business, board member expectations and corporate governance practices

· a director manual with information about Cameco and the uranium and nuclear industries, including copies of our recent regulatory filings, financial statements, governance documents and key policies

· a two-day nuclear industry seminar presented by management, in years when it is offered

· round table discussions with committee chairs and appropriate management representatives for each committee they join.

Kate Jackson received her orientation throughout the year and it covered all aspects of the orientation program set out above. It also included presentations from management on various nuclear industry topics because we did not do the nuclear industry seminar in 2017.

In 2017 we formalized the mentorship aspect of our orientation program. We now pair every new director with a longer serving director for ongoing, real-time practical support to supplement their orientation sessions.

All directors can participate in any part of the orientation program. Existing directors who join new committees also attend round table discussions, if required.

Continuing education

The board recognizes the importance of ongoing education for directors. Directors enhance their understanding of our business throughout the year by attending:

· seminars provided by management that cover issues relating to key business decisions, strategic planning and enterprise risks

· seminars on topics directors request

· Cameco-operated facility or other nuclear facility tours

· external conferences and seminars

· informal social gatherings with senior management.

The nominating, corporate governance and risk committee is responsible for the board education program, which includes a budget and approval process. Educational needs are identified through a self-assessment questionnaire, in individual meetings with the chair of the nominating, corporate governance and risk committee and in board and committee meetings. The corporate secretary maintains a calendar of educational opportunities for the directors that includes information about relevant conferences, webinars and other events.

Directors enhance their knowledge of Cameco’s operations and the nuclear industry through visits to Cameco-operated facilities or other nuclear facilities. In June 2017, a number of our directors traveled to Kazakhstan and received presentations at President Nazarbayev’s Foreign Investors’ Council meeting, as well as the Kazakhstan Canada Business Council meeting, which included presentations by Neil McMillan and Tim Gitzel. The group also toured the Inkai uranium operation. These visits also give directors an opportunity to interact with employees, business associates and community members.

Management made presentations to the board and committees during the year that were aimed at expanding the board’s knowledge of the business, the industry and the key risks and opportunities facing Cameco. We routinely send directors published materials that are likely to be of interest or include them in the meeting materials as supplemental reading.

The board recognizes the importance of ongoing education for directors and we pay for the cost for them to attend. Cameco’s board education program encourages directors to attend conferences or seminars

22     CAMECO CORPORATION

they deem appropriate to keep abreast of developments in the uranium and nuclear industries, corporate governance and the best practices relevant to their contribution to the board generally and their responsibilities on specific committees. Our directors attend courses and programs offered by the Institute of Corporate Directors (ICD), the National Association of Corporate Directors (NACD) and other education providers to stay current on developments in governance and areas relating to their committee responsibilities.

In addition to the items set out above, our directors attended the following continuing education sessions in 2017:

2017 DIRECTOR DEVELOPMENT	PRESENTED/HOSTED BY	ATTENDED BY
Nuclear industry
World Nuclear Association symposium 2017	World Nuclear Association (WNA)	John Clappison Tim Gitzel
Governance
2017 Global board leaders’ summit	NACD	Ian Bruce
The next board gender diversity conversations	ICD	Catherine Gignac
Shareholder engagement	ICD	Catherine Gignac
Significant issues of importance to directors	ICD	Catherine Gignac
Business models and strategies in an era of disruption	ICD	Catherine Gignac
Chairing the board: real world insights and perspectives	ICD	Catherine Gignac
Activism, M&A and board responsibilities	Barclays & Skadden	Kate Jackson
Audit and finance
Expectations of internal audit	Institute of Internal Auditors	John Clappison
Global developments	KMPG Global Head of Audit	John Clappison
Audit committee roundtable for the mining industry	KPMG	John Clappison
Directors in the mining industry	Canadian Public Accountability Board	John Clappison
Audit committee symposium	Deloitte	John Clappison
Audit committee oversight: proxy topics, accounting developments, regulatory/legal developments	KPMG	Kate Jackson
Key tax developments affecting power and utilities	KPMG	Kate Jackson
Economic and market
Energy conference	Peters & Co.	Ian Bruce
Hedging in energy industry	Rice Energy Inc.	Kate Jackson
The future of mobility: effects on energy industry	Deloitte	Kate Jackson
DOE quadrennial energy review	Deloitte	Kate Jackson
Risk
Cybersecurity: leading practices for board engagement	KPMG, Management	All directors
Fundamentals of IT oversight	ICD	Catherine Gignac
Cybersecurity and critical privacy issues	ICD	Catherine Gignac
Improving strategic capital management with integrated valuation and risk modelling methods	Prospectors & Developers Association of Canada (PDAC)	Jim Gowans
Mining and operations
Capital investment in the mining industry	PDAC	Jim Gowans
2017 US regulatory environment	PDAC	Jim Gowans
Mining day conference	Ernst & Young	Catherine Gignac

2018 MANAGEMENT PROXY CIRCULAR     23

Governance at Cameco

We believe that sound governance is the foundation

for strong corporate performance.

This section tells you about three key elements

of governance at Cameco: our shareholder

commitment, our governance principles and how

our board operates.

OUR GOVERNANCE PRACTICES

The nominating, corporate governance and risk committee ensures our governance policies and practices are sound and support the board in carrying out its duties. The committee monitors changing regulations and emerging best practices. The board approves our corporate governance guidelines annually and any changes as appropriate.

Where to find it
Our shareholder commitment		25
•	Shareholder engagement	25
•	Separate chair and CEO positions	25
•	Accountability	25
Governance principles		28
The board		30
•	Board composition	30
•	Our expectations for directors	35
•	Role of the board	36
Board committees		41

WHAT WE DO

Independent board – nine of our 10 nominated directors (90%) are independent	Ö
Non-executive chair leads the board – we maintain separate chair and CEO positions and have had a non-executive, independent chair of the board since 2003	Ö
Share ownership – we require our directors and executives to own shares, or have an equity interest, in Cameco to align their interests with those of our shareholders and share ownership is disclosed	Ö
Majority voting for directors – the board adopted a majority voting policy in 2006	Ö
Strong risk oversight – the board and committees oversee our risk management program and strategic, financial and operational risks	Ö
Formal assessment process – the directors assess the board, committees and individual director performance	Ö
Independent third-party review – the director assessment process includes an independent third-party effectiveness assessment every three years	Ö
Serving on other boards – we limit the number of other public company boards our directors can serve on, and serve on together	Ö
Director recruitment and board succession – we have term limits and a retirement policy for directors	Ö
Diverse board – our board has a diverse mix of skills, background and experience and 30% of this year’s director nominees are female	Ö
Independent advice – board committees have full authority to retain independent advisors to help them carry out their duties and responsibilities	Ö
Code of conduct and ethics – directors, officers and employees must comply with our code of conduct and confirm their compliance every year	Ö
Long-standing shareholder engagement – we communicate openly with shareholders and other stakeholders	Ö
Say on pay – we have held an advisory vote on our approach to executive compensation every year since 2010	Ö
WHAT WE DON’T DO
No slate voting – directors are individually elected	x
No overboarding of directors – no director sits on more than two other public company boards	x
No stock option awards for directors	x

24     CAMECO CORPORATION

Our shareholder commitment

We believe in transparency, integrity and strong stewardship, and are committed to increasing Cameco’s value to benefit all shareholders.

Shareholder engagement

We recognize the importance of strong and consistent engagement with shareholders. We communicate openly with shareholders and other key stakeholders. Our goal is to provide shareholders with clear information about our governance and compensation practices, and to continuously improve our practices and our disclosure.

We receive feedback from shareholders through one-on-one or group meetings with the chair of the board and other directors and/or members of management, as needed. We reply promptly to shareholder concerns and take appropriate action.

Our engagement activities include the following:

· senior management holds quarterly conference calls and webcasts with the investor community to review our most recently released financial and operating results

· our management team speaks at industry and investor conferences about public information on our business and operations

· senior management and the investor relations group engage with investors throughout the year to provide public information on our business

· following our 2017 annual meeting, senior management met with Glass Lewis & Co., LLC and Institutional Shareholder Services (ISS), two proxy advisory firms that provide voting and other governance advice to institutional investors, to maintain a dialogue on governance and compensation matters

· the chair of the board, the chair of the human resources and compensation committee, and the chair of the nominating, corporate governance and risk committee met independently with the Canadian Coalition for Good Governance (CCGG) in 2017 (this was Cameco’s second meeting with the CCGG in eight years)

· we have held a ‘say on pay’ advisory vote on our approach to executive compensation every year since 2010, and have received approval ratings of over 88% every year (see page 5 for details about this year’s advisory vote).

Senior management issues news releases throughout the year to report material information about Cameco, consistent with our commitment to communicating openly and on a timely basis to shareholders and other stakeholders (see page 26 to read more about our disclosure practices).

Separate chair and CEO positions

Leadership starts at the top. We believe it is important to maintain separate chair and CEO positions, and both positions are appointed by the board.

We believe that separating the roles provides stronger board leadership, fosters more effective decision-making, avoids conflicts of interest, and allows for more effective oversight and the ability to hold management accountable for the company’s activities (you can read more about the independent chair on page 29).

The chair and CEO positions each have a formal position description that describes the terms and responsibilities of the role. These are available on our website (cameco.com/about/governance).

Accountability

We are accountable to our shareholders and we demonstrate this commitment through sound governance practices and open and timely public disclosure.

Say on pay

We have held an advisory vote on ‘say on pay’ every year since we introduced it in 2010. We monitor developments in executive compensation and evolving best practices to make sure our programs and decisions are appropriate. We do a risk assessment of our executive compensation program every year and review our compensation programs and governance to reflect changes in market and best practices and changes in our business strategy.

You can write to the board or committee chair about your views on executive compensation (see board contact details on the next page).

2018 MANAGEMENT PROXY CIRCULAR      25

Accessible board

Shareholders, employees and other interested parties can write to the chair of the board, the committee chairs or the independent directors as a group.

Send your sealed envelope to our corporate office:

Cameco Corporation

2121-11th Street West

Saskatoon, SK S7M 1J3

Private and strictly confidential

Attention – Chair of the board of directors

You can use this address to write to the chair of the audit and finance committee or the human resources and compensation committee – make sure you mark on the envelope to whom you are directing the letter. Envelopes will be delivered unopened to the appropriate party.

Voting results

We promptly disclose the voting results of our shareholder meetings. We will disclose the voting results on the items of business at this year’s meeting in our report on the 2018 annual meeting, which will be released shortly after the meeting.

Go to our website (cameco.com/invest/events-presentations/2018-annual-meeting-of-shareholders) or sedar.com following the meeting to see the voting results.

Disclosure

We are committed to communicating openly and on a timely basis with shareholders, employees and the public, and to providing complete, accurate and balanced information in our disclosure documents.

The audit and finance committee is responsible for overseeing our review of our disclosure controls and procedures once a year and recommending any significant changes to the board for approval.

Our disclosure committee includes members of senior management and is responsible for:

· reviewing all news releases and public filings containing material information prior to their release

· evaluating the design and effectiveness of our disclosure controls and procedures to make sure they continue to provide reasonable assurance that information is gathered promptly and accurately, so we can make appropriate public disclosure that complies with legal requirements

· providing regular updates on our public disclosure to the audit and finance committee.

Each board committee reviews the material public disclosure relevant to its mandate before the board considers it for approval:

· the audit and finance committee reviews the annual and interim financial statements, management’s discussion and analysis (MD&A) and related news releases

· the safety, health and environment committee reviews the sustainable development report

· the reserves oversight committee reviews the reserve and resource estimates and technical reports

· the human resources and compensation committee and the nominating, corporate governance and risk committee review this management proxy circular.

The board also reviews and approves the following publicly-filed documents:

· prospectuses

· annual information forms

· US Form 40-F filings

· other disclosure documents that must be approved by the directors according to securities laws, securities regulations or stock exchange rules.

The CEO and the CFO meet regularly with investment analysts and institutional investors. Our website (cameco.com) has information for shareholders, investment analysts, the media and the public, and our Investor Relations department also provides information to shareholders and responds to general questions or concerns.

You can contact our Investor Relations department by:

Phone:	306.956.6340
Fax:	306.956.6318
Email:	go to the Contact section of our website and complete the email form.

26     CAMECO CORPORATION

Shareholder proposals

Shareholders who meet eligibility requirements under the Canada Business Corporations Act (CBCA) can submit a shareholder proposal as an item of business for our annual shareholder meeting in 2019. Proposals must be submitted to our corporate secretary by January 7, 2019 for next year’s annual meeting. Shareholder proposals that comply with the CBCA requirements and are received by that date, and our responses will be printed in the management proxy circular we send to shareholders next spring.

Accessing our governance and other regulatory disclosure

We believe in transparent disclosure for our stakeholders. Our key governance documents are available on our website (cameco.com/about/governance):

· articles and bylaws

· our governance framework

· our governance guidelines

· our code of conduct and ethics

· the mandates of the board and its committees

· definition of independent director and related definitions

· board diversity policy

· board education program

· position descriptions for the board chair and the CEO

· director and executive share ownership guidelines

· executive incentive compensation recoupment policy.

Our publicly-filed disclosure documents are available on our website (cameco.com), SEDAR (sedar.com) and EDGAR (sec.gov/edgar.shtml), including:

· 2017 annual report, which includes financial information about us, as provided in the audited financial statements and MD&A for our most recently completed financial year

· subsequent quarterly reports

· our most recent annual information form, particularly the Governance – About the audit and finance committee section which has additional information about our audit and finance committee, the audit and finance committee mandate in Appendix A, and other information required by Canadian securities regulators

· our code of conduct and ethics, articles of incorporation and the bylaws, and the board committee mandates

· our voting results following the annual meeting of shareholders.

Filings with the US Securities and Exchange Commission (SEC) are available under company filings on the SEC website (sec.gov).

You can request printed versions of these documents at no charge by writing to the corporate secretary at Cameco Corporation, 2121-11^th Street West, Saskatoon, SK S7M 1J3.

2018 MANAGEMENT PROXY CIRCULAR      27

Governance principles

Code of conduct and ethics

We expect our directors, officers, employees and those of our subsidiaries to act with honesty and integrity. Everyone must abide by our code of conduct and ethics, which sets out our principles and guidelines for ethical behaviour under the law, within Cameco, with our shareholders, our communities and the public, and with our customers, partners, contractors, suppliers and competitors.

Everyone must read the code and sign a declaration that they will comply with the code when they join the company or the board. We review the code every year and promptly communicate any changes. Officers and employees who have management responsibilities or work in supply chain management, internal audit, finance/treasury/tax, business technology services, marketing, corporate development, legal, human resources, and our executive offices must sign a new declaration form every year.

Directors must declare any conflicts of interest and excuse themselves from any discussions or decisions where their business or personal interests would create a conflict of interest.

Anyone can report a concern or violation of the code confidentially and anonymously by phone or online, at any time, through our ethics (whistleblower) hotline.

The audit and finance committee reviews concerns relating to senior management and directors. Our conduct and ethics committee reviews all other concerns and investigates matters under the direction of the audit and finance committee.

Compliance

We are a public company and our shares trade on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). We comply with applicable corporate governance guidelines and requirements in Canada and the United States, including:

· the corporate governance standards that apply to Canadian companies listed on the TSX

· the requirements of the Sarbanes-Oxley Act of 2002 (SOx)

· the NYSE corporate governance standards that apply to foreign private issuers registered with the Securities and Exchange Commission (SEC) in the US.

We also voluntarily comply with most of the NYSE corporate governance standards that apply to US issuers, with the following exceptions:

· director independence standards – we generally comply with the NYSE standards, but in some cases we may determine that a director is independent when only the Canadian independence standards are satisfied

· shareholder approval of equity compensation plans – we comply with the TSX rules, which require shareholders to approve equity compensation plans only if they involve newly issued securities. The NYSE standards require shareholders to approve the plans and any material revisions, whether or not the securities issued under the plans are newly issued or purchased on the open market, subject to a few limited exceptions

· appointment of auditors – we comply with the Canada Business Corporations Act, which requires that the auditors be appointed by the shareholders at the company’s annual meeting. The NYSE standards require the audit committee be directly responsible for the appointment of any registered accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services. However, there is an exception for foreign private issuers that are required under a home country law to have auditors selected according to home country standards. Our audit and finance committee is responsible for evaluating the auditors and recommending the appointment of the auditors to the board, who recommends appointment to shareholders.

Governance guidelines

The board has formal governance guidelines that set out our approach to governance and the board’s governance role and practices. The guidelines ensure we comply with the legal requirements and standards listed above, conduct ourselves in the best interests of Cameco and meet industry best practices. The guidelines are reviewed and updated regularly.

28     CAMECO CORPORATION

Independence

We believe that a substantial majority of our directors must be independent for the board to be effective and that the audit and finance committee, human resources and compensation committee and nominating, corporate governance and risk committee must be 100% independent. The majority of our directors are unrelated to Cameco.

A director is independent if he or she does not have a direct or indirect material relationship with us. A relationship is material if it could reasonably interfere with a director’s ability to make independent decisions, regardless of any other association he or she may have. Our independence criteria meets the standards of the Canadian Securities Administrators as set out in Multilateral Instrument 52-110 – Audit Committees, National Policy 58-201 – Corporate Governance Guidelines and the NYSE corporate governance standards, including the NYSE standards on independence of human resources committee members introduced in 2013.

We review our independence criteria and director status every year, and you can find our complete definition of independence on our website (cameco.com/about/governance/governance-guidelines).

Independent chair

The board appoints the independent chair to help it function independently of management. We have had a non-executive, independent chair of the board since 2003.

The chair has various duties and responsibilities:

· leading, managing and organizing the board consistent with our approach to governance

· encouraging high performance and commitment of all directors

· presiding as chair at all board and shareholder meetings

· overseeing the board’s strategic focus to ensure that it represents Cameco’s best interests

· helping to set the tone and culture of Cameco

· overseeing the board’s procedures so it can carry out its work effectively, efficiently and independently of management

· overseeing all board matters so they are properly addressed and brought to resolution as required

· requiring any matters delegated to the board committees to be properly carried out

· acting as the liaison between the board and the CEO and providing advice, counsel and mentorship to the CEO

· meeting with shareholders and other stakeholders in consultation with management

· participating in the recruitment and orientation of new directors

· ensuring that Cameco provides timely and relevant information and access to other resources to support the board’s work.

You can access a copy of the chair’s position description on our website (cameco.com/about/governance/chairs-role).

2018 MANAGEMENT PROXY CIRCULAR      29

The board

The board is responsible for overseeing management and our strategy and business affairs. Its goal is to ensure we operate as a successful business, optimizing financial returns while effectively managing risk.

The board encourages open dialogue and works within a climate of respect, trust and candour. The board fulfills its duties by:

· maintaining a governance framework that establishes broad areas of responsibility and has appropriate checks and balances for effective decision-making and approvals

· making decisions that set the tone, character and strategic direction for Cameco

· approving the vision, mission, value statements and enterprise-level policies developed by management

· regularly monitoring management, including its leadership, recommendations, decisions and execution of strategies to ensure that they carry out their responsibilities and deliver shareholder value.

The board carries out its responsibilities directly and through its five standing committees. This provides proper oversight and accountability for specific aspects of governance, risk and Cameco’s business activities and affairs, and frees up the board to focus more on our strategic priorities, broader oversight of enterprise risk and other matters (see Role of the board and Board committees beginning on pages 36 and 41, respectively).

The board and committees meet in camera without management present at all meetings, including those held by teleconference.

Board composition

Independence

All of the nominated directors are independent, except for Tim Gitzel because he is our president and CEO (see page 29 to read more about our principles on independence).

Board chair

Neil McMillan has been our independent, non-executive chair of the board since May 2013. He has been a member of the board since 2002 and has diverse experience through his work in mining, government relations and the investment industry and as a former CEO. His letter to shareholders begins on page 1.

Neil McMillan’s term as board chair will end following the annual general meeting in May 2018, and Ian Bruce has been selected by the board of directors to succeed him.

Starting in May 2017, Anne McLellan, chair of the nominating, corporate governance and risk committee, led the board process for selecting the new board chair. The process was based on five principles: fairness and transparency, consensus building, free and unfettered discussion, confidentiality and the importance of the chair/CEO relationship. The process focused on internal candidates since the directors believed that there were appropriate successors on the current board and preferred to have a new chair with existing knowledge of Cameco.

Anne conducted one-on-one interviews with each director to solicit input for developing the selection criteria for the new chair. The selection criteria included specific competencies, experiences and attributes that the board members identified as important at this particular stage for Cameco, which Anne reviewed with each director in follow-up interviews to solicit feedback on an appropriate successor. Anne presented the insights and feedback to the nominating, corporate governance and risk committee for review and discussion. The nominating, corporate governance and risk committee made a recommendation to the board. The committee’s recommendation resulted in Ian’s selection as the next board chair. You can read about Ian’s background and experience in his profile on page 11.

30     CAMECO CORPORATION

Skills, attributes and experience

A board that has certain core qualities and a broad mix of skills and experience is best equipped to oversee our strategic direction, understand issues that can arise with a company of our size and complexity, and make informed decisions.

Core attributes

All of our directors are expected to possess the following core attributes that are fundamental to serving on our board:

BUSINESS JUDGMENT	INTEGRITY AND ACCOUNTABILITY	ENGAGEMENT
Track record of leveraging experience and wisdom in making sound strategic and operational business decisions. Demonstrates business acumen and a mindset for risk oversight.	Demonstrates good character and insists on high ethical standards, recognizes and avoids potential and actual conflicts of interest, maintains strict confidentiality, is accountable for board decisions, acts in Cameco’s best interests and maintains public confidence and goodwill of Cameco’s shareholders and other stakeholders.	Actively participates in meetings and develops a strong understanding of Cameco’s business. Demonstrates an information-seeking orientation and knowledge of current issues and trends respecting public companies. Exhibits familiarity with international, national and local affairs.
COMMITMENT	TEAMWORK	COMMUNICATION
Availability and willingness to travel, attend and contribute to board and committee functions and take leadership roles as required.	Demonstrates perception, acuity, tact and rapport to build constructive working relationships and dynamics that engender mutual trust, respect and contribution. Demonstrates an orientation toward resolving differences of opinion, forging consensus, reaching solutions and maintains resiliency and composure under difficult circumstances.	Ability to listen carefully, raise questions constructively and encourage and build upon open discussion of key issues.
INDEPENDENT-MINDEDNESS	FINANCIAL LITERACY	RECORD OF ACHIEVEMENT
Willingness to formulate or maintain one’s own views and to challenge the prevailing opinion.	Ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by Cameco’s financial statements. Knowledge of IFRS and an understanding of internal controls and procedures for financial reporting.	Has a history and reputation of achievement that demonstrates the ability to perform at the highest level and that reflects high standards for one’s self and for others.

Competency matrix

The board uses a competency matrix to assess composition and ensure it has an appropriate mix of skills and competencies to govern effectively and be a strategic resource for Cameco. The nominating, corporate governance and risk committee reviews director competencies every year to ensure they continue to meet Cameco’s needs.

Each director completes an annual assessment of his or her competencies using detailed guidelines. Directors are expected to assess themselves as having expert knowledge, strong knowledge or basic knowledge on each competency. The nominating, corporate governance and risk committee chair reviews each director’s assessment with him or her and the committee reviews the results for consistency.

The table on the next page shows the profile of the proposed board, including the categories and descriptions of essential skills and experience and the percentage of nominated directors who have indicated their level of knowledge as expert or strong in each category.

2018 MANAGEMENT PROXY CIRCULAR      31

Skills and experience	Directors having expert and strong working knowledge
Board / corporate governance Prior or current director of a major organization with mature governance practices
International Experience with, or strong understanding of, international operations, economics, commodity trading and geo-politics, preferably in countries or regions where we have or are developing operations
Investments / mergers and acquisitions Experience in the field of investment banking or with mergers and acquisitions, evaluation of investment strategy, and capital allocation, structure and markets
Investor relations Experience with, or strong understanding of, the perspectives of major, long-term and other investors, capital markets, and the investment community, both domestically and internationally, and in shareholder engagement
Risk oversight Experience in risk governance, including monitoring both strategic and operational / compliance risks
Enterprise leadership Experience, whether as a prior or current CEO or senior officer or otherwise, of a large public company or major organization with a track record of value creation and successful implementation of strategic direction
Human resources and executive compensation Thorough understanding of executive compensation, the oversight of succession planning, talent development and retention, and pension programs
Legal / regulatory Experience ensuring compliance with laws, regulations and business rules
Uranium / nuclear Strong knowledge of markets, competitors, business issues and imperatives, and the domestic and international regulatory environment
Capital projects Experience overseeing and evaluating large capital projects and in project management
Financial acumen Experience, whether as a professional accountant, CFO or otherwise, in financial accounting and reporting, including internal controls, IFRS, evaluation of financial statements and corporate finance
Safety, health and environment / corporate responsibility Experience in, or strong understanding of, leading safety, health and environmental practices, associated risks and regulatory requirements, and in sound corporate responsibility and sustainable development practices, advocacy and reporting
Stakeholder relations / government / public policy Experience in, or a strong understanding of, the workings of government and public policy both domestically and internationally, and in stakeholder engagement or management
Mining, exploration and operations Experience with a leading mining or resource company with reserves, technology, exploration and operations expertise
Operational excellence Experience in a complex chemical or nuclear operating environment, creating and maintaining a culture focused on safety, the environment and operational excellence

100% 90% 80% 70%

32     CAMECO CORPORATION

Board diversity

A board with a diverse mix of skills, background, experience, gender and age, that also reflects the evolving demographics and geographic areas where we carry out business, is important for sound decision-making and good governance.

The board adopted a formal written diversity policy in February 2014.

The nominating, corporate governance and risk committee reviews board diversity every year. It recommends measurable objectives for enhancing diversity, including objectives for female, aboriginal, geographic and age representation. The committee reviews our progress in achieving these objectives as part of the annual board and committee evaluations and also refers to the objectives when selecting new director candidates.

Female representation   The board believes gender diversity is important, and our diversity policy requires at least 25% of directors to be female. We currently have three female directors, representing 30% of the nominated directors.

Indigenous representation

The board is committed to building long-lasting and trusting relationships with communities where we operate, and a significant portion of Cameco’s operations is in northern Saskatchewan. Our diversity policy requires at least one director to have an aboriginal background and be from Saskatchewan to bring an understanding of the culture, heritage, values, beliefs and rights of the local indigenous peoples to the board. We have one aboriginal director.

Geographic representation

The board also believes it is important to have directors with experience living or working in jurisdictions where we operate or do business. Our diversity policy requires the board to have directors with extensive experience in geographical areas where Cameco has or anticipates having significant business interests. Don Kayne was appointed to the board in January 2016, and brings extensive experience in the emerging Asian markets, including China. Kate Jackson was appointed to the board in January 2017 and brings a deep knowledge of the US nuclear industry. Our board is subject to, and complies with, the terms of the Investment Canada Act and the Uranium Non-Resident Ownership Policy, which require at least two-thirds of our directors to be Canadian citizens, and the CBCA, which requires at least half of our directors to be Canadian residents.

Age   While the board recognizes the correlation between age and experience, it believes that directors of different ages bring a wider range of viewpoints. Our diversity policy requires the board to represent a range of ages.

2018 MANAGEMENT PROXY CIRCULAR      33

Board refreshment and the nomination process

The board recognizes the need to balance the benefit of experience and the need for new perspectives. The nominating, corporate governance and risk committee is responsible for ensuring that the board’s succession planning process and policy on tenure and retirement provide for board refreshment that meets our ongoing needs. The committee is also responsible for the annual review of board composition and the nomination process.

Term limits and retirement

Directors are not nominated for election at an annual meeting after completing 15 years of continuous service or after they turn 72, whichever is earlier. In exceptional circumstances, if it is in Cameco’s best interest, the board has the discretion to nominate a director for re-election for an additional one-year term after age 72 or 15 years of service. The term for serving as board chair is five years regardless of the director’s age or years of service. The CEO typically resigns from the board when he or she retires from Cameco.

Director recruitment and board succession

The nominating, corporate governance and risk committee is responsible for overseeing board succession. It reviews the director competency and attribute matrix regularly to ensure that the board has the right mix of diversity, skills and experience. It also monitors upcoming director retirements to identify specific desirable skills in new recruits.

The committee is responsible for the recruitment process. It keeps an evergreen list of suitable candidates based on their skills, experience, character, integrity, judgment, record of achievement, diversity and other qualities or qualifications that would enhance overall composition and oversight capabilities of our board and considers any recommendations made by shareholders.

The committee follows established guidelines and procedures for recruiting and selecting the best candidates. An external search firm is usually retained to cast a wide net to bring forward the best candidates.

The committee follows a tiered interview process to determine the most suitable candidates. The committee approves the list of candidates to be interviewed, a selection committee (consisting of the chair of the board, committee chair and the CEO) interviews the candidates, and further interviews are conducted by the nominating, corporate governance and risk committee and other committee chairs if necessary.

Three directors have joined the board in the last five years, increasing the board’s diversity and broadening its skills in mergers and acquisitions, marketing and sales, operational excellence, and mineral resource estimation. The new directors also have senior leadership and CEO experience as well as experience in mining and exploration, the nuclear industry and international business.

Nomination process

The nominating, corporate governance and risk committee is responsible for recommending the candidates for nomination on an annual basis. Part of the committee’s process includes reviewing the list of potential conflict situations, as well as a report on actual and potential conflicts of interest, before making recommendations respecting the nomination of directors for election by shareholders.

Shareholders may at any time submit to the board the names of individuals for consideration as directors. The committee will consider any submissions when assessing the diversity, skills and experience required on the board to enhance overall board composition and oversight capabilities.

Shareholders collectively owning more than 5% of Cameco’s outstanding shares may nominate individuals to serve as directors and have their nominations included in Cameco’s proxy circular for its annual meeting by submitting a shareholder proposal in compliance with the provisions of the Canada Business Corporations Act. No such shareholder proposal was received this year. The deadline for shareholder proposals for the 2019 annual meeting of shareholders is January 7, 2019.

Our by-laws require shareholders who wish to nominate directors to give advance notice of the nominations. These requirements are intended to provide a transparent, structured and fair process with a view to providing shareholders an opportunity to submit their proxy voting instructions on an informed basis. In accordance with the by-laws, written notice of the nominations must be provided to Cameco’s corporate secretary no later than 30 days and no more than 65 days prior to the date of the annual meeting and must include the information prescribed in the by-laws. A copy of our by-laws is available on our website at www.cameco.com and is filed on SEDAR at www.sedar.com.

34     CAMECO CORPORATION

Our expectations for directors

We expect each member of the board to act honestly and in good faith, and to exercise business judgment that is in Cameco’s best interest. We expect directors to bring their skills, experience and functional expertise to the board and to draw on a variety of resources to support their decision-making, including materials prepared by management, their own research and business experience, independently-prepared media reports on Cameco and the industry, and knowledge gained from serving on other boards.

We also expect each director to:

· comply with our code of conduct and ethics

· promptly report any perceived, potential or actual conflicts of interest

· develop an understanding of our strategy, business environment, operations, performance, financial position and the markets we operate in

· diligently prepare for each board and committee meeting

· attend all board meetings, their committee meetings and the annual meeting of shareholders

· actively participate in each meeting, and seek clarification from management and outside advisors to fully understand the issues

· participate in our board education program

· participate in the board, committee and director assessment process.

Avoiding conflicts of interest

Directors do their best to avoid situations where their interests might conflict with their duty to act in Cameco’s best interest. Each director must promptly report a potential, perceived or actual conflict of interest to the corporate secretary and not participate in any discussions or decisions about the matter.

The corporate secretary maintains a list of issues and potential conflict situations, and monitors them on an ongoing basis. The corporate secretary helps identify when actions may be desirable and consults with legal counsel if necessary to determine whether a director has a conflict.

Serving on other boards

Our directors do not serve on the boards of competitor firms and cannot join organizations or groups that may have adverse interests, unless they have the board’s permission. Our governance guidelines state that a director who is an active CEO can serve on a maximum of three public company boards, including their own board and the Cameco board. Our CEO can only serve on one other board with the consent of the Cameco board, and other directors can serve on a maximum of five public company boards, including the Cameco board. Members of the audit and finance committee cannot serve on the audit committees of more than two additional public companies, without the board’s approval. None of the directors currently exceed any of our limits.

The board reviewed these limits in 2016 and determined that they continue to be appropriate to avoid overboarding by directors. The chair of the nominating, corporate governance and risk committee discusses board memberships with each director during their annual interview, including their commitment to the Cameco board and capacity to handle the board and committee workload.

The board approved Tim Gitzel’s appointment to the board of The Mosaic Company in October 2013.

Directors must advise the chair of the board, the chair of the nominating, corporate governance and risk committee, the CEO and the corporate secretary if they are considering a directorship with another public company. A director can temporarily exceed the limit by one directorship if he or she declared an intention to resign from, or not stand for re-election to, at least one other board as of that company’s next annual general meeting.

Board interlocks

A board interlock is when directors serve together on another board. We do not currently have any board interlocks. We do not allow more than two directors to serve together on the board of another public company. We also do not allow directors to serve together on more than two other public company boards.

Change in position

If a director’s principal occupation or business association changes substantially, the director is required to promptly offer his or her resignation to the board chair, and the board will decide whether or not to accept it.

2018 MANAGEMENT PROXY CIRCULAR      35

Role of the board

The company articles require our board to have between three and 15 directors. The board has decided that ten directors are to be elected at this year’s annual meeting.

Mandate	ABOUT OUR BOARD MEETINGS
The board has a formal mandate (see Appendix B) that lists its specific duties and responsibilities including the following: ·   selecting, evaluating and, if necessary, terminating the CEO ·   assessing the integrity of the executive officers and ensuring there is a culture of integrity throughout Cameco ·   strategic planning and monitoring our performance against the plan ·   succession planning and monitoring management’s performance and compensation
	The board engages in lively debate on strategy and items of business, challenging management in a constructive and healthy manner. The board considers the interests of shareholders, debt holders, customers, employees, communities where we operate, governments, regulators, the general public and the environment when making business decisions.

· approving policies and procedures to manage our

risks and overseeing management’s efforts to mitigate material risks.

The board reviews its mandate annually. Each board committee has a mandate that lists the responsibilities and duties of the committee and chair (see Board committees beginning on page 41).

Overseeing the CEO

The CEO is appointed by the board and is responsible for managing Cameco’s affairs. This includes articulating our vision, focusing on creating value for shareholders, and developing and implementing a strategic plan that is consistent with the corporate vision.

Our annual objectives become the CEO’s mandate from year to year, and they include specific, quantifiable goals. The CEO’s objectives are reviewed by the human resources and compensation committee and approved by the board. The CEO is accountable to the board and committees, and the board conducts a formal review of his performance every year. The human resources and compensation committee reviews and discusses the results of the formal review, followed by a discussion with the board. Then the board chair and chair of the human resources and compensation committee meet with the CEO to discuss the results.

The board has established clear limits of authority for the CEO, and these are described in our delegation of financial authority policy. The board must approve several kinds of decisions, including:

· operating expenditures that exceed the total operating budget by more than 10%

· unbudgeted project expenditures over $10 million per transaction, or over $50 million in total per year

· cost overruns on budgeted project expenditures that are more than $15 million per transaction, or over $50 million in total per year

· any acquisition or disposition of assets over $10 million per transaction, or over $50 million in total per year.

The CEO position description is available on our website (cameco.com/about/governance/ceos-role).

Strategic planning

The board oversees the planning, progress and fulfillment of our strategic goals and is actively involved in the strategic planning process. The board sets aside time at each meeting to discuss strategy with management and monitor progress. Board members discuss and analyze the main risks facing the business, strategic issues, competitive developments and corporate opportunities. The board also discusses possible adjustments to the strategic plan in light of our progress and the current business environment. The board measures success and fulfillment of our strategic plan by assessing our performance results against the annual corporate objectives. The board committees are also involved in the strategic planning process.

36     CAMECO CORPORATION

Risk oversight

The board maintains primary responsibility for risk oversight with a view to ensuring the balance of risk and potential return support Cameco’s long-term strategy. Time is dedicated to risk identification, management, and reporting at both board and committee meetings.

As a responsible corporation, we proactively address a range of strategic, financial, operational and other key risks, assessing all risks against our four measures of success.

Cameco identifies risk in five broad categories:

· Strategic

· Financial

· Operational (safety and environment)

· Human capital

· Social, governance and compliance.

Decisions to accept, mitigate, or transfer identified risks guide management’s plans within our strategic planning and budgeting process. Employees throughout the company take ownership of the risks specific to their area, and are responsible for developing and implementing the controls to manage and re-assess risk.

The board directly oversees strategic risks, as well as enterprise risks, which are those risks identified as having the potential to significantly impact the company under one or more of our measures of success. Enterprise risks are assigned to the committees for ongoing oversight. The table below shows how the board and committees monitor risk across the organization. You can read about the board committees beginning on page 41 and compensation risk on page 49.

BOARD OF DIRECTORS
The board provides oversight on strategic business risks
COMMITTEE AREAS OF RESPONSIBILITY
Audit and finance Oversees financial risks, such as financing, foreign currency, counterparty and credit exposure, and capital projects risks	Human resources and compensation Oversees compensation, talent management, succession, and cyber-security risks	Nominating, corporate governance and risk Oversees the risk management function to ensure the process and practices are robust, and makes recommendations to the board	Reserves oversight Oversees the estimating of our mineral reserves and business-related operational risks	Safety, health and environment Oversees safety, health and environmental risks related to our operations, and risks to our social licence to operate

Managing risk

Our risk policy sets out a broad, systematic approach to identifying, assessing, reporting and managing the significant risks we face in our business and operations. It is reviewed annually to ensure that it continues to meet our needs.

Cameco’s enterprise risk management (ERM) program involves all aspects of our business and follows the framework of ISO 31000: Risk Management – Guidelines. We use a common risk matrix throughout the company and consider any risk that has the potential to significantly affect our ability to achieve our corporate objectives or strategic plan as an enterprise risk. We conduct a gap analysis between enterprise-level and strategic risks to further embed strategic risk into our management process. As part of the annual risk review process, management votes on the top risks to refine our focus for monitoring and reporting on risks over the next year. Management also reviews monthly updates on the company’s progress in managing these top risks.

Time is set aside at each regular board meeting to discuss strategy, which includes strategic risk and reputational risk exposure. Management makes regular presentations throughout the year to the committees, or, in some cases, the full board to facilitate a broader understanding of the enterprise risks and the associated risk management strategies. Each committee receives a quarterly written report on the status of monitoring and mitigation activities related to the risks it has been assigned. Our practice of regular monitoring and reporting assures the board that risks are being appropriately managed, which supports good governance.

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Internal controls

The board and committees are responsible for monitoring the integrity of our internal controls and management information systems.

The audit and finance committee oversees the internal controls, including controls over accounting and financial reporting systems and receives regular reports on internal controls from management. This oversight provides reasonable assurance of the reliability of our financial information and the safeguarding of assets.

The internal auditor reports directly to the audit and finance committee chair and updates the committee quarterly, while the CFO makes quarterly presentations on our financial results and forecasts to the audit and finance committee and the board.

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting to provide reasonable assurance that public reporting of our financial information is reliable and accurate, that our transactions are appropriately accounted for, and that our assets are adequately safeguarded. Management evaluates the effectiveness of our system of internal control over financial reporting.

Succession planning and leadership development

The board oversees succession planning to ensure we have a pool of strong, diverse candidates for senior management positions, and that we nurture talent and attract and retain key people for our long-term success.

Our approach to leadership development focuses on building advanced competencies throughout the organization, identifying high-potential employees and preparing them to take on executive officer roles in the future. The composition of our senior management team is a direct result of this approach.

The human resources and compensation committee reviews succession planning for senior management and involves the audit and finance committee in reviewing the succession plan for the CFO, controller and senior finance and audit roles.

The board reviews the succession plans and has the opportunity to meet high-potential employees through board presentations and informal social gatherings, such as board dinners and site visits.

Workplace diversity and inclusion

Building and cultivating a workplace that values diversity and inclusion has become a business necessity during these times of change. A diverse and inclusive workplace can bring many organizational benefits, including better market position, successful decision-making, an enhanced ability to reach strategic goals, improved organizational outcomes, a strengthened ability to continue to innovate, change and grow, and a stronger bottom line.

In 2017, we continued to make progress on diversity and inclusion, focusing on the continued implementation of Cameco’s long-term diversity and inclusion plan:

· continued to review our resident of Saskatchewan’s north (RSN) workforce strategy by examining forecasts of northern workforce requirements and reviewing training and development opportunities through a partnership between Northern Career Quest and Cameco

· continued to address disrespect in the workplace with the establishment and roll-out of phase I of Cameco’s Expect Respect campaign. Phase I included the launch of the Expect Respect web page, training to recommunicate Cameco’s expectations and review behaviours and actions to address disrespect, diversity and inclusion, online learning resources for employees and supervisors, and guidance for employees to report complaints. Preparation of phase II is currently underway

· increased attention on gender diversity, including our efforts to provide female-specific personal protective equipment for women at all of our operations and the development of action plans to address priority gender diversity challenges

· introduced diversity and inclusion awareness initiatives, including posters and displays to bring attention to various diversity topics, launch of the diversity and inclusion web page through an internal online platform for related learning resources, and an employee survey to receive feedback

· continued to review our HR programs, policies and procedures and made the necessary revisions to ensure inclusive practices are in place for Cameco’s diverse workforce.

38     CAMECO CORPORATION

Women in leadership

We have one female executive officer, representing 20% of the executive officers, and four female vice-presidents, representing 31% of our senior management team. Cameco currently has about 576 female employees across North America, representing 23% of our workforce.

Generally executive officer appointments are a result of our succession framework to build advanced competencies throughout the organization and to identify high-potential employees, including female employees, and prepare them to take on executive roles in the future. When appointing executive officers, we strive for a complement of female executive officers that at a minimum reflects the proportion of women in our workforce. We expect that our five-year diversity and inclusion plan will result in more women being identified and prepared for senior level positions at Cameco.

We have a diversity plan with specific objectives each year to improve workplace diversity. We have not set a target for the number of female executive officers, but our current processes are helping us evaluate how to remove barriers to increase participation and representation and, ultimately, the number of women leaders. We expect the work we are doing will lead to qualitative and quantitative measures to assess the effectiveness of management’s actions.

Indigenous workforce

Cameco is a leading industrial employer of First Nations and Métis people. Indigenous employees and contractors make up more than 44% of the workforce at our northern Saskatchewan operations. We also have a dedicated team of employees at our northern affairs office and at our satellite offices throughout northern Saskatchewan specifically working on local workforce development, including leadership development.

Board, committee and director assessments

Performance and effectiveness assessments of the board, committees and individual directors are conducted annually. The nominating, corporate governance and risk committee oversees the board, committee and director assessment process. An independent third-party review of the board, committees and directors is conducted every three years, and during the other years the assessment is completed using a confidential questionnaire process.

The nominating, corporate governance and risk committee works with management to ensure the questionnaires are structured to receive meaningful feedback from directors. The results are used to assess the board, the CEO, the composition of the committees and meeting effectiveness, identify any gaps in skills and experience, and to ensure that the board is making the best use of each director’s expertise.

Responses are confidential and tallied externally to preserve anonymity and encourage open comments and full disclosure. Individual directors are not identified in the reports, other than the director self-assessments which are reviewed by the board chair and the chair of the nominating, corporate governance and risk committee who receive the reports. Board assessment results are shared with all board members and committee assessment results are shared with all committee members.

Directors also complete a self-assessment of their skills, performance and relevant experience. The nominating, corporate governance and risk committee chair or the board chair also conducts one-on-one interviews to allow directors to speak candidly about any issues or concerns relating to their performance, the performance of their peers, or the functioning of the board. The interview also allows a discussion around capacity and commitment to the board as well as education opportunities.

2018 MANAGEMENT PROXY CIRCULAR      39

The nominating, corporate governance and risk committee reviews the results of the board assessments, and makes recommendations to the board about board and/or committee composition, or changes to the structure, process or other aspects to enhance board performance.

Set out below is an overview of the full suite of questionnaires that would be undertaken in years when an independent assessment is not done. The CEO evaluation is done every year.

QUESTIONNAIRE	ACTIONS
Board evaluation    •completed by all directors	•  nominating, corporate governance and risk committee analyzes results and prepares a summary report for the board
Director self-evaluation    •completed by all directors	•  the nominating, corporate governance and risk committee chair and the board chair analyze results and discuss them with individual directors during personal interviews
Board chair evaluation    •completed by all directors	•  nominating, corporate governance and risk committee chair reviews the results and presents them to the board chair
Committee evaluation    •completed by members of each Committee	•  each committee chair analyzes the results and prepares a summary report for the committee and reports to the committee
Evaluation of committee chairs    •completed by members of each committee	•  board chair reviews the results and discusses any issues raised with each committee chair
CEO evaluation    •completed by the non-executive directors	•  the human resources and compensation committee reviews and discusses the results •  the board discusses the results and the board chair and human resources and compensation committee chair review them with the CEO

2017 Assessment

An independent third-party effectiveness assessment was conducted in 2017 by Patrick O’Callaghan, a Canadian governance consultant. The board effectiveness assessment process included an assessment of the board chair, the board, the committees and the committee chairs. A set of interview guidelines were developed to provide a common framework for interviews without limiting the issues participants wished to discuss. Mr. O’Callaghan interviewed all directors and members of the senior executive team. Following his interviews, a written report on the assessment was provided to the nominating, corporate governance and risk committee and the board of directors. Mr. O’Callaghan met with the full board in-person to present his findings and recommendations.

The result of the assessment was a report that indicated that Cameco has strong and effective board practices. The report included some non-urgent recommendations. An action plan is being developed and progress will be monitored by the nominating, corporate governance and risk committee.

40     CAMECO CORPORATION

Board committees

The board carries out its responsibilities directly and through its five standing committees. Committee work fulfills a specific governance role and supports our four measures of success. The committee structure ensures directors can devote the requisite skills, time and attention to specific matters and supports the board in effectively overseeing our business and affairs and providing sound governance generally.

Each committee sets aside time at each meeting to meet in camera without management present, and reports the business of its meetings to the board in a timely manner.

Committee responsibilities

Each board committee was formed based on the need for detailed oversight in key areas. The specific risks assigned to each committee for oversight are addressed in the work plan developed annually that drives its priorities and activities. Each committee:

· has a mandate outlining the responsibilities and duties of the committee and its chair

· reviews its mandate annually

· reviews its performance against the committee’s mandate.

Each committee chair is responsible for determining the meeting agenda, how often the committee will meet, the conduct of each meeting, and for chairing their committee meetings, as set out in each committee mandate.

Committee membership

Committee membership is reviewed after a new board member is elected and when changes are appropriate. We strive for periodic rotation of committee members but it is not mandated so that we can benefit from continuity and experience of committee members, as appropriate. Changes are based on the recommendations of the chair of the board and the chair of the nominating, corporate governance and risk committee.

Committee chair rotation

Our committee chair rotation policy calls for rotating the positions every five years. Changes to the committee chairs and committee memberships are made in a way that balances continuity and the need for fresh perspectives, while recognizing each director’s particular areas of expertise.

Cross-committee attendance

All directors are invited to attend any board committee meeting. Members of the audit and finance committee attend the portion of the human resources and compensation committee meetings on the finance succession plan, which includes the CFO and senior finance personnel.

The chair of the safety, health and environment committee attends the portion of the human resources and compensation committee meeting when it reviews that aspect of our annual corporate performance.

The chair of the reserves oversight committee attends the audit and finance committee meeting to report on annual reserves and resources.

Access to management and outside advisors

The board and committees can invite any member of management, outside advisor or other person to attend their meetings.

Committees can engage outside advisors to assist in carrying out their duties, as authorized by their mandates. Individual directors can also engage outside advisors, as long as they receive approval in advance from the nominating, corporate governance and risk committee. The human resources and compensation committee and the nominating, corporate governance and risk committee each engaged an independent consultant in 2017.

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Audit and finance committee

John Clappison

(chair since May 2009)

Ian Bruce

Daniel Camus

Catherine Gignac

Neil McMillan (ex-officio)

2017                                           2017

meetings                         attendance

8        100^%

The committee met separately with the internal auditor and external auditors at every regular meeting.

100^%

Independent and

financially literate

John Clappison and Ian Bruce are the audit and finance committee’s financial experts because they have accounting or related financial expertise and meet the necessary requirements under US securities laws.

None of the committee’s members serve on the audit committee of more than two other public companies.

The committee reviewed its mandate and is satisfied that it carried out its duties and responsibilities.

Key responsibilities

The audit and finance committee supports the board in fulfilling its oversight responsibilities regarding the integrity of our accounting and financial reporting; the adequacy and effectiveness of our internal controls and disclosure controls; legal, regulatory (excluding safety, health and the environment) and ethical compliance; the independence and performance of our external and internal auditors; oversight of specific risks; and prevention and detection of fraudulent activities and financial oversight.

2017 Committee highlights

Financial reporting

• oversaw the quality and integrity of our accounting and financial reporting processes

• reviewed and recommended the annual and quarterly financial statements and MD&A and quarterly press releases to the board for approval

• reviewed the revised dividend framework for the company

Internal controls

• reviewed the effectiveness and integrity of our internal control systems and disclosure controls

External audit

• approved the annual audit plan and the external auditors’ fees, including pre-approval of all services to be provided. See page 4 for a description of the services provided by the external auditor and the fees paid to them in 2017

• received regular reports from the external auditors on the audit of our financial statements and the results of their reviews of the unaudited quarterly financial statements

• assessed the performance of the external auditors

• reviewed the auditor’s qualifications, independence and depth of business and industry knowledge and recommended the appointment of our external auditor for the coming year

• regularly met with the external auditor without management present

Internal audit

• assessed the internal auditor, reviewed the internal audit mandate and approved the internal audit plan for the year

• received regular reports from the internal auditor on the fulfillment of its plan and its recommendations to management

• regularly met with the internal auditor without management present

Compliance

• reviewed reports about our compliance programs, including the code of conduct and ethics and our global anti-corruption program

• reviewed related-party transactions

• reviewed policies and programs to monitor compliance with legal and regulatory requirements

• received briefings and reports on management’s hedging, debt and credit policies and compliance with them

• received and reviewed quarterly litigation reports

Risk oversight

• received management presentations on enterprise risks that the committee oversees

• received quarterly updates on the status of mitigation plans pertaining to the risks that the committee oversees (including financial, fraud and other material risks within the committee’s mandate)

Financial oversight

• received and reviewed reports on our insurance program, directors’ and officers’ liability insurance and indemnity agreements

• received and reviewed the annual supply chain management report

• received regular reports from NUKEM on its trading activities

• received and reviewed reports on the company’s funding (including finance and cash flow planning)

42     CAMECO CORPORATION

Human resources and compensation committee

Ian Bruce (chair since May 2016) Daniel Camus Don Kayne Anne McLellan Kate Jackson (joined in May 2017) Neil McMillan (ex-officio)
2017 meetings	2017 attendance
5	100%
100% Independent The committee also has an external consultant who provides independent advice on executive compensation matters. Meridian Compensation Partners (Meridian) has been the committee’s consultant since December 2011, and it has not provided any services to management.
The committee reviewed its mandate and is satisfied that it carried out its duties and responsibilities.

Key responsibilities

The human resources and compensation committee supports the board in fulfilling its oversight responsibilities regarding human resource policies, executive compensation and executive succession and development.

2017 Committee highlights

A letter from the chair of the human resources and compensation committee begins on page 55.

Compensation governance

• monitored compensation trends and emerging issues

• reviewed ‘say on pay’ results

• selected and managed the committee’s independent compensation consultant, approved its work plan, qualifications and fees and considered its independence

• reviewed the compensation disclosure in this circular

Executive and director compensation

• reviewed and recommended to the board approval of executive compensation

• reviewed incentive plan targets and assessed performance against targets

Succession planning

• reviewed succession planning with management and oversaw the succession planning process, including the appointment of a new COO

Risk oversight

• received management presentations on enterprise risks that the committee oversees

• received quarterly status updates on the mitigation plans pertaining to the risks that the committee oversees (including compensation risk, third-party compensation risk assessments, talent management risk, succession risk, cyber-security risk and other material risks within the committee’s mandate)

Pension plan governance

• oversaw pension plan governance and management’s supervision of our pension plan

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Nominating, corporate governance and risk committee

Anne McLellan

(chair since May 2016)

Daniel Camus

John Clappison

Jim Gowans

Kate Jackson (joined in May 2017)

Neil McMillan (ex-officio)

2017                                       2017

meetings                     attendance

4      100^%

100^%

Independent

The committee reviewed its mandate and is satisfied that it carried out its duties and responsibilities.

Key responsibilities

The nominating, corporate governance and risk committee supports the board in fulfilling its oversight responsibilities by developing and recommending a set of corporate governance principles, identifying and recommending director candidates and overseeing risk management.

2017 Committee highlights

Corporate governance

• monitored governance trends and emerging issues

• reviewed our governance guidelines

• reviewed director independence and conflicts of interest

• assessed the size, composition and mandates of the board and board committees

• reviewed the competency and attribute matrices

• reviewed the board’s diversity policy

• oversaw our director education program and approved a revision to include a formal mentorship program for new directors

• oversaw the director orientation for the new director appointed January 1, 2017

Recruitment

• oversaw the chair selection process, including identification of selection criteria, and appointment of a new chair effective May 2018

Risk oversight

• oversaw our risk management process and policies

Board and committee assessments

• oversaw the performance and effectiveness assessment of the board of directors conducted by the independent third-party consultant

Governance disclosure

• reviewed third-party governance ratings

• reviewed governance disclosure for this management proxy circular

44     CAMECO CORPORATION

Reserves oversight committee

Catherine Gignac

(chair since May 2015)

Donald Deranger

Jim Gowans

Don Kayne

Neil McMillan (ex-officio)

2017                                           2017

meetings                         attendance

4        100^%

The committee met separately with the leading qualified person at every meeting.

100^%

Independent

The committee reviewed its mandate and is satisfied that it carried out its duties and responsibilities.

Key responsibilities

The reserves oversight committee supports the board in fulfilling its oversight responsibilities regarding estimating and disclosing mineral reserves and resources.

2017 Committee highlights

Estimating mineral reserves and resources

• confirmed our qualified persons for estimating our mineral reserves and resources

• performed the due diligence process for the year-end reserves and resources reporting

• reviewed management’s annual reserves and resources report and annual reconciliation of reserves to mine production and recommended them to the board for approval

• reviewed material changes to mineral reserves and resources estimates and recommended them to the board for approval before publication and release

• received management reports on internal controls and procedures regarding mineral reserves and resources reporting

Disclosing mineral reserves and resources

• monitored industry standards and regulations on estimating and publishing mineral reserves and resources information, and related issues and developments through reports from management

• received reports from the leading qualified person on the mineral reserves and resources estimates and confirmed that the information has not been restricted or unduly influenced

• received confirmation from the leading qualified person and chief operating officer that the information is reliable and that we will publish mineral reserves and resources estimates according to securities laws and regulations that apply to us

• received confirmation from the leading qualified person that our disclosure controls for disclosing mineral reserves and resources estimates comply with industry standards

• reviewed the 2017 Inkai technical report

• reviewed changes to Inkai mineral reserves and resources following the announcement of the restructuring of JV Inkai LLP

• received presentations on McArthur River and Cigar Lake life of asset plans

• received an update on exploration strategy

Risk oversight

• received management presentations on enterprise risks that the committee oversees

• received status updates on the mitigation plans pertaining to the risks that the committee oversees (including mineral reserves and resources risks and other material risks within the committee’s mandate)

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Safety, health and environment committee

Jim Gowans

(chair since May 2015)

Donald Deranger

Catherine Gignac

Don Kayne

Kate Jackson (joined in May 2017)

Neil McMillan (ex-officio)

2017                                           2017

meetings                         attendance

4        95^%

100^%

Independent

The committee reviewed its mandate and is satisfied that it carried out its duties and responsibilities.

Key responsibilities

The safety, health and environment committee supports the board in fulfilling its oversight responsibilities regarding safety, health and environmental matters.

2017 Committee highlights

Overseeing and assessing policies and management systems

• oversaw our compliance with all relevant safety, health, environment and quality (SHEQ) legislation and our SHEQ policy and programs

• received reports on management’s benchmarking of our policies, systems and monitored processes against industry best practice

Monitoring and assessing performance

• reviewed findings of safety, health and environment (SHE) audits, action plans and results of investigations into significant events

• monitored the US Occupational Safety and Health Administration (OSHA) metrics and leading indicators implemented to drive continued improvements to our safety performance

• reviewed the annual SHE budget to ensure sufficient funding for compliance

• determined the SHEQ objectives and results for executive compensation and related impact

• monitored trends, significant events and emerging issues through reports from management

Risk oversight

• received management presentations on enterprise risks that the committee oversees

• received status updates on the mitigation plans pertaining to the risks that the committee oversees (including SHE risks and other material risks within the committee’s mandate)

46     CAMECO CORPORATION

 Compensation at Cameco

We compensate our directors and executives in a way that is fair, competitive and based on performance.

This section of the board’s report is based on the recommendations of the human resources and compensation committee. It gives you insight into our compensation process and the components of our program.

We have provided more information than what is required by regulators to give you a more complete understanding of our decisions.

Our compensation governance

We believe in frank and transparent disclosure.

The board oversees our compensation policies and practices and can use discretion, subject to limits on adjusting compensation upward.

Our culture encourages management to be objective in assessing its own performance and making recommendations to the board to adjust compensation when appropriate.

Management developed six compensation principles that were adopted by the board (see page 66). These principles guide all executive compensation decisions at Cameco.

Where to find it
Compensation governance	48
●  Compensation risk management	49
●  Independent advice	50
Director compensation	51
●  Compensation discussion and analysis	51
-   Approach	51
-   Share ownership	51
-   Fees and retainers	52
●  2017 Details	53
-   Director compensation table	53
-   Incentive plan awards	54
-   Loans to directors	54
Executive compensation	55
●  Message to shareholders	55
●  Cameco compensation practices	59
●  Executive compensation and strategy	60
-   Compensation timeline	60
●  Share performance and executive compensation	61
-   CEO compensation summary	64
-   CEO’s compensation lookback	65
●  Compensation discussion and analysis	66
-   Approach	66
-   Annual decision-making process	69
-   Measuring performance	70
-   Compensation components	71
-   2017 Performance and compensation	78
-   2018 Compensation decisions	83
●  2017 Details	84
-   Summary compensation table	84
-   Incentive plan awards	86
-   Equity compensation plan information	88
-   Pension benefits	89
-   Loans to executives	90
-   Termination and change of control benefits	91

2018 MANAGEMENT PROXY CIRCULAR      47

Compensation governance

The board has ultimate responsibility for Cameco’s compensation.

The human resources and compensation committee assists the board in overseeing our human resources policies, executive compensation, succession planning, pension plans and director compensation. The committee is qualified, experienced and 100% independent. It has five members of varying tenure.

YEARS ON COMMITTEE
Ian Bruce (chair)1	4
Daniel Camus1,2	7
Don Kayne	2
Anne McLellan2	11
Kate Jackson2	1
Neil McMillan (ex-officio)	7

EXPERTISE OF COMMITTEE MEMBERS
Business and industry experience	5 of 5
Executive compensation experience (as a senior executive, managing partner or member of the compensation committee of other public companies)	5 of 5
Governance background	5 of 5
Risk oversight experience	5 of 5
Executive leadership	5 of 5

1. Audit and finance committee members.

2. Nominating, corporate governance and risk committee members.

Ian Bruce brings strong finance, investment banking, risk management and CEO experience to his role as committee chair. The other committee members bring strong backgrounds in finance, risk oversight, governance and executive compensation to the committee.

You can read more about the committee members in their director profiles starting on page 11.

ABOUT OUR COMPENSATION FRAMEWORK

•  We use a multi-year strategic plan to balance risk and reward. •  We embed our corporate objectives into how we assess executive performance. •  Compensation is directly linked to our strategy and performance. •  We use at-risk compensation to motivate executives because the value depends on performance. •  We have clawback and anti-hedging policies to mitigate compensation risk. Our compensation framework is based on the following: Balanced decision-making •  Corporate performance is based on absolute and relative measures. •  We use a balanced scorecard to provide a more direct line of sight to specific objectives. Threshold performance •  We must achieve at least a minimum threshold performance to receive incentive award payouts. Limits on incentive pay •  The STI and PSU plans pay out at a maximum of 200% of target if performance is exceptional. The human resources and compensation committee and board cannot use their discretion to exceed this cap. •  We set threshold, target and maximum performance levels that require significant effort, but not excessive risk taking, to achieve performance objectives. •  Potential payouts under the incentive plans are modest as a percentage of our revenue and income. CCGG pay-for-performance principles •  Our compensation philosophy and practices incorporate the compensation principles that the Canadian Coalition for Good Governance (CCGG) recommends for Canadian companies. These principles reflect pay for performance and integrate risk management functions into the company’s executive compensation philosophy and structure.

48     CAMECO CORPORATION

Compensation risk management

Compensation risk is addressed by the human resources and compensation committee each year (see page 43 for the committee’s 2017 highlights).

Our compensation program:

· is designed to encourage the right management behaviours

· uses a broad-based approach to assess performance (balanced scorecard)

· recognizes appropriate risk-taking

· avoids excessive payouts to executives and employees.

The human resources and compensation committee works with management and the safety, health and environment committee to set corporate objectives for all incentive plans.

The committee stress tests different performance scenarios and back tests previous performance and compensation decisions to make sure decisions and outcomes are appropriate.

Meridian Compensation Partners (Meridian), the human resources and compensation committee’s independent consultant, reviews Cameco’s compensation program annually. We review nine key areas of our compensation programs on a regular basis:

· compensation principles

· comparator groups

· positioning of target compensation

· pay mix

· incentive plan design

· performance measures

· share ownership

· plan governance and risk mitigation

· supplemental executive pension program.

Clawback policy

All named executives are subject to a clawback policy that applies to compensation received after January 1, 2013. Our previous policy (in effect since 2003) applies to incentive compensation awarded to the CEO and CFO prior to 2013.

The policy covers incentive compensation, including any annual bonus, performance share units, restricted share units and stock options granted or received. It allows us to recoup the incentive compensation of the executive at fault if all three of the following events occur:

· we make an accounting restatement if there is a material non-compliance with financial reporting requirements under securities laws

· an executive had engaged in gross negligence, intentional misconduct or fraud which caused or significantly contributed to the restatement

· the executive was overcompensated as a result of the restatement.

If these three events occur, the board and the human resources and compensation committee will decide how the policy will apply. If an executive is at fault, we recoup the amount of the incentive compensation granted during or for the years subject to the restatement that exceeds the compensation that would have been computed based on the restated results.

Share ownership

Our share ownership guidelines require executives to hold their current shares and to purchase additional shares with their after-tax proceeds from redeeming or exercising equity awards until they have met their target ownership levels (see page 68 for share ownership details).

2018 MANAGEMENT PROXY CIRCULAR      49

Anti-hedging

We prohibit directors, officers and employees from using hedging strategies to offset a decrease in market value of our shares or the market value of equity awards granted as compensation.

Our trading guidelines prohibit:

· trading while in possession of confidential material information

· tipping of confidential information to anyone

· speculative trading in or hedging of Cameco securities or related financial instruments

· holding Cameco securities in margin accounts

· fraudulent trading or market manipulation respecting Cameco securities.

Equity compensation

Long-term incentive awards are allocated 60% to PSUs and 40% to stock options, and their value is not guaranteed. Performance under the PSU plan is based on a combination of absolute and relative measures over a three-year period – relative TSR, which has a 40% weighting, relative average realized uranium price, and tier-one production. The ultimate value of the stock options is determined by our share price at the time of exercise.

All stock options granted since 2010 are currently out-of-the-money.

Independent advice

The board and board committees retain independent consultants as appropriate to assist them in carrying out their duties and responsibilities. Meridian serves as the human resources and compensation committee’s independent consultant, and Mercer is management’s consultant.

Committee’s consultant

The committee considers the independence of its compensation advisor, and reviews all fees and the terms of consulting services provided by the independent consultant. The committee considers recommendations provided by its compensation consultant and management along with other information, and is ultimately responsible for its own decisions.

The table below shows the fees paid to the independent consultant in 2016 and 2017. Meridian did not provide any services to management in either year.

	2017		2016
Meridian Compensation Partners
Executive compensation-related fees	$	64,498	$	130,325
All other fees		–		–
Percent of work provided to the committee		100%		100%

Meridian provided a broad range of services in 2017:

· reviewed the comparator group

· updated the compensation risk review

· provided two education sessions for the committee on compensation and governance trends

· reviewed our 2017 performance against targets

· conducted a review of our executive compensation program, performance measures, and STI and PSU plan objectives

· completed a pay-for-performance assessment

· conducted an in-depth review of the compensation discussion and analysis (CD&A)

· consulted on numerous compensation governance matters, including clawbacks, proxy advisor positions, realized and realizable pay disclosure and ISS pay-for-performance modeling.

The committee reviewed Meridian’s report on independence as contemplated by the NYSE rules, is satisfied with the report, and also determined that Meridian is independent.

50     CAMECO CORPORATION

Director compensation

Compensation discussion and analysis

1. Approach

We have three goals:

· Recruit and retain qualified individuals to serve as members of our board and contribute to our overall success.

· Align the interests of our board and shareholders by requiring directors to own shares or share equivalents (by receiving at least 60% of their annual retainer in deferred share units (DSUs) until they meet our share ownership guidelines).

· Pay competitively by positioning compensation at the median of director compensation paid by companies that are similar in nature and scope of operations and comparable in size.

2. Share ownership

We introduced share ownership guidelines for non-executive directors in 2003 to more closely align their interests with those of our shareholders. The guidelines are also set to align closely with market practice. Directors must build their ownership of Cameco shares or DSUs and ultimately hold at least three times their annual retainer. A DSU is a notional share that has the same value as one Cameco common share. DSUs earn additional units as dividend equivalents at the same rate as dividends paid on our common shares. DSUs are paid out to directors in cash after they retire from the board.

The human resources and compensation committee regularly reviews the share ownership guidelines and compares our director share ownership levels to our comparator group of companies. The committee also reviews any situation where a director is not in compliance for meeting the ownership requirement or maintaining the minimum ownership level, and recommends a course of action to the board. The board has the discretion to decide what action, if any, should be taken.

As of December 31, 2017, directors held $5,259,108 worth of DSUs (representing approximately 453,000 common shares) based on the year-end closing price of Cameco shares on the TSX of $11.61. The dollar value of our share ownership requirement is among the highest in our comparator group. The board chair has a higher ownership requirement than other directors because of the higher retainer to reflect the scope of responsibilities. A director who is appointed as board chair has an additional three years to meet the higher target.

We assess compliance annually, and value shares and DSUs at the price at which they were acquired or the year-end closing price of Cameco’s shares on the TSX, whichever is higher. As of December 31, 2017, all of the nominated directors are in compliance with the guidelines. They either hold the minimum ownership requirement, or have time remaining to meet the requirements. See the director profiles beginning on page 11 for details about each director’s share ownership.

A director who has not met the share ownership guidelines must receive at least 60% of his or her annual retainer in DSUs. A director who has met the guidelines can receive all of the retainer and fees in cash, or a portion in cash and the balance in DSUs in increments of 25%, which is decided before the beginning of each fiscal year. The director compensation table on the next page shows the percentage of annual retainer paid in DSUs for each director.

Directors must maintain their share ownership once they meet the guidelines. The shares and DSUs are valued on an ongoing basis using the closing price of our shares on the TSX, or the acquisition value, whichever is higher. Directors who elect to receive all of their compensation in cash continue to increase their share ownership through dividend equivalents paid in DSUs.

2018 MANAGEMENT PROXY CIRCULAR      51

3. Fees and retainers

In 2017, we moved to a flat fee retainer for director compensation to align with market practice and to recognize our directors’ ongoing commitment of time and attention to their board and committee responsibilities throughout the year, rather than only the time to prepare for and attend meetings. The flat fee structure also recognizes the increased scope of responsibilities for certain committees.

The new program caps director compensation and is easier to administer. Director compensation consists of the following:

· an annual board retainer (higher retainer for the non-executive chair of the board)

· an annual committee chair retainer (higher retainer for human resources and compensation and audit and finance committee chairs)

· an annual committee retainer for members of the human resources and compensation and audit and finance committees

· an additional retainer for members of more than two committees

· a travel fee (per trip).

Share ownership guidelines were changed from four times to three times the annual retainer to reflect the move to a flat fee retainer.

The non-executive chair does not receive any committee-related retainers and directors who are employees of Cameco, such as Tim Gitzel, do not receive director compensation. We pay for reasonable travel and out-of-pocket expenses relating to directors’ duties.

The table below shows the new fee schedule that went into effect on January 1, 2017. The intent was to capture the same pay a director would have received in 2016, and not to increase director compensation. Fees are paid in Canadian dollars, except the travel fee which is paid in US dollars as shown below. Prior to January 1, 2017, non-Canadian directors were paid in US dollars.

ANNUAL RETAINER
Non-executive chair of the board	$375,000
Other non-executive directors	$200,000
COMMITTEE CHAIR RETAINERS
Audit and finance committee	$20,000
Human resources and compensation committee	$20,000
Other committees	$11,000
COMMITTEE RETAINERS
Audit and finance committee members	$5,000
Human resources and compensation committee members	$5,000
A member of more than two committees (per additional committee)	$5,000
TRAVEL FEES (PER TRIP)
Over 1,000 km within Canada	$1,700
From the US	$1,700 (US)
From outside North America	$2,700 (US)

52     CAMECO CORPORATION

2017 Details

Director compensation table

The table below shows fees earned by each non-executive director in 2017, based on the new fee schedule and their committee memberships.

Tim Gitzel does not receive any director compensation because he is compensated in his role as president and CEO (see the summary compensation table on page 84). Neil McMillan is our non-executive chair of the board and his board retainer reflects the fees paid to him in this capacity.

	ANNUAL             RETAINER		OTHER RETAINERS					TRAVEL FEE		TOTAL PAID		% OF ANNUAL RETAINER PAID IN DSUS
NAME	BOARD		COMMITTEE MEMBER			COMMITTEE CHAIR
Ian Bruce		$200,000		$10,000			$20,000		–		$230,000		50%
Daniel Camus		$200,000		$15,000			–		$12,182		$227,182		50%
John Clappison		$200,000		$5,000			$20,000		$8,500		$233,500		25%
Donald Deranger		$200,000		–			–		–		$200,000		50%
Catherine Gignac		$200,000		$10,000			$11,000		$8,500		$229,500		60%
Jim Gowans		$200,000		$5,000			$11,000		$6,800		$222,800		–
Kathryn Jackson		$200,000		$6,401	1		–		$8,765		$215,166		60%
Don Kayne		$200,000		$10,000			–		$6,800		$216,800		100%
Anne McLellan		$200,000		$5,000			$11,000		–		$216,000		25%
Neil McMillan		$375,000		–			–		–		$375,000		–
Total		$2,175,000		$66,401			$73,000		$51,547		$2,365,948		–

1. Membership on three committees began in May 2017.

Travel fees paid in US dollars have been converted to Canadian dollars for reporting purposes at the following exchange rates:

	MARCH 21, 2017		JUNE 27, 2017		SEPTEMBER 19, 2017		DECEMBER 21, 2017
$1 (US)		$1.3359 (Cdn)		$1.3188 (Cdn)		$1.2277 (Cdn)		$1.2734 (Cdn)

2018 MANAGEMENT PROXY CIRCULAR      53

Incentive plan awards – DSUs

The next table shows what each non-executive director earned in DSUs in 2017. We have combined information from two mandatory tables: Incentive plan awards – Value vested or earned during the year and Outstanding share-based and option-based awards into the table below.

Directors received their retainer and fees in cash and DSUs:

· Share-based awards – Value vested during the year is the amount of DSUs that the directors received in 2017, valued as of the grant dates. It includes all of the DSUs that vested as of the grant date and DSUs granted as dividend equivalents in 2017.

· Share-based awards – Market or payout value of vested share-based awards not paid out or distributed are all of the directors’ DSUs that have vested. DSUs are not paid out until the director resigns or retires from the board. The DSUs were valued at the closing price of Cameco shares on the TSX on December 29, 2017 of $11.61.

NAME	SHARE-BASED AWARDS
	VALUE VESTED DURING THE YEAR		MARKET OR PAYOUT VALUE OF VESTED SHARE-BASED AWARDS NOT PAID OUT OR DISTRIBUTED
Ian Bruce		$125,934		$446,357
Daniel Camus		$135,794		$838,559
John Clappison		$73,846		$572,865
Donald Deranger		$115,432		$594,964
Catherine Gignac		$127,217		$319,370
Jim Gowans		$19,876		$693,922
Kathryn Jackson		$121,306		$113,004
Don Kayne		$224,264		$382,378
Anne McLellan		$67,683		$508,066
Neil McMillan		$22,617		$789,623
Total		$1,033,969		$5,259,108

See the director profiles starting on page 11 for the number of Cameco shares and DSUs held by each director.

Incentive plan awards – options

We stopped granting options to directors in 2003. None of the directors have any outstanding options.

Loans to directors

As of March 9, 2018, we and our subsidiaries had no loans outstanding to any current or former directors, except routine indebtedness as defined under Canadian securities laws.

54     CAMECO CORPORATION

    Executive compensation

Cameco is committed to maintaining the transparency of our executive compensation program.

The following message by the chair of the human resources and compensation committee highlights key aspects of our executive compensation program. A more detailed discussion follows in the compensation discussion and analysis (CD&A) beginning on page 66.

Message to shareholders¹

Dear fellow shareholder,

As the chair of the human resources and compensation committee, I am pleased to provide an update on the committee’s priorities in 2017 and our decisions about executive pay.

A carefully designed compensation program

Cameco’s compensation program is designed to attract, retain and motivate the executive team, pay for performance and drive shareholder value. The majority of executive pay is variable, or at-risk, and is linked to the execution of Cameco’s strategy and business plan. At-risk pay is not guaranteed and the value that is ultimately realized is based on Cameco’s performance against key financial and non-financial measures as well as share price performance. At-risk pay accounts for 83% of the CEO’s total target compensation and an average of 75% for the other named executives.

We use market median as a guide to set total target direct compensation and consider many factors, including the executive’s experience in the role, scope of responsibilities, market competitiveness, internal equity, business and strategic priorities, and retention.

Our main priority is to make sure compensation is competitive, fair and supports the achievement of Cameco’s business plan and strategy. This is not an easy task in the difficult market conditions the uranium industry has faced since the Fukushima nuclear incident in March 2011. The average uranium spot price has decreased nearly 70% since then, while the long-term uranium price has decreased 50%. This makes setting performance targets challenging, erodes the value of long term incentives, and makes it challenging to pay executives for the operational results they achieve while aligning payouts with movement in our share price. We set our 2017 earnings target lower than our 2016 actual earnings to reflect the challenges in our business. This target was set with rigorous stretch, as evidenced by performance that was below threshold.

Pay for performance

Corporate performance remains the most significant factor affecting the board’s decisions about pay for Cameco’s CEO and other senior officers.

Short-term incentive

The short-term incentive is a cash bonus that is tied to performance against annual targets for financial, safety, environment and sustainability targets. Together, these targets make up a balanced scorecard that rewards performance which contributes to long-term, sustainable shareholder value (see page 79).

Long-term incentive

The long-term incentive is equity based and allocated 60% as performance share units (PSUs) and 40% as stock options. The heavier weighting on PSUs aligns more closely with shareholder interests because it puts more emphasis on performance-based vesting and PSUs, unlike options, do not result in shareholder dilution.

The payout of PSUs is tied to absolute and relative performance measures over a three year period: uranium price achieved relative to prices realized by competitors, all-in sustaining cash costs for the Saskatchewan tier-one operations, and relative total shareholder return (TSR) (see page 81). Relative TSR is weighted 40% in the PSU plan because of its importance to shareholders.

1. This message to shareholders contains forward looking information and is based upon the assumptions and subject to the material risks described at pages 2 and 3 of our 2017 annual management’s discussion and analysis. Actual outcomes for future periods may be significantly different.

2018 MANAGEMENT PROXY CIRCULAR      55

We do not have a group of uranium companies against which we can measure our relative performance. Accordingly, we measure our relative performance within the uranium industry based on realized uranium sales price and measure our relative share price performance against the TSX 60, as an index of leading companies, which represent our competitors for shareholder capital. All-in sustaining cash costs reflects our significant operational and strategic focus on cost reduction in the current low uranium price environment.

2017 Corporate performance

While tough market conditions in 2017 had a negative impact on earnings, Cameco generated strong cash flow and performance against environmental and community support measures. Cameco exceeded its target for cash from operations² through additional sales, deferral of purchases and lower all-in sustaining cash costs. Adjusted net earnings³ were below threshold because of continued weakness in uranium prices. The average uranium spot price fell 9% in 2017, while the long-term uranium price dropped 10%.

In 2017, Cameco acted decisively to position the company to deliver improved shareholder value, and implemented a plan to conserve cash, mobilize inventory and sustain profitability in a difficult market environment.

Cameco strengthened its core uranium business in 2017. The Cigar Lake operation successfully ramped up to full production. Major changes were implemented at Cameco’s mining operations, resulting in significant savings in capital and operating costs, and the agreement to restructure and enhance Joint Venture Inkai (JV Inkai) was finalized in 2017 and implemented at the beginning of 2018.

Safety performance was also strong in 2017 with several operations reaching significant safety milestones including the Blind River Refinery and the Crow Butte operation passing 11 and 10 years respectively without a lost-time incident. The Port Hope Conversion Facility, Cameco Fuel Manufacturing and Key Lake also made significant improvements in their safety performance over the prior year. While the improvements in performance over the previous several years have been sustained, further improvements have become more difficult to achieve. The challenge is evident by the miss of the 2017 total recordable incident rate (TRIR) target.

The 2017 targets for environmental performance were based on mitigating specific risks in each area of the operations. Cameco’s overall performance met these targets and marked another year without a significant environmental incident at its operations.

Gaining the trust and support of communities, indigenous people and governments is necessary to sustain our business. With market conditions dictating reduced capital spending, there were limited opportunities for preferred northern contractors, yet Cameco procured over $170 million from locally owned northern Saskatchewan companies (80% of our total spend) in 2017. The company also employed 954 northern Saskatchewan residents (603 Cameco employees, 351 contractors) and signed a Collaboration Agreement with the Lac La Ronge Indian Band.

Overall, Cameco remains focused and operationally very strong in a tough market. The result is a 2017 corporate performance score of 95% for the short-term incentive plan (see page 79).

The 2015 PSU awards vested on December 31, 2017 and paid out on March 2, 2018 at 38.6% of their original grant value based on Cameco’s strong operational performance but tempered by the decline in Cameco’s share price as a result of the general decline in uranium prices over the period, highlighting the link between pay and performance.

2017 Compensation decisions

CEO compensation

CEO compensation is based on the achievement of annual corporate objectives, successful implementation of the corporate strategy and overall corporate performance. Tim Gitzel’s total direct compensation in 2017 was $6.0 million, slightly higher than 2016 due to the corporate performance score mentioned above at 95% for 2017 compared to 52% for 2016. This reflects solid operating performance in a difficult market as assessed by the committee.

Tim’s base salary was unchanged in 2017. His 2017 STI award was $1,292,000, reflecting the corporate performance score of 95% and Tim’s very strong individual performance. Under his leadership, Cameco has implemented a plan to preserve shareholder value and position the company for long-term success. Tim also received a 2017 long-term incentive award, which was granted at target to motivate strong future performance.

² Cash from operations after working capital changes.

³ Adjusted net earnings is a non-IFRS measure as described in our 2017 MD&A and excludes the impact of various items as detailed in note 1 on page 79.

56     CAMECO CORPORATION

CEO three-year lookback

Since the accident at Fukushima seven years ago, the industry has faced considerable market challenges. Over the last three years, Tim has led Cameco’s drive to reduce supply, manage its sales portfolio to optimize value, and significantly reduce costs in a challenging environment.

Over the last three years, Cameco:

· announced the temporary suspension of production at McArthur River/Key Lake beginning in 2018

· successfully ramped up to full production at the Cigar Lake operation

· implemented significant changes at the mining operations, which resulted in savings in capital and operating costs

· restructured JV Inkai to secure access to a large, low-cost production source through 2045.

The CEO’s three-year average realized and realizable pay at the end of 2017 was $3.5 million, 43% (almost $2.6 million) less than the three-year average of his reported compensation in the summary compensation table (you can read more about the CEO’s compensation beginning on page 64). The average uranium spot price fell by 40% during this period from $37.00 (US) per pound at the beginning of 2015, to $22.32 (US) at the end of 2017.

The graph below shows the link between pay and performance and compares Cameco’s TSR performance to the CEO’s three-year average reported compensation and the CEO’s three-year average realized and realizable compensation. The three-year average reported compensation includes equity-based compensation at grant date values and the three-year average realized and realizable compensation includes the estimated value of the equity-based compensation based on actual performance and share price as of December 29, 2017.

Succession planning

Succession planning is one of the board’s key responsibilities. The committee oversees succession planning for effective development of leadership talent and orderly transition to officer roles as required, including appropriate compensation.

On June 30, 2017, Bob Steane retired after 34 years with Cameco and was succeeded by Brian Reilly as senior vice-president and chief operating officer. Brian was previously vice-president, mining, technology and projects and joined Cameco in 2011 as managing director of Cameco Australia Pty. Ltd., a wholly-owned subsidiary overseeing development of two mine projects and an extensive exploration program.

Looking ahead to 2018

Until we see a shift in uranium prices from increased demand from restarts and new reactors and reduced supply through curtailments and lack of investment, Cameco continues to take steps to shield the company from near-term risks and reward shareholders for their continued patience and support of our strategy to build long-term value.

2018 MANAGEMENT PROXY CIRCULAR      57

Cameco expects to remain focused on cash flow and cost management in 2018. Total 2018 capital expenditures for uranium and fuel services are expected to be about 37% lower than in 2017. This is mainly due to the temporary suspension of operations at McArthur River and Key Lake and the restructuring of JV Inkai.

Although reducing operations has a short-term cost, taking this step better positions Cameco to manage risk and preserve tier-one assets for production in a market that values them appropriately. Cameco’s strategy is to continue to pursue profitable production while respecting the health and safety of people and the environment. Cameco will continue to optimize its mix of production, inventory and purchases to meet our contractual commitments and return the best value possible for shareholders.

Targets for the 2018 short-term and long-term incentive awards continue to align with the strategy and focus on:

· delivering adjusted net earnings and cash flow in a tough market environment

· optimizing costs at the Saskatchewan uranium operations, which make up 85% of the company’s uranium production

· achieving higher uranium sales prices than its competitors

· keeping people safe

· protecting the environment

· maintaining the support of communities near Cameco’s operations

· achieving shareholder returns higher than the TSX 60 Index.

CEO Tim Gitzel has demonstrated strong leadership by positioning Cameco to operate profitably if uranium spot and long-term prices remain low for longer, while maintaining upward leverage for when the market recovers.

Considering the solid operating performance Cameco achieved in a challenging market environment, there is sound rationale to support measured salary increases for 2018. However, consistent with Cameco’s continuing focus on cost containment, the CEO recommended no salary increases.

The committee, board and management also continue to be mindful of Cameco’s share price.

The compensation timeline on page 60 gives more context to the compensation decisions described above. See also page 61 for a discussion of the trend in share performance and total compensation

awarded to the named executives over the past five years.

Thank you for your support

The human resources and compensation committee oversees all compensation matters in the best interests of Cameco and its shareholders. We firmly believe in the importance of linking executive pay to the execution of Cameco’s business plan and strategy, aligning the interests of executives and shareholders and building value for shareholders over the long term. We continue to monitor developments in executive compensation and best practices to make sure our compensation program and decisions are appropriate and that we mitigate compensation risk.

This year shareholders will again have the opportunity to participate in our advisory vote on our approach to executive compensation. We have held the advisory vote every year since we introduced ‘say on pay’ in 2010, and appreciate the consistently strong support we have received from shareholders. Last year we received over 88% approval and look forward to receiving your feedback this year.

As a Cameco shareholder for many years, I remain confident in the company’s future prospects. It has been a privilege to serve as the committee chair. I look forward to continuing to serve Cameco in my new role as chair of the board following this year’s annual meeting.

Sincerely,

Ian Bruce

Chair

Human resources and compensation committee

58     CAMECO CORPORATION

Cameco compensation practices

The human resources and compensation committee ensures our executive compensation program is competitive, based on sound decision-making, pays for performance, motivates and attracts talent, and focuses on creating shareholder value.

WHAT WE DO

Pay for performance – 83% of the compensation for the CEO is at-risk pay – it is variable, contingent on performance and not guaranteed	✓
Share ownership – we require our executives to own shares or other equity in Cameco, and to obtain additional shares using the proceeds from redeeming or exercising vested equity awards until they have met their target ownership	✓
Performance based vesting – 60% of the long-term incentive vests at the end of three years based on our absolute performance, relative TSR and relative average realized uranium price	✓
Benchmarking – we benchmark executive compensation against a size and industry appropriate comparator group and target compensation to the median of the group	✓
Caps on incentive payouts – our STI and PSU plans cap payouts at a maximum of 200% of target for exceptional performance. The human resources and compensation committee and the board cannot exceed this cap	✓
Stress testing and back testing – we stress test different scenarios to assess appropriateness of pay and avoid excess risk-taking, and the committee looks back at long-term incentive awards previously granted when granting new awards	✓
Clawbacks – our clawback policy applies to all executives and all incentive compensation awarded	✓
Anti-hedging – directors, executives and other employees are prohibited from hedging their shares or equity-based compensation	✓
Independent advice – the committee receives compensation advice from an independent advisor	✓
Realized and realizable pay – the value ultimately realized from a long-term incentive award can be significantly different from the grant value. Share price is only one factor that affects the payout value	✓
Modest benefits and perquisites – these are market competitive and represent a small part of total compensation	✓
Employment agreements – employment agreements with the named executives protect specialized knowledge, contacts and connections obtained while at Cameco	✓
Double trigger – the severance provisions in our executive employment agreements and our LTI plans have double triggers in the event of a change of control	✓
WHAT WE DON’T DO
No repricing of stock options	x
No tax gross-ups	x
No excessive severance obligations	x
No bonus amounts or value of equity awards included in pension calculations	x

See Compensation governance on page 48 and the CD&A beginning on page 66 for more information.

2018 MANAGEMENT PROXY CIRCULAR      59

Executive compensation and strategy

Cameco’s strategy is to focus on our tier-one assets, and to profitably produce at a pace aligned with market signals to preserve the value of those assets and increase long-term shareholder value. The board plays a key role in our strategy, and works directly with management in developing the strategic plan. Management focuses primarily on taking advantage of the long-term growth we see coming in our industry, while maintaining the ability to respond to market conditions as they evolve. The board oversees risk and the execution of the corporate strategy, and challenges management on their progress.

We establish corporate objectives to achieve our strategic plan and our executive compensation program is directly aligned with the strategic plan:

• measures within these objectives form the basis of the compensable targets under the short-term incentive plan

• performance share units (PSUs) measure absolute and relative performance over a three-year period. The value realized is based on share performance and outcomes against targets based on our long-term strategic goals: relative TSR, relative uranium price and all-in sustaining cash costs.

Compensation timeline

The chart below shows the different components that make up total direct compensation for our executives. Our short-term incentive plan offers the potential for executives to earn a cash bonus based on their success in achieving pre-established corporate and individual performance targets for the year.

Long-term incentives include a PSU plan and stock option plan, which have different terms for vesting and payouts. These incentive plans focus management on the importance of future value and drive corporate performance over the longer term.

Performance-based vesting and share price fluctuation can have a dramatic impact on the realized and realizable value of equity-based compensation. The named executives realized 38.6% of the grant value of the 2015 PSU awards that vested at the end of 2017 (see pages 80 through 82). All stock option awards that the named executives are holding are currently out-of-the-money (the exercise prices are higher than the December 29, 2017 share price).

60     CAMECO CORPORATION

Share performance and executive compensation

The graph below compares our TSR to the S&P/TSX Composite Total Return Index, S&P/TSX 60 Total Return Index and S&P/TSX Global Mining Index for the past five years, assuming an initial $100 investment at the end of 2012 and reinvestment of dividends over the period.

The graph also compares our TSR to the named executives’ average compensation and shows the correlation between our share price performance and realized and estimated realizable compensation.

• The three-year average reported compensation reflects the average compensation from the summary compensation table in our previous management proxy circulars. Where there were changes in named executives, we used the incumbents in place at the end of the year.

• The three-year average realized and estimated realizable compensation is a point-in-time look at the average value of compensation at the end of each three-year period taking into account the effect that share price movement has on the value of long-term equity-based awards.

• The decreased 2017 average realized and estimated realizable compensation over 2016 reflects lower long-term incentive payouts since 2015, and a lower 2016 short-term incentive payout, which aligns with a decrease in Cameco share price. As well, our COO retired mid-2017 following 34 years with Cameco, and his replacement, Brian Reilly, currently receives lower overall compensation reflecting his tenure in the role. Mr. Reilly’s 2017 compensation includes that of his previous roles held with the Cameco group of companies during the year.

• We believe the method of determining an average value of compensation at the end of each three-year period provides a reasonable reflection of long-term compensation as PSUs pay out after three years and options vest over three years.

2018 MANAGEMENT PROXY CIRCULAR      61

Market context

Like other commodities, the uranium industry is cyclical and the low level of contracting at low prices that we are seeing today is not new. When prices are low, there is no urgency to contract. When heavy contracting took place during the previous price run, which drove investment in higher-cost sources of production, it contributed to the perception that uranium is abundant and always will be. History demonstrates that the opposite tends to occur when prices rise. After years of low investment in supply, as has been the case so far this decade, security of supply tends to overtake price concerns at some point, and utilities re-enter the long-term market to ensure they have the reliable supply of uranium they need to run their reactors.

There have been three significant events that have changed sentiment in the market and impacted uranium prices in the past two decades. The first was a supply event in 2006 when our Cigar Lake project flooded, putting at risk 18 million pounds a year of future supply from the market. The second event was a demand shock in 2010 as Chinese utilities entered the market in a sizeable way, signing long-term uranium contracts with multiple suppliers to fuel their growing nuclear reactor fleet. The third change in sentiment came in March 2011, when the events at the Fukushima nuclear power plants in Japan halted and reversed the upward price trend. Uranium prices fell, as did the share prices of companies involved in uranium exploration, development and production. As Japan idled its reactor fleet and acceptance of nuclear declined in certain countries, the uranium market entered a period of fundamental over-supply.

Market recovery has taken longer than originally anticipated as a result of a slower than expected pace of reactor restarts in Japan, unexpected reactor shutdowns in other regions, and delays in reactor construction programs, and all the while supply has continued to perform well. In 2017, the spot price continued to weaken and fell approximately 15% from 2016, ending the year at $21.78 (US) per pound. The long-term price dropped approximately 18% in 2017, ending the year at $31.92 (US) per pound.

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We believe that our share price does not reflect the strength of our core business, as outside factors, including uranium market challenges, global economic uncertainty, geopolitical risk or the attractiveness of other commodity investments also influence share price. In addition, we believe that the uncertainty around our dispute with the Canada Revenue Agency has also had an impact on our share price.

Although we cannot control the pace of the uranium market recovery, we can and will continue to take action on things we can control, including:

· preserving the value of our tier-one assets

· restructuring our organization for efficiency

· managing our production, inventory and purchases with strong discipline

· protecting and extending the value of our contract portfolio

· maximizing cash flow while maintaining our investment-grade rating

· positioning the company to manage risk and deliver long-term value.

2018 MANAGEMENT PROXY CIRCULAR      63

CEO compensation summary

Tim Gitzel President and CEO The term ‘realized and realizable’ compensation in our disclosure refers to the sum of: 1)  compensation actually received; and 2)  an estimate of compensation a named executive would be entitled to receive at a given point in time under Cameco’s long-term incentive program. For the purpose of calculating realized and realizable value for named executives in this circular, the point in time we use is December 29, 2017.	Tim Gitzel became president and CEO of Cameco on July 1, 2011. Tim joined Cameco in January 2007 as senior vice-president and COO and was appointed president in May 2010. He has more than 20 years of senior management experience with Canadian and international uranium mining companies.
	2017 pay mix (actual compensation)
	2017 base salary and short-term incentive Tim’s total cash compensation in 2017 was $2,317,000, including: •   base salary of $1,025,000 •   a cash bonus of $1,292,000, which was 105% of his target award. Our short-term incentive plan for 2017 (based on five objectives) scored 95% of target. The CEO’s payout on individual performance was assessed above his target as a result of his strong leadership, significant performance results (including cost savings) and strategic change initiatives made during 2017. Some of the 2017 cost savings included lowering average unit cost of sales by 13 percent, lowering direct administration costs by 23 percent, lowering exploration costs by 30 percent, and lowering capital expenditures by 34 percent from 2016.
	Long-term (equity-based) incentives As president and CEO, Tim receives over 60% of his compensation on a deferred basis as long-term incentives. This is at-risk, equity-based compensation – if our share price increases, so will the value Tim receives when the long-term incentives vest. The table below shows the grant and current realized and realizable value of long-term incentives awarded to Tim from 2015 to 2017. The 2015 PSUs vested on December 31, 2017 with a realized value of $753,377. His options currently have zero realizable value as the exercise prices of all awards granted between 2015 and 2017 are higher than our share price on December 31, 2017. The total realized and realizable value of Tim’s long-term incentive compensation is 38% of the total grant value, highlighting the link between pay and performance. To illustrate the nature of the long-term incentives, we are using a three-year period to provide a reasonable reflection of long-term compensation as PSUs pay out after three years and options vest over three years. •  PSUs and options (at grant) – amount represents the total grant value of the PSUs and options granted in 2015 through 2017 as set out in the summary compensation table on page 84. •  PSUs (realized and realizable value) – amount Tim received on PSUs granted to him in 2015 and paid in early 2018 plus estimated amounts for PSUs granted to him in 2016 and 2017. The realizable value of PSUs granted in 2016 and 2017 have been estimated based on target vesting and the closing price of Cameco shares on December 29, 2017 of $11.61. •  Options (current value) – includes the value of in-the-money options granted in 2015, 2016 and 2017. The value of the options granted to Tim in this period are based on the closing price of Cameco shares on the TSX on December 29, 2017. The realized and realizable value is zero because none of the options are in-the-money.

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CEO compensation lookback

The following table takes a closer look at Tim’s compensation over the past three years. It shows the value of his three-year average compensation and his compensation as disclosed in the summary compensation table in each of the past three years compared to the realized and realizable value.

His realized and realizable value is lower than the grant value disclosed in the summary compensation table, demonstrating the alignment between our compensation program and performance. Cameco has had solid financial, production and safety results in this three-year period. TSR was below target in two of the three years. Realized and realizable compensation is lower when all performance measures do not show positive results.

TIM GITZEL’S COMPENSATION (2015 TO 2017 AND THREE-YEAR AVERAGE)
	Three-year average		2017		2016		2015	CEO three-year average compensation The charts below show the impact of at-risk pay and the effect that performance and share price have on realized and realizable pay. There is a difference of -42% between the average grant value and the average year-end value.
Base salary		$1,028,427		$1,025,000		$1,025,000	$1,035,282
Annual incentive pay		$1,075,667		$1,292,000		$851,000	$1,084,000
PSUs awarded and paid out		$946,702		$753,377		$558,837	$1,527,893
Options exercised		–		–		–	–
Realized compensation subtotal		$3,050,796		$3,070,377		$2,434,837	$3,647,175
PSUs outstanding				–		–	–
Options granted and outstanding				–		–	–
Pension		$420,233		$302,900		$409,200	$548,600
Realizable compensation subtotal		$420,233		$302,900		$409,200	$548,600
TOTAL REALIZED AND REALIZABLE COMPENSATION (based on 2017 year-end value)		$3,471,029		$3,373,277		$2,844,037	$4,195,775
TOTAL COMPENSATION AS REPORTED IN THE SUMMARY COMPENSATION TABLE (based on grant date values)		$6,033,302		$6,258,425		$5,924,134	$5,917,347
·  Base salary – This reflects the actual pay for the year and was greater in 2015 because there were 27 pay periods in 2015 versus the usual 26 pay periods. Tim received a 6.8% salary increase in 2015, a 2.5% salary increase in 2016 and no salary increase in 2017. ·  Annual incentive pay – STI bonus amounts paid each year. ·  PSUs awarded and paid out – amounts paid out on PSUs awarded in 2013, 2014 and 2015 that vested in 2015, 2016 and 2017. ·  Options exercised – amount earned from options exercised from 2015 to 2017. Tim did not exercise any stock options in 2015, 2016 or 2017. ·  PSUs outstanding – for the purpose of the CEO compensation lookback, the outstanding PSUs granted in 2016 and 2017 have been given no value because they are performance-based awards that have not vested and may have a zero payout value when they vest. ·  Options granted and outstanding – amount that could be earned upon exercise of options that were granted from 2015 to 2017 based on the closing price of Cameco common shares on the TSX on December 29, 2017 of $11.61. No options granted between 2015 and 2017 are in-the-money. ·  Pension – pension values reported for 2015, 2016 and 2017 in the summary compensation table.

The next table looks back at CEO compensation during Tim’s tenure as disclosed in prior circulars, and also compares the CEO’s compensation to the value earned by shareholders over the same period. We have indexed these values at $100 invested on January 1, 2012 to provide a meaningful comparison.

	SUMMARY COMPENSATION TABLE AWARD		THREE-YEAR AVERAGE REALIZED AND ESTIMATED REALIZABLE COMPENSATION AS AT DECEMBER 31, 20171		PERIOD	VALUE OF $100 INVESTED ON   JANUARY 1, 2012
						CEO		SHAREHOLDER
2017		$6,258,425		$2,775,453	Jan 1, 2015 to Dec 31, 2017		$44		$66
2016		$5,924,134		$2,876,508	Jan 1, 2014 to Dec 31, 2016		$49		$78
2015		$5,917,347		$3,093,626	Jan 1, 2013 to Dec 31, 2015		$52		$92
2014		$5,099,097		$2,757,473	Jan 1, 2012 to Dec 31, 2014		$54		$101
2013		$4,720,325		$2,770,902	Jan 1, 2011 to Dec 31, 2013		$59		$115
2012		$4,772,534		$3,023,578	Jan 1, 2010 to Dec 31, 2012		$63		$100
					Average		$54		$92

1. The current year amount differs from the three-year average above because this number is calculated on a three-year rolling period. The 2012 amount includes compensation awarded to Jerry Grandey who was the CEO until June 30, 2011.Tim Gitzel became president and CEO on July 1, 2011.

2018 MANAGEMENT PROXY CIRCULAR      65

Executive compensation

Compensation discussion and analysis

1. Approach   Our executive compensation program is based on strong principles, a disciplined process and thorough research and analysis.   Our program has three goals:     1.  Attract, retain and motivate executives, who are operating in a highly-demanding, complex and competitive global business environment.     2.  Establish a clear link between corporate performance and executive pay.     3.  Motivate executives to create shareholder value by:   · using total shareholder return as a performance measure   · rewarding them when they successfully achieve corporate and individual performance objectives over the short and long term   · ensuring a significant portion of their total compensation is at risk, reinforcing the importance of strong leadership and their ability to influence business outcomes and financial performance, and is tied to share value to align the interests of executives and shareholders.   Target compensation   We target base salaries and total compensation at the median of our comparator group with the flexibility to position executive pay within the competitive range of the median for target performance.   The charts below show the 2017 target pay mix for total direct compensation for our named executives who are current executives, and the amount of at-risk compensation.   About the compensation mix   We use financial and operational measures to assess performance for short- and long-term incentives. 60% of the 2017 long-term incentive vests based on performance

6 COMPENSATION PRINCIPLES 1 TEAM 2 PERFORMANCE 3 RETENTION 4 SHAREHOLDER ALIGNMENT 5 COMPARATOR 6 MARKET COMPETITIVENESS Six principles drive our policy and program decisions relating to executive compensation: 1 TEAM Promote executive teamwork by using incentive-based compensation that emphasizes corporate over individual performance. 2 PERFORMANCE Base compensation decisions on corporate and individual performance, using a combination of financial, non-financial, internal and external measures, and absolute and relative performance, depending on short-term or long-term performance. 3 RETENTION Focus part of the LTI program (PSUs) on absolute and controllable performance measures to retain skilled executives. 4 SHAREHOLDER ALIGNMENT Use share ownership requirements and equity-based compensation to align executives with long-term interests of shareholders. 5 COMPARATOR Benchmark shareholder experience and compensation program against a comparable group of companies. 6 MARKET COMPETITIVENESS Target executive compensation around the range of the market median, depending on role, experience and performance, to ensure we can attract and retain our executive talent.

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Research and benchmarking

We use national, provincial and industry compensation forecasts and benchmark our executive compensation against our comparator group for individual compensation components and total compensation by position. Performance, scope of the role, experience and internal equity are also considered.

We engage an independent compensation consultant for advice and analysis to make sure our executive compensation is fair and competitive and we are balanced in our decision-making.

As a publicly-traded, global nuclear energy company based in Canada, we have no peers that are directly comparable, so the human resources and compensation committee, with the support of its independent consultant, established a comparator group of companies to assess compensation levels.

Benchmarking compensation

Our objective is to have a robust and stable group of companies to benchmark against that are comparable by size and industry. We use a multi-step evaluation process to determine companies appropriate for assessing market levels of compensation. The evaluation process is based on our existing criteria and is focused on companies in the resource industry (mining in particular) that are similar in size and complexity and are a relatively good fit with the overall group.

Comparator group

In 2017, we used one comparator group to benchmark our director and executive compensation.

The comparator group of 20 companies represents a cross-section of Canadian capital intensive companies from different sectors that are similar by size of assets, revenue, enterprise value, and market capitalization (generally ranging from one-third to three times the size of Cameco). These companies were also selected because they are in regulated or relevant industries, in complex businesses, have operations in multiple geographic locations and jurisdictions, and a head office in Canada.

2017 COMPARATOR GROUP
DIVERSIFIED METALS, MINING AND GOLD	ENERGY (OIL, GAS AND METHANOL)	UTILITIES, ENERGY INFRASTRUCTURE AND POWER PRODUCERS
Agnico-Eagle Mines Ltd. Agrium Inc. Eldorado Gold First Quantum Minerals Ltd. Goldcorp Inc. Hudbay Minerals Inc. IAMGold Kinross Gold Corp. Lundin Mining Corp. New Gold Inc. Potash Corp. of Saskatchewan Teck Resources Yamana Gold Inc.	ARC Resources Crescent Point Energy EnCana Corp. Enerplus Resources Fund MEG Energy Corp. Methanex Corp. Penn West Petroleum	TransAlta Corp.

THIS YEAR’S NAMED EXECUTIVES        

We have six named executive officers (named executives) in 2017, including the chief executive officer, chief financial officer, and the next three most highly compensated officers at December 31, 2017, and one former officer who would have otherwise qualified as one of the three most highly compensated officers were he employed at December 31, 2017.

●  Tim Gitzel           President and Chief Executive Officer (CEO)

●  Grant Isaac         Senior Vice-President and Chief Financial Officer (CFO)

●  Brian Reilly         Senior Vice-President and Chief Operating Officer (COO)

●  Alice Wong         Senior Vice-President and Chief Corporate Officer (CCO)

●  Sean Quinn        Senior Vice-President, Chief Legal Officer and Corporate Secretary (CLO)

●  Robert Steane    former Senior Vice-President and Chief Operating Officer

2018 MANAGEMENT PROXY CIRCULAR      67

Share ownership

We require our executives to own Cameco shares so they have a vested interest in the company, aligning with shareholder interests.

Our share ownership guidelines are a multiple of base salary:

· CEO – 4 x base salary

· senior vice-presidents – 2 x base salary

· vice-presidents – 1 x base salary.

Executives must meet their ownership targets within five years of being appointed to the position. If an executive is promoted to a level with a higher share ownership target, he or she will have an additional three years to meet the increased target. Executives must use the after-tax proceeds from the payout of their PSU awards and the exercise of stock options to purchase additional Cameco shares until they have met the requirements.

Brian Reilly became a vice-president in March 2017 and was promoted to his senior vice-president position in July 2017. He has until March 2022 to meet his initial ownership target (1 x base salary) and until March 2025 to meeting his current ownership target (2 x base salary). All of the other named executives meet their share ownership requirements.

The table below shows the number of shares held by our named executives on December 31, 2017. We calculate the target value of share ownership by using their 2017 base salary and the multiple for their position. Share value is based on the closing price of Cameco common shares on the TSX on December 29, 2017 of $11.61 or the executive’s purchase price, whichever is higher. See the notes to the table below for information about how we determine the PSU value.

We believe our executive share ownership guidelines support best practices and align with the market generally, therefore no changes are planned for 2018.

NAME	2017 BASE SALARY ($)	MULTIPLE	TARGET VALUE OF OWNERSHIP ($)	CAMECO SHARES		QUALIFYING PSUs		VALUE OF SHARE   OWNERSHIP($)   (SHARES AND   QUALIFYING PSUs)
				NUMBER HELD (#)	VALUE ($)	NUMBER HELD3 (#)	VALUE4 ($)		MEETS SHARE OWNERSHIP TARGET
Tim Gitzel1	1,025,000	4 x	4,100,000	256,638	4,679,321	112,720	1,308,679	5,988,000	Yes (146% of the target for the CEO)
Grant Isaac	550,000	2 x	1,100,000	71,035	1,160,228	42,580	494,354	1,654,582	Yes (150% of the target for the CFO)
Brian Reilly2	420,000	2 x	840,000	323	6,890	323	3,750	10,640	On track to meet the target for the COO
Alice Wong	444,700	2 x	889,400	65,029	1,035,180	27,560	319,972	1,355,152	Yes (152% of the target for the position)
Sean Quinn	430,000	2 x	860,000	32,086	652,977	26,640	309,290	962,267	Yes (112% of the target for the position)

1. See Tim Gitzel’s profile on page 16 for the total number and value of the CEO’s shares and all PSUs, not just qualifying PSUs.

2. Brian Reilly was promoted to vice-president in March 2017 and to his current position in July 2017. He has until March 2025 to meet his share ownership guideline.

3. This is the lesser of the number of PSUs and the number of Cameco common shares held by the named executive.

4. The number of qualifying PSUs multiplied by the closing price of Cameco shares on the TSX on December 29, 2017 of $11.61.

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2. Annual decision-making process

The board, human resources and compensation committee and management are involved in compensation decision-making. The committee is responsible for making compensation recommendations to the board for its approval.

The illustration below shows our process, the different inputs we use to determine compensation and the flow of information, recommendations and approval by our board.

1 Management Management analyzes and gathers data (including comparative data) and considers performance (corporate and individual) against objectives. It recommends compensation for executive officers, other than the CEO, and performance objectives for the next year. 2 Compensation committee The compensation committee reviews management’s recommendations, corporate performance results and the CEO’s individual performance, in consultation with its independent compensation consultant. It recommends compensation for all executive officers and performance objectives for the next year to the board. 3 Board The non-executive board members have final approval of CEO compensation, executive compensation and performance objectives for the next year.

Assessing the program

The human resources and compensation committee believes that it is good practice to review our compensation programs each year and continued this practice in 2017.

The committee reviews all policies and programs relating to executive compensation, which involves:

· establishing the annual corporate objectives to measure performance

· determining the proposed base salaries, short-term incentive awards, performance share unit awards and stock options

· evaluating performance

· reviewing and recommending executive compensation to the board for review and approval.

The committee retains an external consultant as an independent advisor on compensation matters who is also involved in the compensation review. Management retains a different external consultant as a general resource on human resources and other matters (see Compensation governance starting on page 48 for more information).

2018 MANAGEMENT PROXY CIRCULAR     69

3. Measuring performance

Executive compensation decisions are based on corporate and individual performance. Performance objectives are tied to our strategy of focusing on our tier-one assets and to profitably produce at a pace aligned with market signals to preserve the value of those assets and increase long-term shareholder value, and to do that with an emphasis on safety, people and the environment.

Corporate performance and measuring success

We assess our corporate performance by how well we achieve both financial and operational goals, and group our corporate objectives into our four measures of success:

· outstanding financial performance

· safe, healthy and rewarding workplace

· clean environment

· supportive communities.

Our four measures of success allow us to proactively address the financial, social and environmental aspects of our business. We believe that each is integral to our overall success and that together they will ensure our long-term sustainability.

The board approves our corporate objectives every year, as initially recommended by management and following reviews by the human resources and compensation and safety, health and environment committees. These objectives support our strategic plan.

Linking pay to performance

The corporate objectives are used as performance measures under our short-term incentive plan. The table on page 79 lists our 2017 corporate objectives and weightings, and the threshold, target, maximum and actual performance against these objectives under the STI plan.

Under our PSU plan, we assess performance over a three-year period based on three objectives, including relative TSR. These objectives were recommended by management, reviewed by the human resources and compensation committee and then recommended to the board for approval. The table on page 75 sets out the measures for PSUs granted in 2017.

PSU awards granted in 2015 were measured against three performance targets. They vested on December 31, 2017 and were paid out early in 2018 based on our performance against those three targets for the three-year performance period (see pages 80 to 82 for the performance assessment and details of the payout).

Performance measures under our STI and PSU plans are linked to our strategic plan to ensure our long-term growth and focus on creating shareholder value. The better we perform, the greater the potential to realize a higher payout value.

Individual performance

The board assesses the CEO’s individual performance using the annual corporate objectives and recommendations by the human resources and compensation committee, which are based on:

· overall corporate performance

· implementation of the CEO’s strategies to increase shareholder value

· achievement of the CEO’s individual performance objectives.

The committee reviews reports from management and the CEO’s self-assessment and consults with its compensation consultant before making its recommendation to the board.

Every year the CEO assesses the individual performance of each senior vice-president using the annual corporate objectives as targets, with consideration of the executive’s influence in a given area. The CEO compares actual performance to the targets and evaluates the leadership effectiveness of the executive. The CEO discusses the performance of the executives with the committee and its compensation consultant. The committee then makes its recommendations to the board.

The board approves all decisions on executive compensation. See page 83 for details about the compensation decisions in 2018.

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4. Compensation components

Five components make up total executive compensation:

·   Base Salary
·   Short-term incentive (STI)
·   Long-term incentive (LTI)
·   Pension
·   Group benefits

FORM	PERFORMANCE PERIOD	HOW IT IS DETERMINED	RISK MANAGEMENT FEATURES
BASE SALARY	Provides market competitive level of fixed compensation
Cash	One year	Based on current business challenges, experience, scope of the role, market competitiveness among the comparator group, individual performance and internal equity.	Fixed pay, paid throughout the year, provides a certainty at a base level for fulfilling their responsibilities. Represents 20-28% of target direct compensation of the named executives.
VARIABLE (AT-RISK SHORT TERM)	STI compensation encourages achievement of pre-established corporate and individual performance objectives. Payout is subject to a clawback policy
Cash	One year	Focuses on specific annual objectives. Target award based on market competitiveness among the comparator group and other factors. Actual award based on corporate and individual performance.	Provides a balanced focus on short-term performance based on a pre-determined set of performance metrics weighted and scored in our scorecard. Actual payout on all metrics could be 0-200%. Targets and results are approved by the board. Targets are tested to determine the level of stretch. Using balanced and diverse performance metrics reduces the risk associated with emphasizing a single (or limited) performance measure.
VARIABLE (AT-RISK LONG TERM)	LTI compensation is an incentive to achieve longer-term performance and an opportunity to receive equity-based compensation aligned with shareholder interests. Payout is tied to Cameco share performance and subject to a clawback policy
Performance share units	Three-year term, with vesting at the end of three years	Focuses on longer-term objectives (three years). Target award based on market competitiveness of the LTI package among the comparator group and other factors. Actual payout based on our overall relative and absolute performance targets. At the board’s discretion, payment is made in Cameco shares purchased on the open market, or in cash.	Performance is measured on previously established relative and absolute targets. Three-year vesting period maintains longer term focus for decision-making and management of business. Vesting and payout eligibility capped. Payout on the relative TSR metric could be 0-200% and on the other metrics could be 0-150%. Stretch targets are based on achievement better than the comparator group and market.
Stock options	Eight-year term, with one-third vesting each of the first three years starting on the first anniversary of the grant date	Target award based on market competitiveness of the LTI package among the comparator group and other factors. The final realized value is based on the appreciation of Cameco’s share price.	Provides a balanced incentive to take appropriate risks. Three-year vesting eligibility period and eight-year term maintain longer-term focus for decision-making and management of business.
Restricted share units	Typically a three-year term, with vesting at the end of three years	Mainly used as a targeted retention tool in individual circumstances. At the board’s discretion, payment is made in Cameco shares purchased on the open market, or in cash.	Vesting over time supports retention and longer-term focus for decision-making.
RETIREMENT BENEFITS
Defined contribution pension plan Supplemental executive pension program (defined benefit)	Ongoing	Based on market competitiveness and legislative requirements.	Tax efficient way to provide employment benefits. Provide security for employees and their families.
Group insurance, health and dental, income protection	Ongoing	Based on market competitiveness.

We also have employment agreements with our named executives (see page 91).

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Base salary

Typically we target base salaries at the median of the comparator group. We review base salaries every year, and compare them to similar positions in the comparator group. Then we review our corporate performance, the individual’s performance, experience and scope of the role as well as internal equity to make sure any increases are fair and balanced. Salary adjustments, if any, for our named executives generally go into effect January 1.

Short-term incentive (STI)

The STI plan gives executives the opportunity to earn a cash bonus based on their success in achieving pre-established corporate and individual performance targets for the year.

Cameco has to meet a minimum level of performance (threshold) for each measure before being eligible for a payout of 50% on that measure. Achieving target produces 100% payout on that measure. The maximum payout on any STI target is 200%. There is no payout if performance is below threshold. Individual performance has a maximum payout factor of 150%. The targets are considered challenging or stretch.

The human resources and compensation committee sets the STI target for each executive based on position, internal equity and market competitiveness. The table below shows the current target levels and weightings used to establish the actual awards. The weighting of corporate and individual performance is the same for all executives, which promotes executive teamwork and better aligns the interests of executives and shareholders. Actual bonuses are based on performance for the year and paid in the following year after our year-end results are released.

POSITION	STI TARGET FOR 2017 (% OF BASE SALARY)		CORPORATE PERFORMANCE WEIGHTING		INDIVIDUAL PERFORMANCE WEIGHTING
CEO		120%		80%		20%
Senior vice-presidents		60-75%		80%		20%

Determining the payout

We use a balanced scorecard to broadly measure corporate performance and give participants a clearer picture of their potential award. The scorecard includes all of the corporate objectives and applies a weighting to each one. Individual performance is also measured.

Measuring corporate performance

The board establishes the measures and weightings every year based on the recommendation of the committee. These objectives represent our four measures of success that highlight the importance we place on our financial and non-financial measures and the social and environmental aspects of our business as a responsible corporation and global leader in corporate social responsibility.

Part of the process for determining the STI award is for the human resources and compensation committee to consult with the safety, health and environment committee on our performance related to safety, health and the environment and related corporate results. A recommendation is then brought forward from the human resources and compensation committee to the board.

72     CAMECO CORPORATION

Measuring individual performance

The committee determines the individual performance measures and weightings for the CEO, while the CEO establishes the same for the named executives. Assessment of individual performance is based on the executive’s contribution to corporate performance and individual performance measures. The CEO assesses individual performance for the named executives and presents them to the committee. The committee assesses CEO performance.

Once the individual performance assessment is complete, the assessments are approved by the committee. The corporate performance multiplier and the executive’s assessment results are put into the formula below to determine the annual bonus for each named executive.

Using discretion

The board can increase or decrease the amount of the STI payment when there are significant external challenges or opportunities that were not contemplated or reasonably expected when the objectives were set. It cannot exceed the overall maximum payout of 200%.

Long-term incentive (LTI)

LTI provides executives and management employees the opportunity to receive equity-based compensation to drive longer-term performance. Both the committee and the board believe equity-based compensation is important for motivating employees to deliver strong longer-term performance, aligning their interests with those of our shareholders and providing pay that is competitive with the market.

LTI is awarded to executives as PSUs and stock options, with RSUs granted under special circumstances. This LTI mix allows us to use different vesting criteria, eligibility and performance measures for at-risk compensation. Since 2016, we have measured relative TSR performance against the TSX 60 rather than our comparator group (see page 67 for companies that are part of our comparator group).

AWARD	HOW IT’S USED	BUSINESS FOCUS	WHO PARTICIPATES	VESTING	HOW IT’S SETTLED	ALIGNED WITH SHAREHOLDERS
PSUs (page 74)	60% of target LTI award	Performance vesting criteria Directly linked to long-term, absolute and relative performance and share price Reduces the number of option awards, lessening the dilutive impact to shareholders	Vice-presidents and above	Based on financial and operating performance and TSR at the end of a three-year period	Cameco shares purchased on the market or cash	Motivates executives to create shareholder value that can be sustained over a longer period on both an absolute and relative basis Non-dilutive
Stock options (page 76)	40% of target LTI award	Ties a portion of future compensation to the long-term performance of our shares	Vice-presidents and above	Vest over three years, expire after eight years	Option to buy Cameco shares issued from treasury at the exercise price	Motivates executives to increase shareholder value
Restricted share units (page 77)	Mainly for targeted retention	Ties a portion of future compensation to the longer term performance of our shares	Select executives	Typically, at the end of three years	Cameco shares purchased on the market or cash	Motivates executives to increase shareholder value Non-dilutive

2018 MANAGEMENT PROXY CIRCULAR     73

Determining the mix

The committee evaluates the mix of options and PSUs every year, and discusses national trends with its compensation consultant, including the importance of stock options in our industry and the emphasis Canadian public companies continue to place on stock options and other equity-based awards. The committee takes into account previous awards of PSUs and options when it considers new LTI grants.

Governance concerns have been expressed about the use of stock options and the committee regularly reviews the merits of keeping stock options in our compensation program. Stock options align with share price improvement over a longer-term horizon and are a common form of LTI in our comparator group.

The committee set the 2017 target mix of the expected value of the long-term incentives at 60% PSUs and 40% options, so a high percentage of LTI vests based on performance against a number of factors including relative TSR. Companies in our comparator group typically have a lower portion of performance-based LTIs.

LTI awards are granted every year on March 1 (or the next business day if March 1 falls on a weekend) after we publicly disclose our results for the previous fiscal year. If we impose a trading blackout period that includes March 1, we will make the grants on the next trading day after the blackout period has ended.

The board can grant special LTI awards at other times during the year if required for promotions, new hires or to address specific business issues.

Non-executive employees (union and non-unionized) participate in the employee share ownership plan (ESOP). Cameco makes an annual base level of contribution to the plan, and matches 50% of employee contributions up to a maximum of 1.5% of an employee’s base salary. Executives do not participate in ESOP because they participate in the PSU plan.

Performance share unit (PSU) plan

The PSU plan design is described in the table on the previous page, including vesting at the end of a three-year period. The formula below shows how the performance factors determine the final number of PSUs on vesting.

  

The performance multipliers are determined at the time of each PSU award and may be different depending on the three-year period. All-in sustaining cash costs was established as the operations measure in 2017, replacing production. The performance multipliers of the three most recent PSU awards are as follows:

2015 AWARD (vests December 31, 2017; payout March 2018)	2016 AWARD (vests December 31, 2018; payout March 2019)	2017 AWARD (vests December 31, 2019; payout March 2020)
●   average relative realized uranium price	●   same as 2015	●   same as 2015
●   tier-one production	●   same as 2015	●   all-in sustaining cash costs
●   three-year relative TSR (comparator group)	●   same as 2015 (compared to TSX 60)	●   same as 2015 (compared to TSX 60)

Each PSU represents an opportunity to receive a Cameco common share purchased on the open market at the end of the three-year performance period (or cash, at the board’s discretion).

We use a scorecard to align senior management’s compensation with their ability to improve corporate performance over the three years. The PSUs measure absolute and relative performance so management maintains a balanced, longer-term focus on delivering shareholder value.

Performance measures are based on a combination of two corporate measures, one absolute and one relative, and relative TSR, which has the highest weighting of the three measures. TSR is a good reflection of performance when comparing like companies in a comparable industry and the same commodity. As companies in our comparator group are not affected by the uranium price like Cameco, we believe that TSR is a challenging performance target in the current depressed uranium market.

74     CAMECO CORPORATION

The human resources and compensation committee reviews the performance measures and targets every year and recommends them to the board for approval. The targets are set on the basis that they are challenging to achieve. The table below shows the measures and weightings for PSUs awarded in 2017 for 2017 to 2019 performance.

MEASURE	WEIGHTING			DESCRIPTION	WHAT IT MEASURES
Average relative realized uranium price 0 to 150%		30	%	Achieve an average realized price for uranium sales for a three-year period that exceeds the weighted average price for sales in two independent industry benchmarks for the same period: ●   EIA (US energy information administration) price for sales in the US ●   ESA (Euratom supply agency) price for sales in Europe. The payout at the end of the three-year period is based on 2016, 2017 and 2018 sales due to timing of when pricing information is available.	Measures performance relative to our competitors. Consistently achieving higher prices than our competitors is a stretch target because uranium is a fungible product and we need to distinguish our uranium from our competitors to achieve a premium price. We use these pricing indicators because they are publicly-available measures set by independent third parties.
All-in sustaining cash costs (AISCC)1 0 to 150%		30	%	Achieve three-year cumulative cost reductions while safely achieving steady production at the Saskatchewan tier-one operations in the three-year period from 2017 to 2019.	Measures absolute performance and ties directly to our strategic plan.
Our three-year relative total shareholder return (TSR) 0 to 200%		40	%	Achieve three-year average TSR at the median of the three-year average TSR achieved by companies in the TSX 60. We define TSR as the change in price of a Cameco common share, including reinvestment of dividends, on the TSX during the three-year period from 2017 to 2019.	Measures performance relative to the broader index.
PERFORMANCE MULTIPLIER Maximum of 170%				The overall performance factor is the sum of the three weighted targets above.
INITIAL GRANT OF PSUs				Notional units awarded at the beginning of the three-year performance period.
PSU PAYOUT				Payout amount is the initial number of PSUs granted, multiplied by the PSU performance multiplier, exchanged for the equivalent number of Cameco common shares.

1. Cash outlay to sustain the operation of the site. It does not include growth capital or royalties. This information is prepared as part of each site’s annual three-year business and budget plan and is incorporated in the monthly financial report for each site.

2018 MANAGEMENT PROXY CIRCULAR     75

PSU performance multiplier

The performance multiplier for each measure depends on our performance against each target. The table below shows how we assessed performance against each measure in 2017 for 2015 to 2017 performance and the PSU scorecard on page 81 shows assessment outcomes.

PERFORMANCE MEASURES (AND WEIGHTING)	THRESHOLD PERFORMANCE	IF WE ACHIEVE:	THEN THE PERFORMANCE MULTIPLIER IS:
Average realized uranium price (30%)	80% of our target of 100%	Less than 80% of the corresponding target	0%
		80 to 120% of the corresponding target	50 to 150% (in a straight-line interpolation)
Tier-one production (30%)		More than 120% of the corresponding target	150%
Our three-year average TSR (40%)	35th percentile (target is the 50th percentile)	Below the 35th percentile among our comparator group	0%
		From the 35th to the 50th percentile	40 to 100% (in a straight-line interpolation with 100% at the 50th percentile)
		50th percentile	100%
		50th to 75th percentile	100 to 200% (in a straight-line interpolation)
		Higher than the 75th percentile	200%

Vesting

Payout formulas have been established for each performance measure, taking into account different levels of threshold performance to determine the performance multiplier, and to cap payouts to eliminate any excessive risk-taking.

Applying discretion

The committee can use discretion to make adjustments, so that payouts appropriately reflect performance and discourage excessive risk-taking. We fully disclose any use of discretion, together with the rationale and the particular circumstance. No adjustments were made for 2017 performance.

Stock option plan

We provide a stock option plan for executives at the vice-president level and above. The committee takes into account previous equity awards when it considers new grants of options. The board fixes the exercise price of an option at the time of the grant at the TSX closing price of Cameco common shares on the trading day immediately before the date of the grant.

If an option holder leaves the company, any unvested options will vest during a specific period of time depending on the reason for leaving. Vested options can be exercised during the same period. See Termination and change of control benefits starting on page 91 for details.

No more than 10% of our total issued and outstanding shares can be issued to insiders in a year under the stock option plan and any other security-based compensation arrangement. No more than 5% of our total issued and outstanding shares can be issued to any one person. Options cannot be transferred to another person (other than by will or intestate succession).

Making changes – The board can change, suspend or terminate the stock option plan, subject to the laws that apply, including but not limited to the rules, regulations and policies of any stock exchange where our shares are listed. Some changes may require approval from shareholders or a governmental or regulatory body.

Neither the board, the human resources and compensation committee nor shareholders can alter or affect the rights of an option holder in a negative way without his or her consent, except as described in the plan. See Appendix C for information about changes to the stock option plan that must be approved by shareholders.

According to the TSX rules for reporting on equity compensation plans, there were no plan changes in 2017.

International employees – Our non-North American stock option plan (phantom plan) allows eligible employees of our international subsidiaries to participate in our overall growth and profitability in permitted jurisdictions.

76     CAMECO CORPORATION

The phantom plan has the same objectives and features as our stock option plan, except that these option holders have the right to receive cash payments rather than Cameco shares. The cash amount equals the difference between the closing market price of Cameco shares on the day prior to the exercise date and the exercise price of a phantom stock option.

The Summary compensation table on page 84 gives information about the grant date value of options awarded to the named executives over the past three years. The Incentive plan awards table on page 86 gives information about the 2017 year-end value of the named executives’ unexercised options and PSUs that have not vested.

Restricted share units

The board grants RSUs from time to time to senior management, mainly as a targeted retention tool, on the recommendation of the committee. RSUs typically vest at the end of three years. Management employees below the level of vice-president receive their annual LTI awards as RSUs and they vest one-third each year over three years.

Each RSU represents one notional common share. The board has discretion to decide whether the payout is in Cameco shares purchased on the open market, or in cash based on the weighted average closing price of Cameco shares on the TSX for the 20 trading days immediately before the vesting date, after deducting withholding taxes.

Pension

Pensions are an integral part of total compensation and a cost-effective and important benefit for attracting and retaining executives and other employees. Executives participate in a registered base plan and a supplemental program.

Registered base plan – We have a registered defined contribution plan for eligible employees. All of the named executives participate in our defined contribution plan. We contribute 12% of the named executive’s pensionable earnings to the defined contribution plan every two weeks up to the annual dollar limit allowed by the Canada Revenue Agency. The maximum dollar amount for 2017 was $26,230.

Supplemental program – This non-contributory supplemental defined benefit retirement plan is designed to attract and retain talented executives over the longer term. It provides a retirement income that is commensurate with the executive’s salary and offsets the registered pension plan limits under the Income Tax Act (Canada).

All of our Canadian-based management at the vice-president level and above participate in the supplemental retirement plan (see Pension benefits on page 89 for more information).

Benefits

Group benefits – We provide group benefits to all our employees. The named executives participate in an enhanced program and receive coverage similar to those offered by companies in our comparator group. These benefits include life insurance, long-term disability insurance, extended health care, dental care and emergency medical coverage.

Perquisites – Our named executives also receive additional benefits as part of their total compensation, similar to those offered by companies in our comparator group. These include a financial and tax planning allowance, a vehicle allowance, an executive medical plan and salary protection in the event of short-term disability.

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5. 2017 Performance and compensation

Base salary

The named executives did not receive salary increases for 2017.

Short-term incentive (STI)

The STI award is based on targets set for each named executive as a percentage of base salary and actual corporate and individual performance. Target awards are set at the median of those of our comparator group. The plan design is based 80% on corporate performance and 20% on individual performance for all executives.

Corporate performance was assessed at 95% for 2017, compared to 52% for 2016, reflecting strong operational performance in 2017.

STI awards are reported in the summary compensation table on page 84, and you can find a complete description of the plan design beginning on page 72.

2017 results

Cameco’s operational performance in 2017 was strong in a tough market, as uranium prices remained low. We delivered strong results in terms of our cash flow from operations and supportive communities’ commitments, and solid results on our clean environment commitment. However, our performance was adversely affected by misses on adjusted net earnings and our safety objective for the year. Management took further action in 2017 to focus on supply discipline, streamline the organization and target significant cost reductions, focusing on what we can control to strengthen the company for the long term.

Detailed STI performance results and weightings are reported in the table on the following page.

About the payouts

Threshold performance provides a 50% payout on that measure, while performance at target produces a 100% payout, and maximum performance provides a 200% payout.

There is no payout if performance is below threshold. We have a 200% cap on payouts for performance above the maximum to mitigate excessive risk-taking.

78     CAMECO CORPORATION

STI scorecard

2017 COMPENSABLE TARGETS				ACTUAL PERFORMANCE	PAYOUT PERCENTAGE	PERFORMANCE WEIGHTING		PAYOUT
OBJECTIVE/TARGET	THRESHOLD	TARGET	MAXIMUM
OUTSTANDING FINANCIAL PERFORMANCE (50% weighting)
Achieve targeted adjusted net earnings	$77	$96	$115	Adjusted net earnings were $74 million1. Performance did not reach the threshold.	0%	x	25% =
Achieve targeted cash flow from operations (after working capital changes). ($ millions)	$393	$491	$589	Cash flow from operations (before working capital changes) was $614 million1. This exceeded our target maximum.	200%	x	25% =
SAFE, HEALTHY AND REWARDING WORKPLACE (20% weighting)
Strive for no injuries at all Cameco-operated sites and maintain a long-term downward trend in combined employee and contractor radiation doses, and injury frequency and severity (measured by TRIR2).	1.78	1.56 or lower	0.82	TRIR2 was higher than our 2017 target. Performance did not reach our threshold target. There were no significant safety incidents in 2017.	0%	x	20% =
	If a fatality or permanent disability were to occur, the entire safety performance would default to 0%.
SUPPORTIVE COMMUNITIES (15% weighting)
Implement Collaboration Agreements by supporting northern business development opportunities through sourcing services from Northern Saskatchewan vendors.	70%	75% to 77%	79%	In 2017, 80% of northern services were sourced from Northern Saskatchewan vendors. This exceeded our target maximum.	200%	x	15% =
CLEAN ENVIRONMENT (15% weighting)
Improve environmental performance in significant environmental aspects by achieving divisional targets.	80%	100%	120%	Environmental performance targets were within the target performance range. There were no significant environmental incidents in 2017.	100%	x	15% =
	If an incident occurs that results in moderate or significant environmental impacts or current and future remediation costs of greater than or equal to $1 million or which has a reasonable potential to result in significant negative impact on the company’s reputation with our major stakeholders, the payout under this metric is zero.

  OVERALL 2017 STI PERFORMANCE     2017 CORPORATE PERFORMANCE MULTIPLIER      

1. We use adjusted net earnings and cash flow provided by operations (after working capital changes) as a more meaningful way to compare our financial performance from period to period. These measures do not have a standardized meaning or a consistent basis of calculation under IFRS, and they should not be considered in isolation or as a substitute for financial information prepared in accordance with IFRS. Other companies may calculate these measures differently. The adjusted net earnings and cash flow provided by operations amounts in the 2017 compensable targets table are different than what are reported in our 2017 annual management discussion and analysis (2017 MD&A). As reported in further detail on page 24 of our 2017 MD&A, adjusted net earnings starts with reported net loss attributable to equity holders and then increased by a net $264 million to exclude the effect of adjustments on derivatives and impairment charges. For compensation purposes, adjusted net earnings as reported in our 2017 MD&A is further adjusted for variances in foreign exchange rates as compared to budget. To calculate cash flow from operations, we start with cash provided by continuing operations as reported on page 23 of our 2017 MD&A and adjust for variances in foreign exchange rates as compared to budget.

2. The total recordable incident rate (TRIR) is an Occupational Safety and Health Administration (OSHA) safety metric that was adopted by the company to continue to drive improvements in safety performance. TRIR is a measure of the rate of “recordable” workplace injuries. Examples of “recordable injuries” are a medical treatment (other than first aid), restricted work, lost-time and other specific injuries such as 10 decibel hearing loss, loss of consciousness and broken bone.

2018 MANAGEMENT PROXY CIRCULAR      79

Individual performance

Individual CEO performance was assessed against the following core measures set for 2017, similar to those set in previous years:

Key operating results Strategic change initiatives Leadership effectiveness } The committee can also add any other performance measures it deems appropriate

In developing its recommendation for the board, the committee assessed overall CEO performance using these measures as well as corporate performance, implementation of our strategy to achieve shareholder value, the recommendations from the compensation consultant, and the CEO’s own self-assessment.

The board discussed the results of the CEO assessment and considered the committee’s recommendation during an in camera session without management present before approving the CEO’s 2017 STI award. The board’s decision to provide an above-target payout to the CEO on individual performance was based on his strong leadership, significant performance results (including costs savings) and strategic change initiatives made during 2017. Some of the 2017 cost savings included lowering average unit cost of sales by 13 percent, lowering direct administration costs by 23 percent, lowering explorations costs by 30 percent, and lowering capital expenditures by 34 percent from 2016.

The CEO determines the individual performance measures that will be used for the other executives, sets the weightings for each, and conducts a performance assessment for each senior vice-president. Senior vice-presidents assess the performance of vice-presidents. For each of the senior vice-presidents, the CEO provided a detailed assessment of their performance, particular achievements and leadership. The committee considered these assessments in light of the key operating results for 2017 and approved the CEO’s recommended performance assessments for each of the senior vice-presidents, including the named executives. As Mr. Steane retired mid-year, he did not receive an STI award for 2017.

Long-term incentive (LTI)

Each LTI grant is based on the level of the position, internal equity and overall market competitiveness. The LTI grant to executives in 2017 was benchmarked to the median of the comparator group. LTI awards are reported in the Incentive plan awards table on page 86.

POSITION	LTI AWARD (% OF BASE SALARY)		ACTUAL % OF PSUs AND OPTIONS GRANTED IN 2017 (PSUs/OPTIONS)
President and CEO		355%		60/40
Senior Vice-President and Chief Financial Officer		250%		60/40
Senior Vice-President and Chief Operating Officer1		225%		60/40
Senior Vice-President and Chief Corporate Officer		200%		60/40
Senior Vice-President, Chief Legal Officer and Corporate Secretary		200%		60/40

1. The LTI award as a percentage of base salary for the former COO prior to his retirement was 250%.

The table on page 75 explains the targets and weightings for PSUs awarded in 2017.

Payout of 2015 PSU awards

PSUs granted on March 2, 2015 were for the three-year performance period from January 1, 2015 to December 31, 2017.

80     CAMECO CORPORATION

PSU scorecard

The calculated payout of the 2015 PSU awards for the performance period January 1, 2015 to December 31, 2017, was 65.6% of the number of PSUs granted. The payout was made in March 2018. The following table shows the threshold, target and maximum for each objective and our results against the three performance measures under the plan at the end of the performance period.

THREE-YEAR RESULTS (ENDING DECEMBER 31, 2017)

ACTUAL PERFORMANCE

PERFORMANCE PAYOUT

WEIGHTING

PERFORMANCE MULTIPLIER

CORPORATE OBJECTIVE/TARGET

THRESHOLD

TARGET

MAXIMUM

Average realized uranium price 0 to 150% Achieve an average realized price for uranium sales for a three-year period that exceeds the weighted average price for sales in two industry benchmarks for the same period – the EIA price for sales in the US and the ESA price for sales in Europe. The 2015 grant is based on 2014, 2015 and 2016 sales due to timing of when pricing information is available.

80% of target

100% of target

At or above 120% of target

Achieved an average realized price for uranium sales of $44.78 (US), above the weighted average price for sales in two industry benchmarks for the same period.

$33.65

$42.06

$50.47

106.5% achievement

= 116.3%

x

30% =

Tier-one production 0 to 150% Produce 69.9 million pounds U3O8 (our share) in the three-year period 2015 to 2017 from our tier one operations (McArthur River/Key Lake, Cigar Lake, Inkai).

80% of target

100% of target

At or above 120% of target

Achieved 100.9% of our tier one production for a total of 70.5 million pounds.

55.9 million pounds

69.9 million pounds

83.9 million pounds

100.9% achievement

= 102.3%

x

30% =

Our three-year average total shareholder return (TSR) 0 to 200% Achieve three-year average TSR that is the median of the three-year average TSR achieved by companies in the comparator group in effect at the time. We define TSR as the change in price of a Cameco common share, including reinvestment of dividends, on the TSX for the three-year period 2015 to 2017.

At the 35th percentile

At the 50th percentile

At or above the 75th percentile

Three-year average TSR was at the 31st percentile of our comparator group for the three-year vesting period from 2015 to 2017.

P35

P50

P75

P31 achievement

= 0.0%

x

40% =

PSU PERFORMANCE MULTIPLIER Sum of the three weighted factors

2018 MANAGEMENT PROXY CIRCULAR      81

Relative performance

The 2015 PSU awards vested based on performance conditions that were set at the time of the grant.

We assessed our TSR performance relative to our comparator group at the time the awards were granted. The group consisted of 21 companies that we used to benchmark compensation generally. The group has since been reduced from 21 to 20 companies due to an acquisition that occurred since the time of grant.

COMPARATOR GROUP
Agnico-Eagle Mines Ltd. Agrium Inc. ARC Resources Ltd. Crescent Point Energy Corp Eldorado Gold Corporation Emera Inc. EnCana Corporation Enerplus Resources Fund First Quantum Minerals Ltd. Fortis Inc.	IAM Gold Corporation Kinross Gold Corporation Lundin Mining Corporation Methanex Corporation Obsidian Energy (formerly Penn West Petroleum Ltd.) Potash Corp. of Saskatchewan Sherritt International Corporation Teck Resources Ltd. TransAlta Corporation Yamana Gold, Inc.

Our three-year average TSR for 2015 to 2017 was at the 31st percentile of companies in the comparator group.

Grant value vs. payout value

The grant value of the PSUs in 2015 was based on $19.30, our closing share price on the TSX on the day prior to the grant (as disclosed in the summary compensation table of our 2016 proxy circular).

The payout amount is the initial number of PSUs granted, multiplied by the PSU performance multiplier (calculated at a payout of 65.6% of the number of PSUs granted). This results in a payout of 38.6% of the original grant date value based on performance and share price.

The table below shows the calculation of the payout on March 2, 2018 for each named executive. The value of the payout is based on $11.37, the actual average purchase price of our common shares purchased on the TSX on behalf of the named executives on March 2, 2018.

NAME

(MULTIPLIER x WEIGHTING)

2015 PSU AWARD (# OF UNITS )

AVERAGE REALIZED URANIUM PRICE

TIER-ONE PRODUCTION

OUR THREE- YEAR AVERAGE TSR

VALUE OF TOTAL 2015 PSU PAYOUT ($)

Tim Gitzel

101,000

753,377

Grant Isaac

30,300

226,015

Brian Reilly

–

x

(116.3% x 30%

+

102.3% x 30%

+

0.0% x 40%)

=

–

Alice Wong

20,200

150,685

Sean Quinn

19,400

144,715

Robert Steane

46,300

327,524

Mr. Steane retired on June 30, 2017 and his performance was measured to the end of the year, consistent with the terms of his employment agreement. His PSU payout was made in cash in February, based on $12.94, the volume-weighted average closing price of our common shares on the TSX for the last 20 trading days of the year, in accordance with the terms of the plan.

The next table shows the vesting history of PSUs awarded to our named executives and paid out over the past three years. Awards vested below target the last two years and above target in 2013, highlighting the at-risk structure and link between pay and performance.

PSUs AWARDED IN	VESTED AS A % OF TARGET		PAID OUT IN SHARES, AFTER DEDUCTING WITHHOLDING TAXES
2015		65.6%	March 2018
2014		60.8%	March 2017
2013		123.2%	March 2016

Payout of 2014 RSU awards

Grant Isaac and Alice Wong each received a retention incentive of RSUs on March 3, 2014 valued at two times their 2013 salary and at a grant date value of $26.81.The units vested on March 3, 2017. Shares were purchased on the TSX at an average share price of $14.64 on March 3, 2017. Grant and Alice received Cameco shares instead of cash and they realized 55% of the original grant date value, which aligns with the decrease in Cameco’s share price over the period.

82     CAMECO CORPORATION

6. 2018 Compensation decisions

Base salary

In 2016 and continuing through 2017, Cameco has made tough but necessary business decisions that included streamlining the organization and freezing salaries for much of the organization in 2017 and 2018 to reduce operating and general administrative expenses. As a result, the CEO recommended that the named executives not receive salary increases for 2017 or 2018. The chief operating officer was appointed in July 2017 and received a 5% increase in base salary effective January 1, 2018 to move him closer to the market median for his role.

Short-term incentive (STI)

The STI plan will continue to use a balanced scorecard approach that supports Cameco’s four measures of success. The plan emphasizes strong financial performance with 50% of the STI plan based on achievement of financial results.

Long-term incentive (LTI)

2018 LTI awards

Each LTI award is based on the level of the position, internal equity and overall market competitiveness. LTI awards granted to executives in early 2018 were benchmarked at the median of the comparator group and based on a percentage of base salary (see page 80 for details about each position).

Historically, PSUs did not earn dividend equivalents. Starting in 2018, PSUs will earn dividend equivalents in the form of additional PSUs, vesting in proportion to the underlying PSUs and paid out when the award is settled.

PSUs and options were granted to the named executives on March 1, 2018 as follows:

· the LTI award is made up of 60% PSUs and 40% options

· PSUs vest at the end of a three-year period based on our performance against the following criteria: our average realized uranium price relative to industry benchmarks (30%), all-in sustaining cash cost (30%) (see page 74 for a description of what this includes) and our three-year average TSR (40%) relative to the TSX 60 index.

NAME	SECURITIES UNDER OPTIONS GRANTED (#)	VALUE OF OPTIONS ON DATE OF GRANT1 ($)	EXERCISE PRICE ($/SECURITY)	EXPIRY DATE	PSUs GRANTED2 (#)	VALUE OF PSUs GRANTED3 ($)	DATE WHEN PERFORMANCE PERIOD MATURES
Tim Gitzel	472,550	1,455,454	11.32	02/28/2026	192,850	2,183,062	12/31/2020
Grant Isaac	178,550	549,934	11.32	02/28/2026	72,900	825,228	12/31/2020
Brian Reilly	128,850	396,858	11.32	02/28/2026	52,600	595,432	12/31/2020
Alice Wong	115,500	355,740	11.32	02/28/2026	47,150	533,738	12/31/2020
Sean Quinn	111,700	344,036	11.32	02/28/2026	45,600	516,192	12/31/2020

1. Value of options

Options granted on March 1, 2018 expire on February 28, 2026 and are valued at approximately $3.08 per option using the Black-Scholes option-pricing model. The compensation consultant used the following key assumptions in the model when comparing companies.

Dividend yield (%)	Volatility (%)	Risk-free rate (%)	Expected life (years)	Exercise price ($)
2.9	37.2	1.9	5.5	11.32

In its analysis for the human resources and compensation committee, the compensation consultant estimated the expected value of Cameco’s options using the expected life of the option (average of a full term of eight years and a three-year vesting period). This approach is consistent with the majority of companies in our comparator group and is sensitive to the assumptions used. The figures may not be directly comparable across companies, but for compensation valuation purposes a consistent approach has been used. The exercise price of $11.32 per option is based on the closing price of Cameco shares on the TSX on the day immediately before the grant.

2. PSUs granted

The number of PSUs reflect 100% of the original number of PSUs awarded and has not been adjusted to reflect performance. The actual number of PSUs earned can vary from 0 to 200% of the original number granted based on corporate performance, plus dividends.

3. Value of PSUs granted

The values represent the number of PSUs granted to each named executive, multiplied by $11.32, the closing price of Cameco shares on the TSX on the day immediately before the grant. The PSUs granted on March 1, 2018 are for the three-year performance period from January 1, 2018 to December 31, 2020.

2018 MANAGEMENT PROXY CIRCULAR      83

2017 Details

Summary compensation table

The table below shows the base salary, incentive-based awards, pension value and other compensation awarded to the named executives in 2017 and the previous two years.

NAME AND PRINCIPAL POSITION	YEAR		SALARY1		SHARE- BASED AWARDS2		OPTION BASED AWARDS3		ANNUAL INCENTIVE PLANS4		PENSION VALUE5		ALL OTHER COMPENSATION6		TOTAL COMPENSATION
Tim Gitzel President and Chief Executive Officer		2017		$1,025,000		$2,182,950		$1,455,575		$1,292,000		$302,900		–		$6,258,425
		2016		$1,025,000		$2,183,454		$1,455,480		$851,000		$409,200		–		$5,924,134
		2015		$1,035,282		$1,949,300		$1,300,165		$1,084,000		$548,600		–		$5,917,347
Grant Isaac Senior Vice-President and Chief Financial Officer		2017		$550,000		$824,670		$550,070		$433,000		$170,400		–		$2,528,140
		2016		$550,000		$824,733		$550,080		$285,000		$348,300		–		$2,558,113
		2015		$530,177		$584,790		$389,364		$366,000		$206,200		–		$2,076,531
Brian Reilly Senior Vice-President and Chief Operating Officer		2017		$341,610		$129,654		$86,397		$212,000		$971,700		–		$1,741,361
		2016		$284,740		–		$91,116		$94,050		–		–		$469,906
		2015		$277,120		–		$83,137		$122,500		–		–		$482,757
Alice Wong Senior Vice-President and Chief Corporate Officer		2017		$444,700		$533,610		$355,770		$277,000		$5,700		–		$1,616,780
		2016		$444,700		$533,988		$355,680		$185,000		$160,400		–		$1,679,768
		2015		$448,616		$389,860		$259,576		$235,000		$219,500		–		$1,552,552
Sean Quinn Senior Vice-President. Chief Legal Officer and Corporate Secretary		2017		$430,000		$515,970		$344,045		$268,000		$43,100		–		$1,601,115
		2016		$430,000		$515,970		$343,980		$179,000		$191,200		–		$1,660,150
		2015		$431,200		$374,420		$249,522		$225,000		$420,300		–		$1,700,442
Robert Steane former Senior Vice- President and Chief Operating Officer		2017		$317,510		$917,280		$611,543		$0		$(250,455)		–		$1,595,878
		2016		$611,500		$917,280		$611,460		$317,000		$167,500		–		$2,624,740
		2015		$616,843		$1,493,608		$595,014		$444,000		$221,500		–		$3,370,965

1. Base salary

Each amount reflects actual pay for the year. There were no salary increases in 2017. Brian Reilly’s salary change reflects a role change when he was promoted to his current position effective July 1, 2017. The 2016 salaries will generally be lower than the 2015 salaries because according to Cameco’s biweekly payroll schedule there were 27 pay periods in 2015 versus the usual 26 pay periods.

2. Share-based awards

These amounts reflect the grant date value of the actual number of PSUs originally awarded, using the closing price of Cameco shares on the TSX on the day before the grant. The number of PSUs that the named executives will actually earn can vary from 0 to 150% of the original number of PSUs granted, depending on performance (the board can pay up to 200% if performance is exceptional).

Brian Reilly was granted share-based awards in 2017 when he joined our senior management at Canadian headquarters as vice-president, mining, projects and technology. He was formerly managing director for Cameco Australia Pty Ltd, a wholly-owned subsidiary.

	March 1, 2017		March 1, 2016		March 2, 2015
Tim Gitzel		148,500		133,300		101,000
Grant Isaac		56,100		50,350		30,300
Brian Reilly		8,820		–		–
Alice Wong		36,300		32,600		20,200
Sean Quinn		35,100		31,500		19,400
Robert Steane		62,400		56,000		46,300
Grant price		$14.70		$16.38		$19.30

For purposes of financial statement disclosure, the PSUs were valued at $14.72 per unit for 2017, $16.35 per unit for 2016 and $18.88 per unit for 2015 using a Monte Carlo pricing model and the key assumptions set out in the table below. This model is considered the most appropriate way to value a plan with a relative market condition like total shareholder return. The total fair value of the PSUs is amortized into income over their three-year vesting period and the weighted average of the expected retirement dates of the named executives, whichever is lower. The non-market criteria relating to realized selling prices and production targets have been incorporated into the valuation at grant date by reviewing prior history and corporate budgets.

	Expected dividend ($)		Expected volatility (%)		Risk-free rate (%)		Expected life (years)		Expected forfeitures (%)
March 2017		–		36.2		0.9		3		8.8
March 2016		–		30.8		0.5		3		4.6
March 2015		–		29.2		0.5		3		4.6

The table below shows the difference between the grant date value for compensation purposes and the grant date fair value used for purposes of financial statement disclosure.

Grant date	Grant date value for compensation purposes ($)		Grant date fair value for financial statement disclosure ($)		Difference per unit ($)
March 1, 2017		14.70		14.72		(0.02	)
March 1, 2016		16.38		16.35		0.03
March 2, 2015		19.30		18.88		0.42

84     CAMECO CORPORATION

3. Option-based awards

These amounts reflect the grant date value of the actual number of options originally granted using the Black-Scholes option-pricing model and key assumptions determined by the compensation consultants and listed below.

The table below shows the number of options granted to the named executives over the last three years and the corresponding grant date valuations.

	March 1, 2017	March 1, 2016	March 2, 2015
Tim Gitzel	434,500	404,300	284,500
Grant Isaac	164,200	152,800	85,200
Brian Reilly	25,790	25,310	18,192
Alice Wong	106,200	98,800	56,800
Sean Quinn	102,700	95,550	54,600
Robert Steane	182,550	169,850	130,200
Grant date valuation (per option)	$3.35	$3.60	$4.57

The human resources and compensation committee reviewed estimates of the value of the options on the grant dates that were prepared by Mercer (March 2017, March 2016 and March 2015). It then recommended to the board the number of options to grant, which the board approved.

The compensation consultants used the Black-Scholes option-pricing model and the following key assumptions:

	Dividend yield (%)	Volatility (%)	Risk-free rate (%)	Expected life (years)	Exercise price ($)
March 2017	2.90	33.0	1.1	5.5	14.70
March 2016	2.20	29.9	0.9	5.5	16.38
March 2015	1.80	29.2	1.5	5.5	19.30

As this approach may not be identical to that used by other companies and is sensitive to the assumptions used, the figures may not be directly comparable across companies, however a consistent approach has been used for compensation valuation purposes. The expected life assumption is based on Mercer’s calculation of the expected life of Cameco options and options issued by companies in the comparator group in effect at the time. They calculate the expected life by adding the actual term (eight years) to the vesting period (three years), and dividing in half.

For purposes of financial statement disclosure, options were valued at $3.34 (awarded in March 2017), $3.49 (awarded in March 2016) and $4.30 (awarded in March 2015) each on the date of the grant. For purposes of financial statement disclosure, the options were amortized over their three-year vesting period or the weighted average of the years to expected retirement of the named executives, whichever was lower. We used the Black-Scholes option-pricing model all three years and the following key assumptions:

	Dividend yield (%)	Volatility (%)	Risk-free rate (%)	Expected life (years)	Exercise price ($)
March 2017	2.72	33.7	1.1	4.7	14.70
March 2016	2.44	31.8	0.7	4.7	16.38
March 2015	2.07	32.1	0.7	4.5	19.30

These accounting value assumptions are different from the compensation value assumptions in the calculations above. The human resources and compensation committee uses the compensation valuation method and assumptions used in valuing compensation of companies in the comparator group to allow for a better comparison with market comparators.

The accounting value assumptions are based on our own internal research and past experience of how employees exercise their options. The table below shows the difference between the grant date value for compensation purposes and the accounting value assumptions used for purposes of financial statement disclosure.

Grant date	Grant date value for compensation purposes ($)	Grant date fair value for financial statement disclosure ($)	Difference per unit ($)
March 1, 2017	3.35	3.34		(0.01	)
March 1, 2016	3.60	3.49		0.11
March 2, 2015	4.57	4.30		0.27

4. Annual incentive plans

These amounts were earned in the fiscal year shown and were paid in the following fiscal year.

5. Pension value

The amounts for the named executives include company contributions under the registered defined contribution pension plan as applicable, plus the present value of the projected pension earned in each year for service credited under the supplemental executive pension program. The 2017 pension value for Robert Steane was determined at his retirement date.

6. All other compensation

This amount does not include perquisites and other personal benefits because they total less than $50,000 and less than 10% of the annual salary for any of the named executives. Perquisites and benefits are valued at the cost to Cameco and include commissions to buy shares with PSU payouts, premiums on incremental life insurance and long-term disability, a financial and tax planning allowance, an executive medical plan and a vehicle allowance.

Value of options exercised (supplemental information)

In each of the last three years, none of the named executives have exercised options. All options awarded to the executives since 2010 have an exercise price greater than the current price of Cameco shares on the TSX.

2018 MANAGEMENT PROXY CIRCULAR      85

Incentive plan awards

The table below shows the total unexercised option and share awards granted to the named executives as of December 31, 2017.

					OPTION-BASED AWARDS								SHARE-BASED AWARDS
NAME	GRANT DATE		NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS		OPTION EXERCISE PRICE		OPTION EXPIRY DATE		VALUE OF UNEXERCISED IN-THE-MONEY OPTIONS		NUMBER OF SHARES OR UNITS OF SHARES THAT HAVE NOT VESTED		MARKET OR PAYOUT VALUE OF SHARE- BASED AWARDS THAT HAVE NOT VESTED1		MARKET OR PAYOUT VALUE OF VESTED SHARE- BASED AWARDS NOT PAID OUT OR DISTRIBUTED)
Tim Gitzel		03/01/2010		60,000		$28.90		02/28/2018		–
		03/01/2011		75,000		$39.53		02/28/2019		–
		07/01/2011		50,000		$25.44		06/30/2019		–
		05/15/2012		268,600		$21.14		05/14/2020		–
		03/01/2013		187,500		$22.00		02/28/2021		–
		03/03/2014		155,200		$26.81		03/02/2022		–
		03/02/2015		284,500		$19.30		03/01/2023		–				–		$753,377
		03/01/2016		404,300		$16.38		02/29/2024		–		133,300		–
		03/01/2017		434,500		$14.70		02/28/2025		–		148,500		–
Total				1,919,600						$0		281,800		$0		$753,377
Grant Isaac		03/01/2010		13,334		$28.90		02/28/2018		–
		03/01/2011		25,000		$39.53		02/28/2019		–
		05/15/2012		89,500		$21.14		05/14/2020		–
		03/01/2013		62,500		$22.00		02/28/2021		–
		03/03/2014		51,700		$26.81		03/02/2022		–						$501,141
		03/02/2015		85,200		$19.30		03/01/2023		–				–		$226,015
		03/01/2016		152,800		$16.38		02/29/2024		–		50,350		–
		03/01/2017		164,200		$14,70		02/28/2025		–		56,100		–
Total				644,234						$0		106,450		$0		$727,156
Brian Reilly		03/01/2011		2,250		$39.53		02/28/2019		–
		05/15/2012		8,875		$21.14		05/14/2020		–
		03/01/2013		13,410		$22.00		02/28/2021		–
		03/03/2014		11,095		$26.81		03/02/2022		–
		03/02/2015		18,192		$19.30		03/01/2023		–				–		$0
		03/01/2016		25,310		$16.38		02/29/2024		–		–		–
		03/01/2017		25,790		$14.70		02/28/2025		–		8,820		–
Total				104,922						$0		8,820		$0		$0
Alice Wong		03/01/2010		10,575		$28.90		02/28/2018		–
		03/01/2011		10,275		$39.53		02/28/2019		–
		05/15/2012		59,700		$21.14		05/14/2020		–
		03/01/2013		41,700		$22.00		02/28/2021		–
		03/03/2014		34,500		$26.81		03/02/2022		–						$445,524
		03/02/2015		56,800		$19.30		03/01/2023		–				–		$150,685
		03/01/2016		98,800		$16.38		02/29/2024		–		32,600		–
		03/01/2017		106,200		$14.70		02/28/2025		–		36,300		–
Total				418,550						$0		68,900		$0		$596,209
Sean Quinn		03/01/2010		12,900		$28.90		02/28/2018		–
		03/01/2011		12,900		$39.53		02/28/2019		–
		05/15/2012		12,500		$21.14		05/14/2020		–
		03/01/2013		16,040		$22.00		02/28/2021		–
		03/03/2014		13,017		$26.81		03/02/2022		–
		03/02/2015		54,600		$19.30		03/01/2023		–				–		$144,715
		03/01/2016		95,550		$16.38		02/29/2024		–		31,500		–
		03/01/2017		102,700		$14.70		02/28/2025		–		35,100		–
Total				320,207						$0		66,600		$0		$144,715
Robert		03/01/2010		13,500		$28.90		02/28/2018		–
Steane2		03/01/2011		50,000		$39.53		02/28/2019		–
		05/15/2012		136,800		$21.14		05/14/2020		–
		03/01/2013		95,500		$22.00		06/30/2020		–
		03/03/2014		79,000		$26.81		06/30/2020		–
		03/02/2015		130,200		$19.30		06/30/2020		–						$327,524
		03/01/2016		169,850		$16.38		06/30/2020		–						$217,392
		03/01/2017		182,550		$14.70		06/30/2020		–						$80,746
Total				857,400						$0						$625,662

1. The PSU awards are subject to performance conditions and valued at the minimum possible payout of zero.

2. Mr. Steane retired on June 30, 2017. The PSU performance was measured to the end of the year, consistent with his employment agreement. Under the PSU plan, a prorated portion of his PSUs for 2015, 2016 and 2017 vested based on the portion of the three-year period that he worked, and he was paid in 2018. The value of each payout amount is based on $12.94, the volume-weighted average closing Cameco share price on the TSX for the last 20 trading days in 2017. The payout was made in cash and based on our performance against targets to December 31, 2017.

86     CAMECO CORPORATION

The next table shows:

· the total value of the named executive’s options when they vested during 2017

· share-based awards that vested at the end of 2017 and were paid out in 2018

· short-term incentive award earned in 2017 and paid in 2018.

NAME	OPTION-BASED AWARDS – VALUE VESTED DURING THE YEAR	1	SHARE-BASED AWARDS – VALUE VESTED DURING THE YEAR	2	NON-EQUITY INCENTIVE PLAN COMPENSATION – VALUE EARNED DURING THE YEAR	3
Tim Gitzel	$0		$753,377		$1,292,000
Grant Isaac	$0		$727,156		$433,000
Brian Reilly	$0		$0		$212,000
Alice Wong	$0		$596,209		$277,000
Sean Quinn	$0		$144,715		$268,000
Robert Steane	$0		$625,662		$0

1. Option-based awards

The amounts reflect the pre-tax value that the executives would have realized if they had exercised their options that vested in 2017, on the date they vested. Options that had a positive value at the time of vesting are included in the calculation of these figures.

2. Share-based awards

The amounts are the values of the PSUs that were granted in 2015, vested at December 31, 2017 and paid out to the named executives on March 2, 2018 at $11.37 (the actual average purchase price of our common shares purchased on the TSX on behalf of the named executives on that date). The compensation value we previously disclosed for these PSUs was based on the target number of PSUs multiplied by the share value on grant date. The named executives realized 38.6% of the grant date value of the PSUs that were granted as part of their total compensation for 2015.

The amounts for Grant Isaac and Alice Wong include the value of RSUs that were granted on March 3, 2014. They vested on March 3, 2017 and were paid out in Cameco common shares at an average share price of $14.64 on March 3, 2017, realizing 55% of the grant date value of the RSUs at the time of the award.

Mr. Steane received a prorated payout for the portion of the PSUs for 2015, 2016 and 2017 he was entitled to upon his retirement in 2017. The payments were made in 2018 based on $12.94 (the volume-weighted average closing price of Cameco common shares on the TSX for the last 20 trading days in 2017).

3. Non-equity incentive plan compensation

The amounts are the STI payments for 2017 that were paid in 2018.

2018 MANAGEMENT PROXY CIRCULAR      87

Equity compensation plan information

Securities authorized for issue under equity compensation plans

(authorized for issue from treasury under our compensation plans at the end of 2017)

PLAN CATEGORY	NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (A)	WEIGHTED-AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (B)	NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUE UNDER EQUITY COMPENSATION PLANS  (EXCLUDING SECURITIES REFLECTED IN COLUMN A) (C)
Equity compensation plans approved by security holders	8,324,666	$22.19	6,822,243
Equity compensation plans not approved by security holders	–	–	–
Total	8,324,666	$22.19	6,822,243

Of the 8,324,666 options outstanding at December 31, 2017, 5,809,077 were exercisable and 2,515,589 were not. The total number of Cameco shares that can be issued under the option plan and other compensation arrangements must be less than 43,017,198 (10.9% of our total and outstanding common shares as of March 9, 2018).

The table below shows the burn rate for the last three years calculated in accordance with TSX listing rules based on the weighted-average number of shares outstanding in each year.

AS OF DECEMBER 31	2017		2016		2015
Number of options issued		1,373,040		1,273,340		965,823
Weighted average number of shares outstanding		395,792,686		395,792,522		395,792,522
Burn rate		0.35%		0.32%		0.24%

The next two tables provide additional details about the stock option plan at the end of 2017 and as of March 9, 2018.

	AS OF DECEMBER 31, 2017
Number of options available for issue under the option plan and other compensation arrangements		6,822,243
Number of options issued in 2017 under the option plan and other compensation arrangements		1,373,040
	AS OF MARCH 9, 2018
Number (%) of our shares issued and outstanding to be issued when outstanding options under the option plan are exercised		7,651,282 (1.93%)
Number (%) of our issued and outstanding shares still available for issue under the option plan		7,495,627 (1.89%)
Total dilution rate		3.83%

The table below shows other activity in the option plan since it was introduced in 1992:

Maximum initial share reserve (August 15, 1995)	31,460,418
Increase in the reserve (June 12, 2006)	11,556,780
Total shares issued under the plan (as at business open on March 9, 2018)	27,870,289
Total shares issued under the plan / total shares issued and outstanding (as at business open on March 9, 2018)	7.0%
Total shares issued and outstanding (as at business open on March 9, 2018)	395,792,732

88     CAMECO CORPORATION

Pension benefits

Defined contribution plan

All regular, full-time and part-time employees (including all of the named executives) participate in our registered defined contribution plan as of December 31, 2017.

Under the Income Tax Act (Canada), the plan had a contribution limit of $26,230 in 2017, based on a salary of approximately $218,583.

Supplemental executive pension program

The supplemental executive pension program is aimed at attracting and retaining talented executives. It provides a lump sum retirement benefit that is consistent with the executive’s salary and offsets the strict limits of registered pension plans under the Income Tax Act (Canada).

All Canadian-based management at the vice-president level and above participate in the program. It had 16 active members as at December 31, 2017, with one inactive member, 18 retirees and spouses of deceased retirees who were receiving a pension and one former member with a deferred entitlement. This includes certain officers of wholly-owned subsidiaries who were previously eligible to participate in the program.

The supplemental benefit is calculated as follows:

The supplemental benefit is based on actual years of service from the participant’s date of hire with Cameco up to the date of termination, or until the end of the notice period for termination without cause. It is calculated on base salary, and unlike other companies, does not include bonuses as part of the pensionable earnings. The supplemental program does not allow past service credits or any kind of accelerated service. Full benefits are paid at the normal retirement age of 65, but are also payable starting at 60 years of age if the person has 20 years of service.

Except for benefits for participants who are US taxpayers, the program is funded in part by trust assets and the remainder by a letter of credit held by the program’s trustees. The liability is approximately $54,754,000 ($28,875,000 for the named executives) as of December 31, 2017. The face amount of the letter of credit will be determined each year based on the wind-up liabilities of the supplemental program (excluding benefits for US taxpayers), less any trust assets. The face amount of the letter of credit for 2017 was $47,283,000. The trustee would be able to draw on the letter of credit to pay benefits to members following specified trigger events. Benefits will continue to be paid from the trust assets until the fund is exhausted, at which time Cameco will begin paying benefits from corporate assets.

Early retirement

Under our registered defined contribution plan, members can transfer their account balance or begin receiving a benefit any time after termination of employment, so early retirement does not apply. All named executives are members of this plan.

Under our supplemental program, the named executives can take early retirement starting at age 55, however, the benefit formula will be reduced by 0.25% for each month before the defined age (at least age 60 with at least 20 years of continuous employment, or age 65, whichever is earlier).

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Executive pension value disclosure

The table below shows the estimated pension service costs for the supplemental program and Cameco’s contribution to the defined contribution plan as the compensatory change. It also shows the accrued pension obligations payable under our pension plans for each named executive.

NAME	NUMBER OF YEARS OF CREDITED SERVICE (#)		ANNUAL BENEFITS PAYABLE1				PENSION OBLIGATION AT START OF YEAR2,3 ($)		COMPENSATORY CHANGE3 ($)		NON- COMPENSATORY CHANGE4 ($)		PENSION OBLIGATION AT YEAR END5 ($)
			AT YEAR END		AT AGE 65
Tim Gitzel		10.98		334,900		618,500		4,554,800		302,900		706,700		5,564,400
Grant Isaac		8.47		136,600		443,100		1,770,400		170,400		377,200		2,318,000
Brian Reilly		7.00		62,700		142,400		0		971,700		130,500		1,102,200
Alice Wong		30.92		351,100		446,300		5,589,500		5,700		754,100		6,349,300
Sean Quinn		24.25		287,700		380,900		4,455,200		43,100		609,500		5,107,800
Robert Steane		34.30		510,800		510,800		6,770,600		(250,455)		(6,520,145)		0

1. Annual benefits payable

The value of the annual benefits accrued for all named executives include benefits under the registered defined contribution pension plan and the supplemental executive pension program. The defined contribution costs are also included in the service cost as described under Compensatory change. The annual benefits accrued do not take into account any early retirement reductions or vesting requirements.

The amounts under at age 65 are based on current compensation levels and assume accrued years of service to age 65 for each of the named executives. Under our supplemental executive pension program, the named executives are eligible to retire at age 55, which would reduce the pension benefits they are entitled to receive.

Annual benefits payable at year end and at age 65 are based on final average earnings as at December 31, 2017. The annual benefits for Robert Steane are accrued to date of retirement.

2. Pension obligation at start of year is based on December 31, 2016 accounting assumptions.

3. Pension obligation at start of year and the compensatory change are estimated totals that include our registered defined contribution pension plan and supplemental executive pension program. They are based on assumptions representing entitlements in employment agreements that may change over time. The methods we used to determine these estimates may not be exactly the same as methods other companies use, so the figures may not be directly comparable.

We used the following key assumptions to estimate these benefit obligations:

· 100% vesting

· a retirement age of 63 or one year after the valuation date if 63 years of age or older. The assumed retirement age of 63 is management’s best estimate for determining the accrued benefit obligation as at December 31, 2016, as reported in our financial statements

· salary increases of 3.0% each year

· a discount rate of 3.9% each year to determine the benefit obligation

· a long-term rate of return on defined contribution plan assets of 6.0%

· benefits are pre-tax.

See note 23 to our audited 2017 financial statements (in our 2017 annual report and also on our website) for more information about our pension plans.

Compensatory change is the value of the projected pension earned from January 1, 2017 to December 31, 2017 for our registered defined contribution pension plan and supplemental executive pension program. The negative change for Robert Steane reflects the actual interest rates used for the pension payout at date of retirement.

4. Non-compensatory change includes changes such as changes in assumptions (other than those used to estimate the compensatory change), employee contributions and interest on the accrued obligation at the start of the year. The amount for Robert Steane is the pension payout he received when he retired.

5. Pension obligation at year end is the value of the named executive’s projected pension earned for service up to December 31, 2017 under our registered defined contribution pension plan and supplemental executive pension program. It is based on December 31, 2017 accounting assumptions and includes RRSP balances included in the base plan, if any.

We used the following key assumptions to estimate these benefit obligations:

· 100% vesting

· a retirement age of 63 or one year after the valuation date if 63 years of age or older. The assumed retirement age of 63 is management’s best estimate for determining the accrued benefit obligation as at December 31, 2017, as reported in our financial statements

· salary increases of 3.0% each year

· a discount rate of 3.4% each year to determine the benefit obligation

· a long-term rate of return on defined contribution plan assets of 6.0%

· benefits are pre-tax.

The pension amounts for all of the named executives equal the value of their accumulated contributions under the registered defined contribution pension plan, supplemented by amounts based on final average earnings and service under the supplemental executive pension program (a defined benefit plan).

Loans to executives

As of March 9, 2018, we and our subsidiaries had no loans outstanding to our current or former named executives, except routine indebtedness as defined under Canadian securities laws.

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Termination and change of control benefits

We have employment agreements with the named executives. They are for an indefinite period and provide for:

· a base salary

· participation in the short-term incentive plan

· participation in the long-term incentive plans (including PSUs and options)

· participation in the employee defined contribution pension plan and the supplemental executive pension program.

The agreements also include post-termination obligations requiring that the named executives do not:

· use or disclose specialized knowledge, contracts and connections obtained while at Cameco

· compete against us in any way for 12 months after leaving the organization

· solicit any of our customers, suppliers or employees or harm our relationships with any of them for 12 months (18 months for the CEO) after leaving the organization.

The summary on page 93 shows the incremental compensation that would be paid to the named executives if their employment had been terminated without cause on December 31, 2017, including following a change of control. If Tim Gitzel, Brian Reilly, Alice Wong or Sean Quinn had resigned, it would have been treated as retirement because they are eligible to retire. None of the named executives receive any incremental benefits if there is a change of control but no termination of employment.

CEO

Tim Gitzel’s employment agreement provides for:

· a requirement to hold four times his base salary in Cameco shares and qualifying PSUs

· a severance period of two years if he is terminated without cause

· a $7,000 annual allowance for tax advice ($14,000 in his retirement year)

· a requirement to give a minimum notice of six months for resignation or retirement

· accelerated vesting of certain equity awards if the CEO’s employment is terminated within 24 months following a change of control (see the summary below for details on compensation upon termination).

Other named executives

The employment agreements for the other named executives provide for:

· a requirement to hold two times their base salary in Cameco shares and qualifying PSUs by December 31 of the fifth year in their current positions

· a notice period of 18 months if they are terminated without cause

· a $5,000 annual allowance for tax advice ($10,000 in their retirement year)

· a requirement to give a minimum notice of three months for resignation or retirement

· accelerated vesting of certain equity awards if employment is terminated within 24 months following a change of control (see the summary below for details on compensation upon termination).

The table below is a summary of the compensation that would be paid to the named executives if the employment of any of them is terminated. We believe the following terms are fair, competitive with the market and based on industry practice.

TYPE OF TERMINATION	SEVERANCE	STI BONUS	OPTIONS	PSUs	RSUs	BENEFITS	PENSION
Retirement1	●   none	●   none, unless the executive retires on or near the last day of the year	●   three years to vest ●   must be exercised within three years or the original term, whichever is earlier	●   performance is measured to the end of the year of retirement ●   awards are pro-rated to completed months of service	●   all outstanding RSUs are cancelled	●   post-retirement benefits continue until age 65 ●   once the executive turns 65, life insurance, health and dental benefits are reduced and are provided until death	●   credited service no longer earned

2018 MANAGEMENT PROXY CIRCULAR      91

TYPE OF TERMINATION	SEVERANCE	STI BONUS	OPTIONS	PSUS	RSUS	BENEFITS	PENSION
Resignation2	●   executive must give three months’ notice, except for CEO who must give six months’ notice ●   if we waive the notice, we must pay his base salary for the three or six months	●   none	●   vesting continues for 90 days ●   must be exercised within 90 days or the original term, whichever is earlier	●   all outstanding PSUs are cancelled	●   all outstanding RSUs are cancelled	●   none	●   credited service no longer earned
Termination without cause3	●   lump sum equal to base salary and target bonus for the notice period	●   none, unless committee exercises discretion, usually when executive has worked most of the year	●   options continue to vest for the notice period ●   must be exercised within the notice period or by the original expiry date, whichever is earlier	●   performance is measured to the end of the year of termination ●   awards are pro-rated to completed months of service	●   a pro-rated number of awards vest and are valued at the volume-weighted average price of the 20 trading days prior to the termination date	●   employer contributions for health, dental and life insurance benefits continue for the notice period or until executive obtains other employment, whichever is earlier	●   coverage continues and credited service continues to be earned for the notice period
Termination without cause or for good reason within 24 months of a change of control4	●   same as for termination without cause	●   same as for termination without cause	●   all options vest immediately and may be exercised until the original term or within 24 months, whichever is earlier	●   all PSUs vest and are paid at target within 30 days	●   all RSUs vest immediately and are payable in cash within 30 days	●   same as for termination without cause	●   same as for termination without cause
Termination with cause	●   none	●   all entitlement to the bonus is lost	●   vesting continues for 30 days or the original term, whichever is earlier ●   must be exercised within 30 days	●   all outstanding PSUs are cancelled	●   all outstanding RSUs are cancelled	●   none	●   credited service no longer earned
Death	●   none	●   target bonus pro-rated to date of death	●   three years to vest ●   must be exercised within three years or original term, whichever is earlier	●   performance is measured to end of year of death ●   awards are pro-rated to the completed months of service as of date of death	●   awards are pro-rated to date of death and valued at the volume-weighted average price of the 20 trading days prior to date of death	●   life insurance is paid on death	●   credited service no longer earned ●   value of vested pension benefit is paid to the beneficiary

1. Retirement

At the discretion of the CEO and provided that the executive is at least 57 years old with at least 10 years of service when he or she retires, the executive may be eligible for post-retirement benefits including health, dental, accidental death and dismemberment, and life insurance. Also at the discretion of the CEO, a supplemental amount of $1,000 per month is paid until age 65, if the executive retires and is at least 57 years old with 10 years of service.

Robert Steane was eligible for the reduced retiree benefits at date of retirement as he was over age 65.

2. Resignation

Tim Gitzel, Brian Reilly, Alice Wong and Sean Quinn are eligible for retirement and therefore the compensation that is paid if a senior executive resigns does not apply.

3. Termination without cause

The notice period for Tim Gitzel is two years or the period remaining until age 65, whichever is earlier. The notice period for the other named executives is 18 months or the period remaining until age 65, whichever is earlier.

4. Termination without cause or good reason within 24 months of a change of control

According to the ENL Reorganization Act, no person, alone or together with associates may hold, beneficially own or control, directly or indirectly, more than 25% of Cameco’s voting shares that can be cast to elect the directors. Because of the legislated restrictions on share ownership, there would have to be an act of federal parliament for anyone to hold more than 25% of our voting shares. For Tim Gitzel, change of control is defined as a transaction resulting in any person, corporation or entity holding 35% or more of our voting shares, transfer or lease of substantially all of the company’s assets, dissolution or liquidation of the company, or the board deciding that a change of control has occurred. For the other named executives, change of control is the same except that an entity must hold 50% or more of our voting shares.

92     CAMECO CORPORATION

The table below shows the incremental values that would be paid to the named executives if any of them had been terminated without cause on December 31, 2017, including following a change of control. No incremental amounts are payable if a named executive resigns, dies or is terminated with cause.

Cameco has legislated ownership restrictions under the ENL Reorganization Act. While a change of control is possible, it would require an act of parliament or one of the activities discussed in note 4 on page 92. Robert Steane¹ is not included as he retired on June 30, 2017 and no incremental values would have been paid.

		ESTIMATED INCREMENTAL PAYMENT AT DECEMBER 31,  20171
NAME	COMPENSATION ELEMENT	TERMINATION WITHOUT CAUSE2 ($)		TERMINATION WITHOUT CAUSE WITH A CHANGE OF CONTROL3 ($)
Tim Gitzel	Cash		4,510,000		4,510,000
	Deferred compensation vesting		–		3,646,492
	Benefits		34,700		34,700
	Total incremental amount		4,544,700		8,191,192
	Annual pension increment		931,600		931,600
Grant Isaac	Cash		1,443,750		1,443,750
	Deferred compensation vesting		–		1,377,463
	Benefits		24,700		24,700
	Total incremental amount		1,468,450		2,845,913
	Annual pension increment		351,500		351,500
Brian Reilly	Cash		1,071,000		1,071,000
	Deferred compensation vesting		–		114,131
	Benefits		22,300		22,300
	Total incremental amount		1,093,300		1,207,431
	Annual pension increment		230,300		230,300
Alice Wong	Cash		1,068,000		1,068,000
	Deferred compensation vesting		–		891,566
	Benefits		23,600		23,600
	Total incremental amount		1,091,600		1,983,166
	Annual pension increment		254,700		254,700
Sean Quinn	Cash		1,032,000		1,032,000
	Deferred compensation vesting		–		861,804
	Benefits		23,400		23,400
	Total incremental amount		1,055,400		1,917,204
	Annual pension increment		257,300		257,300

1. The table below shows the commuted values for resignation (retirement in the case of Tim Gitzel, Brian Reilly, Alice Wong, Sean Quinn and Robert Steane). We estimated these values using the Canadian Institute of Actuaries’ Standard Practice for Determining Pension Commuted Values, and assumed:

· 100% vesting

· pension commencement at the executive’s age or age 55, whichever is later

· no salary increase after December 31, 2017

· a discount rate of 2.6% each of the next 10 years and 3.4% each year thereafter for Canadian and US liabilities

· benefits are pre-tax.

Commuted value	For retirement		On December 31, 2017
The commuted values are based on assumptions representing entitlements in the employment agreements, and these may change over time. These commuted values may be higher or lower than the present value of the benefit obligation and include entitlements from the defined contribution retirement program and the supplemental executive pension program. The methods we use may not be exactly the same as those used by other companies, so you may not be able to compare our figures directly with those of other companies.		Tim Gitzel Brian Reilly Alice Wong Sean Quinn Robert Steane	$5,388,000 $994,000 $6,969,000 $5,725,900 $0
	For resignation
		Grant Isaac	$1,676,300

2. Termination without cause

Amounts shown as Cash represent entitlements to cash payments in lieu of notice. The cash payment for the CEO, Tim Gitzel, is equal to two times the sum of annual salary and target annual cash bonus. The cash payment for the other named executives is equal to one and one-half times the sum of annual salary and target annual cash bonus.

There is no deferred compensation vesting. For all named executives, unvested PSU awards would continue to be eligible to vest and pay out over the normal schedule so there is no incremental benefit. Options would continue to be eligible to meet time-based vesting conditions over the severance period and expire at the end of the severance period.

Amounts shown as Benefits are the present value of the continuing benefits for the notice period, based on historical costs and trends and calculated using a discount rate of 3.4% at December 31, 2017. Additionally, at the discretion of the CEO, Alice Wong and Sean Quinn may be eligible for post-retirement benefits, including health, dental, accidental death and dismemberment, and life insurance as they are at least 57 years of age and have more than 10 years of service, which incremental values would be up to $154,291 and $178,595, respectively.

Amounts shown as Annual Pension Increment is equal to the value of benefits to be credited according to the notice period for each named executive and calculated using the December 31, 2017 accounting assumptions (same as the key assumptions set out in note 2 on page 90).

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3. Termination without cause with a change of control

Amounts shown as Cash represent entitlement to cash payments in lieu of notice as indicated in note 2 above.

Amounts shown as Deferred Compensation Vesting include an amount for unvested PSUs and options. There is no incremental benefit for options as none of the options are in-the-money. The incremental benefit for PSUs represent all outstanding PSUs that would vest immediately at target and be paid out in the first quarter of 2018. The calculation of the PSUs in this situation is based on a share price of $12.94, the volume-weighted average price of a Cameco common share on the TSX over the last 20 trading days of 2017, as required under the PSU plan.

Amounts shown as Benefits are the present value of the continuing benefits for the notice period as indicated in note 2 above.

Amounts shown as Annual Pension Increment is equal to the value of benefits to be credited according to the notice period as indicated in note 2 above.

94     CAMECO CORPORATION

Appendix A

Interpretation

The following definitions are summaries only and are defined in their entirety by the provisions of the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) and Cameco’s articles.

For the purposes of this circular:

a person is an “associate” of another person if:

i. one is a corporation of which the other is an officer or director;

ii. one is a corporation that is controlled by the other or by a group of persons of which the other is a member;

iii. one is a partnership of which the other is a partner;

iv. one is a trust of which the other is a trustee;

v. both are corporations controlled by the same person;

vi. both are members of a voting trust or parties to an arrangement that relates to voting securities of the Corporation; or

vii. both are at the same time associates, within the meaning of any of (i) to (vi) above, of the same person;

provided that:

viii. if a resident associated with a non-resident submits to the board of directors of the corporation a statutory declaration stating that no voting shares of the corporation are held, directly or indirectly, for a non-resident, that resident and non-resident are not associates of each other, provided the statutory declaration is not false;

ix. two corporations are not associates pursuant to (vii) above by reason only that each is an associate of the same person pursuant to (i) above;

x. if any person appears to the board to hold voting shares to which are attached not more than the lesser of four one-hundredths of 1% of the votes that may be cast to elect directors of the corporation and 10,000 such votes, that person is not an associate of any other person and no other person is an associate of that person in relation to those voting shares.

“beneficial ownership” includes ownership through a trustee, legal representative, agent or other intermediary.

“control” means control in any manner that results in control in fact, whether directly through ownership of securities or indirectly through a trust, an agreement, the ownership of any body corporate or otherwise.

“non-resident” means:

i.   ii.   iii.   iv.   v. an individual, other than a Canadian citizen, who is not ordinarily resident in Canada;   a corporation incorporated, formed or otherwise organized outside Canada;   a foreign government or agency thereof;   a corporation that is controlled by non-residents, directly or indirectly, as defined in any of (i) to (iii) above;   a trust:

a. established by a non-resident as defined in any of (ii) to (iv) above, other than a trust for the administration of a pension fund for the benefit of individuals, a majority of whom are residents; or

b. in which non-residents as defined in any of (i) to (iv) above have more than 50% of the beneficial interest; or

vi. a corporation that is controlled by a trust described in (v) above.

“person” includes an individual, corporation, government or agency thereof, trustee, executor, administrator, or other legal representative.

“resident” means an individual, corporation, government or agency thereof or trust that is not a non-resident.

2018 MANAGEMENT PROXY CIRCULAR      95

Appendix B

Board mandate

PURPOSE

The purpose of the board of directors (board) is to supervise the management of the business and affairs of the corporation. The board of directors will discharge this responsibility by developing and determining policy by which the business and affairs of the corporation are to be managed and by overseeing the management of the corporation.

COMPOSITION

The board is elected by the shareholders at the annual meeting of the shareholders of the corporation. The board shall appoint the chair annually from among its non-executive independent members. As fixed by the articles of the corporation, the board shall consist of at least three and not more than fifteen members. A majority of the directors shall be resident Canadians.

A majority of the directors shall be independent pursuant to standards for independence adopted by the board. The standards for independence are available on our website.

MEETINGS

The board will schedule as many meetings as necessary to carry out its duties effectively. A two year rolling schedule of regular board and committee meetings will be provided to directors. Confirmation of the date, time and place of regular meetings will be sent to directors approximately three weeks in advance of regularly scheduled meetings.

A meeting of the board may be called by the chair, the chief executive officer or any two directors. The corporate secretary shall, upon the direction of any of the foregoing, arrange a meeting of the board. Special meetings may be called by providing 48 hours notice. Board meetings may be held at any time without notice if all of the directors have waived or are deemed to have waived notice of the meeting.

A majority of the members of the board shall constitute a quorum. No business may be transacted by the board except at a meeting of its members at which a quorum of the board is present. Each director is expected to attend all meetings of the board. A director who is unable to attend a board meeting in person may participate by telephone or teleconference.

At board meetings, each director is entitled to one vote and questions are decided by a majority of votes of the directors present. In case of an equality of votes, the chair of the meeting does not have a second or casting vote.

The corporate secretary acts as secretary to the board. In the absence of the corporate secretary, the board may appoint any other person to act as secretary.

The board may invite such officers and employees of the corporation as it may see fit from time to time to attend at meetings of the board and assist thereat in the discussion and consideration of any matter.

DUTIES AND RESPONSIBILITIES

1. The board of directors has specific responsibilities for the following, which do not, in any way, limit or comprehensively define its overall responsibility for the stewardship of the corporation:

a. selection, appointment, evaluation and if necessary the termination of the chief executive officer;

b. satisfying itself as to the integrity of the senior executives of the corporation and as to the culture of integrity throughout the corporation;

c. succession planning, including appointing, counselling and monitoring the performance of executive officers;

d. oversight of the human resources policies of the corporation and while taking into account the views and recommendations of the human resources and compensation committee, approval of the compensation of the chief executive officer and the other executive officers;

e. strategic planning, approval of business plans and monitoring corporate performance against those plans;

f. approval of periodic capital and operating plans and monitoring corporate performance against those plans;

96     CAMECO CORPORATION

g. oversight of the policies and processes to manage risks of the corporation, and oversight of management’s mitigation of the material risks;

h. policies to require ethical behaviour of the corporation and its directors and employees, and compliance with laws and regulations;

i. oversight of the policies and processes for the implementation and integrity of the corporation’s internal control and management information systems and its financial reporting;

j. assessment of the effectiveness of the board and its committees and overseeing the establishment of an appropriate orientation program for new directors and an education program for all directors;

k. definition of the duties and the limits of authority of senior management, including approving a position statement for the chief executive officer;

l. policies for disclosure of corporate information to facilitate effective communications with shareholders, other stakeholders and the public;

m. health and safety and environmental policies and oversight of systems to enable compliance with these policies and all relevant laws and regulations;

n. oversight of the policies and processes for estimating and disclosing the corporation’s mineral reserves;

o. corporate governance including the relationship of the board of directors to management and shareholders and taking reasonable steps to ensure the corporation has appropriate structures and procedures in place to permit the board of directors to effectively discharge its duties and responsibilities;

p. calling meetings of shareholders and submission to the shareholders of any question or matter requiring approval of the shareholders;

q. approval of directors for nomination and election, and recommendation of the auditors to be appointed at shareholders’ meetings, and filling a vacancy among the directors or in the office of the auditor;

r. issuance of securities of the corporation;

s. declaration of dividends and establishment of the dividend policy for the corporation;

t. approval of the annual audited financial statements and related management discussion and analysis, and the interim unaudited financial statements and related interim management discussion and analysis, management proxy circulars, takeover bid circulars, directors’ circulars, prospectuses, annual information forms and other disclosure documents required to be approved by the directors of a corporation under securities laws, regulations or rules of any applicable stock exchange;

u. adoption, amendment or repeal of bylaws of the corporation;

v. review and approval of material transactions not in the ordinary course of business; and

w. other corporate decisions required to be made by the board of directors, or as may be reserved by the board of directors, to be made by itself, from time to time and not otherwise delegated to a committee of the board of directors or to the management of the corporation.

2. Subject to the provisions of applicable law and the bylaws of the corporation, the responsibilities of the board of directors may be delegated, from time to time, to committees of the board of directors on such terms as the board of directors may consider appropriate.

ORGANIZATIONAL MATTERS

1. The procedures governing the board shall be those in Parts 6 and 7 of the General Bylaws of the corporation.

2. The board shall annually review and assess the adequacy of its mandate.

3. The board shall participate in an annual performance evaluation.

2018 MANAGEMENT PROXY CIRCULAR      97

Appendix C

Stock option plan

The following kinds of changes must be approved by shareholders according to the terms of our stock option plan:

General

· any change to the number of common shares that can be issued under the plan, including increasing the fixed maximum number of common shares, or changing from a fixed maximum number to a fixed maximum percentage of common shares

· any change to extend the period after a trading blackout when options can be exercised

· any change to extend the expiry date of an option unless it would otherwise expire during a trading blackout period

· any change that requires shareholder approval under applicable law such as those described in the rules, regulations and policies of any stock exchange that we are listed on.

Exercise price

· any change that would cause the exercise price of an option to be lower than the fair market value of the common shares at the time the option is granted. This does not include standard adjustment provisions relating to dividends or stock splits, recapitalizations, consolidations or other fundamental corporate changes, or provisions for the treatment of options if there is a change of control or other similar transaction that affects the powers of the board to make certain changes to the stock option plan

· any other change that would cause the exercise or purchase price of an option to be lower (other than the standard adjustment provisions or if there is a change of control or other similar transaction as described in the item above). Cancelling an option and reissuing it at a lower price is considered a reduction in the exercise price.

Eligibility

· any change that increases the number of categories of people who are eligible to receive options, if it could increase the participation of insiders

· any change allowing options to be transferred other than by will or intestate succession.

Securities

· adding deferred or restricted share units or other share awards that would not involve an actual cash payment

· any change that allows adding a cashless exercise feature, unless it reduces the number of underlying shares in the stock option plan reserve.

98     CAMECO CORPORATION

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Cameco Corporation

2121-11th Street West

Saskatoon, Saskatchewan

S7M 1J3

cameco.com

TSX – CCO; NYSE - CCJ

EX-99.3

Exhibit 99.3

Cameco Corporation Use this proxy form to vote by proxy at our 2018 annual meeting of shareholders  

This proxy is solicited by management. Throughout this document, we, us, our and Cameco mean Cameco Corporation and you and your mean the person completing this form. When Wednesday, May 16, 2018 8:30 a.m. CST Where Cameco Corporation 2121 - 11th Street West Saskatoon, Saskatchewan

1	Appoint a proxyholder You can appoint Tim Gitzel or Sean Quinn to be your proxyholder, or choose someone else to represent you and vote your shares at the meeting. This person does not need to be a shareholder.
	☐  You appoint Tim Gitzel, or in his absence, Sean Quinn.
	☐  You appoint the following person to attend the meeting and vote on your behalf:
	If you do not check one of the boxes, we will assume you have appointed Tim Gitzel, or in his absence, Sean Quinn as your proxyholder.
2	Tell us your voting instructions
	When you complete this section, you are directing your proxyholder to follow these instructions when voting.
	Our board of directors and management recommend that shareholders vote For these items.
	If you do not specify how you want to vote your shares:
	•   the Cameco officer you appointed as your proxyholder in section 1 will vote For each of the items below	•   the other proxyholder you appointed in section 1 can vote as he or she sees fit
	If there are amendments or other items of business that properly come before the meeting, your proxyholder can vote on each matter as he or she sees fit, as permitted by law, whether or not it is a routine matter, an amendment or contested item of business.

A	Elect the directors (see page 4 of the management proxy circular)
		For	Withhold		For	Withhold
	1. Ian Bruce	☐	☐	6. Tim Gitzel	☐	☐
	2. Daniel Camus	☐	☐	7. Jim Gowans	☐	☐
	3. John Clappison	☐	☐	8. Kathryn Jackson	☐	☐
	4. Donald Deranger	☐	☐	9. Don Kayne	☐	☐
	5. Catherine Gignac	☐	☐	10. Anne McLellan	☐	☐

B	Appoint the auditors (see page 4 of the management proxy circular)	For	Withhold
	Appoint KPMG LLP as auditors	☐	☐
C	Have a say on our approach to executive compensation
	(see page 5 of the management proxy circular)
	As this is an advisory vote, the results will not be binding on the board.
	Be it resolved that, on an advisory basis and not to diminish the role and responsibilities of the board of directors for executive compensation, the shareholders accept the approach to executive compensation disclosed in Cameco’s management proxy circular delivered in advance of the 2018 annual meeting of shareholders.	For ☐	Against ☐

Two ways to vote: in person or by proxy Our annual meeting gives you the opportunity to vote on several items of Cameco business. It is also an opportunity to get an update on our business, meet face to face with management and interact with the board of directors. Your vote is important, regardless of the number of shares you hold.
	Vote in person
	Come to our annual meeting and vote your shares in person. Do not complete this form.
	Vote by proxy
	This is the easiest way to vote. It means you give someone else — called your proxyholder — the authority to attend the meeting and vote for you.
	You can vote by proxy in four ways: •  On the internet — Go to www.astvotemyproxy.com and follow the instructions on screen. You will need your control number, which appears below your name and address on this form. •  By fax — Complete, date and sign this form and fax both pages to our transfer agent, AST Trust Company (Canada). •  By mail — Complete, date and sign this form and mail it to AST Trust Company (Canada).	•  By appointing someone else to attend the meeting for you — This person does not need to be a shareholder (see section 1). Make sure your appointee is aware of it and attends the meeting for you. Your proxyholder will need to see a representative of AST Trust Company (Canada) when they arrive at the meeting. If you are voting by proxy, please complete all five sections of this form, date and sign it, and return it right away.

Your control number:

3	Declare your residency
	If you do not provide this information, we will consider the shares represented by this proxy to be owned and controlled by a non-resident, which means the vote may have less impact.
	You declare that the shares represented by this proxy are held, beneficially owned or controlled, either directly or indirectly, by a resident of Canada as defined below. If the shares are held in the names of two or more people, you declare that all of these people are residents of Canada.	☐ Yes ☐ No When you sign this form, you are certifying that you have done whatever is reasonably possible to confirm residential status.
	What do we mean by residency? Cameco shares have restrictions on ownership and voting for residents and non-residents of Canada. You can read about residency and voting starting on page 6 of the accompanying management proxy circular. The definitions here are summaries only. The complete definitions are in the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) and in our articles.
	A non-resident is: •  an individual, other than a Canadian citizen, who is not ordinarily resident in Canada •  a corporation •  that was incorporated, formed or otherwise organized outside Canada, or •  that is controlled by non-residents, either directly or indirectly	•  a trust •  that was established by a non-resident, other than a trust for the administration of a pension fund for individuals where the majority of the individuals are residents, or •  where non-residents have more than 50% of the beneficial interest •  a foreign government or foreign government agency
	Anyone not included in the above description of non-resident is considered a resident. Residents can be individuals, corporations, trusts and governments or government agencies.

4	Sign and date
	When you sign here, you are:
	•  authorizing your proxyholder to vote according to your voting instructions at Cameco’s 2018 annual meeting of shareholders, or any meeting that is reconvened if it was postponed or adjourned
	•  revoking any proxy that you previously gave for this meeting.
	For shares registered in the name of a corporation, estate, trust or minor, an authorized officer or attorney must sign this form and state his or her position. This person may also have to provide proof that he or she is authorized to sign.
	Signature
	(if your shares are held in more than one name, either person can complete and sign this form)
	Date
	(if you leave this blank, we will consider the date to be the day this form was received by or on behalf of us)
	Position
	(complete this if you are a guardian, or signing by power of attorney on behalf of a corporation, estate or trust)
5	Vote by fax or mail
	We must receive your completed form before 8:30 a.m. CST on Monday, May 14, 2018. If the meeting is postponed or adjourned, we must receive the form at least 48 hours (excluding Saturdays, Sundays and holidays) before the meeting is reconvened.
	The chair of the meeting has the discretion to accept or reject any late proxies, and can waive or extend the deadline for receiving proxy voting instructions without notice.
	By fax	By mail
	Toll free from anywhere in North America:	Use the envelope provided or mail to:
	1.866.781.3111	AST Trust Company (Canada)
	From outside North America:	Attn: Proxy department
	1.416.368.2502	P.O. Box 721
	Remember to fax both pages of this form.	Agincourt, Ontario M1S 0A1
	Vote by internet
	If you prefer to vote on the internet, we must receive your internet voting instructions before 8:30 a.m. CST on Monday, May 14, 2018. Go to www.astvotemyproxy.com and follow the instructions on screen.

EX-99.4

Exhibit 99.4

Cameco Energizing the World 2017 Annual Report

The nuclear fuel cycle 2 3 5 6 CANDU Cycle Light Water Cycle 1 4 5 6

Mining

Once an orebody is discovered and defined by exploration, there are three common ways to mine uranium, depending on the depth of the orebody and the deposit’s geological characteristics:

• Open pit mining is used if the ore is near the surface. The ore is usually mined using drilling and blasting.

• Underground mining is used if the ore is too deep to make open pit mining economical. Tunnels and shafts provide access to the ore.

• In situ recovery (ISR) does not require large scale excavation. Instead, holes are drilled into the ore and a solution is used to dissolve the uranium. The solution is pumped to the surface where the uranium is recovered.

Milling

Ore from open pit and underground mines is processed to extract the uranium and package it as a powder typically referred to as uranium concentrates (U₃O₈) or yellowcake. The leftover processed rock and other solid waste (tailings) is placed in an engineered tailings facility.

Refining

Refining removes the impurities from the uranium concentrate and changes its chemical form to uranium trioxide (UO₃).

Conversion

For light water reactors, the UO₃ is converted to uranium hexafluoride (UF₆) gas to prepare it for enrichment. For heavy water reactors like the Candu reactor, the UO₃ is converted into powdered uranium dioxide (UO₂).

Enrichment

Uranium is made up of two main isotopes: U-238 and U-235. Only U-235 atoms, which make up 0.7% of natural uranium, are involved in the nuclear reaction (fission). Most of the world’s commercial nuclear reactors require uranium that has an enriched level of U-235 atoms.

The enrichment process increases the concentration of U-235 to between 3% and 5% by separating U-235 atoms from the U-238. Enriched UF6 gas is then converted to powdered UO₂.

Fuel manufacturing

Natural or enriched UO₂ is pressed into pellets, which are baked at a high temperature. These are packed into zircaloy or stainless steel tubes, sealed and then assembled into fuel bundles.

Generation

Nuclear reactors are used to generate electricity. U-235 atoms in the reactor fuel fission, creating heat that generates steam to drive turbines. The fuel bundles in the reactor need to be replaced as the U-235 atoms are depleted, typically after one or two years depending upon the reactor type. The used – or spent – fuel is stored or reprocessed.

Spent fuel management

The majority of spent fuel is safely stored at the reactor site. A small amount of spent fuel is reprocessed. The reprocessed fuel is used in some European and Japanese reactors.

Management’s discussion and analysis

February 9, 2018

6	2017 PERFORMANCE HIGHLIGHTS
9	MARKET OVERVIEW AND 2017 DEVELOPMENTS
13	OUR STRATEGY
21	MEASURING OUR RESULTS
22	FINANCIAL RESULTS
51	OPERATIONS AND PROJECTS
74	MINERAL RESERVES AND RESOURCES
79	ADDITIONAL INFORMATION
82	2017 CONSOLIDATED FINANCIAL STATEMENTS

This management’s discussion and analysis (MD&A) includes information that will help you understand management’s perspective of our audited consolidated financial statements (financial statements) and notes for the year ended December 31, 2017. The information is based on what we knew as of February 7, 2018.

We encourage you to read our audited consolidated financial statements and notes as you review this MD&A. You can find more information about Cameco, including our financial statements and our most recent annual information form, on our website at cameco.com, on SEDAR at sedar.com or on EDGAR at sec.gov. You should also read our annual information form before making an investment decision about our securities.

The financial information in this MD&A and in our financial statements and notes are prepared according to International Financial Reporting Standards (IFRS), unless otherwise indicated.

Unless we have specified otherwise, all dollar amounts are in Canadian dollars.

Throughout this document, the terms we, us, our, the Company and Cameco mean Cameco Corporation and its subsidiaries, including NUKEM Energy GmbH (NUKEM), unless otherwise indicated.

Caution about forward-looking information

Our MD&A includes statements and information about our expectations for the future. When we discuss our strategy, plans, future financial and operating performance, or other things that have not yet taken place, we are making statements considered to be forward-looking information or forward-looking statements under Canadian and United States (US) securities laws. We refer to them in this MD&A as forward-looking information.

Key things to understand about the forward-looking information in this MD&A:

· It typically includes words and phrases about the future, such as: anticipate, believe, estimate, expect, plan, will, intend, goal, target, forecast, project, strategy and outlook (see examples below).

· It represents our current views, and can change significantly.

· It is based on a number of material assumptions, including those we have listed on page 3, which may prove to be incorrect.

· Actual results and events may be significantly different from what we currently expect, due to the risks associated with our business. We list a number of these material risks on pages 2 and 3. We recommend you also review our most recent annual information form, which includes a discussion of other material risks that could cause actual results to differ significantly from our current expectations.

· Forward-looking information is designed to help you understand management’s current views of our near and longer term prospects, and it may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by securities laws.

Examples of forward-looking information in this MD&A

· our expectations about 2018 and future global uranium supply, consumption, demand, contracting volumes and number of reactors, including the discussion under the heading Market overview and 2017 developments

· the discussion under the heading Our strategy

· our expectations for uranium deliveries in 2018

· the discussion of our expectations relating to our Canada Revenue Agency (CRA) transfer pricing dispute, including our estimate of the amount and timing of expected cash taxes and transfer pricing penalties

· the discussion of our expectations relating to our dispute with Tokyo Electric Power Company Holdings, Inc. (TEPCO)

· our expectations that we will recognize a gain in the first quarter of approximately $66 million on the change of Joint Venture Inkai LLP’s (JV Inkai) ownership interest

· our consolidated outlook for the year and the outlook for our uranium and fuel services segments for 2018

· our expectations for future tax payments and rates, including effective tax rates

· our price sensitivity analysis for our uranium segment

· our expectation that existing cash balances and operating cash flows will meet our anticipated 2018 capital requirements

· our expectations for 2018, 2019 and 2020 capital expenditures

· our expectation that in 2018 we will be able to comply with all the covenants in our unsecured revolving credit facility

· future plans and expectations for uranium properties, projects under evaluation, and fuel services operating sites

· our expectations related to care and maintenance costs

· our mineral reserve and resource estimates

Material risks

· actual sales volumes or market prices for any of our products or services are lower than we expect for any reason, including changes in market prices, loss of market share to a competitor or trade restrictions

· we are adversely affected by changes in currency exchange rates, interest rates, royalty rates, or tax rates

· our production costs are higher than planned, or our cost reduction strategies are unsuccessful, or necessary supplies are not available, or not available on commercially reasonable terms

· our estimates of production, purchases, costs, decommissioning, reclamation expenses, or our tax expense prove to be inaccurate

· we are unable to enforce our legal rights under our existing agreements, permits or licences

· we are subject to litigation or arbitration that has an adverse outcome, including lack of success in our dispute with CRA or with TEPCO

· our estimate of the gain on the change in ownership interests for JV Inkai prove to be inaccurate

· we are unsuccessful in our dispute with CRA and this results in significantly higher cash taxes, interest charges and penalties than the amount of our cumulative tax provision

· we are unable to utilize letters of credit to the extent anticipated in our dispute with CRA

· there are defects in, or challenges to, title to our properties

· our mineral reserve and resource estimates are not reliable, or there are unexpected or challenging geological, hydrological or mining conditions

· we are affected by environmental, safety and regulatory risks, including increased regulatory burdens or delays

· necessary permits or approvals from government authorities cannot be obtained or maintained

· we are affected by political risks

· we are affected by terrorism, sabotage, blockades, civil unrest, social or political activism, accident or a deterioration in political support for, or demand for, nuclear energy

· we are impacted by changes in the regulation or public perception of the safety of nuclear power plants, which adversely affect the construction of new plants, the relicensing of existing plants and the demand for uranium

2 CAMECO CORPORATION

· government regulations or policies that adversely affect us, including tax and trade laws and policies

· our uranium suppliers fail to fulfil delivery commitments or our uranium purchasers fail to fulfil purchase commitments

· our McArthur River and/or Cigar Lake development, mining or production plans are delayed or do not succeed for any reason

· any difficulties in resuming McArthur River production after the end of the production suspension including as a result of failure to reach a new collective agreement

· any difficulties in milling of Cigar Lake ore at the McClean Lake mill or resuming production after the extended Cigar Lake shutdown scheduled for the third quarter

· JV Inkai’s development, mining or production plans are delayed or do not succeed for any reason

· our expectations relating to care and maintenance costs prove to be inaccurate

· we are affected by natural phenomena, including inclement weather, fire, flood and earthquakes

· our operations are disrupted due to problems with our own or our suppliers’ or customers’ facilities, the unavailability of reagents, equipment, operating parts and supplies critical to production, equipment failure, lack of tailings capacity, labour shortages, labour relations issues, strikes or lockouts, underground floods, cave-ins, ground movements, tailings dam failures, transportation disruptions or accidents, unanticipated consequences of our cost reduction strategies, or other development and operating risks

Material assumptions

· our expectations regarding sales and purchase volumes and prices for uranium and fuel services, trade restrictions and that counterparties to our sales and purchase agreements will honour their commitments

· our expectations regarding the demand for and supply of uranium

· our expectations regarding spot prices and realized prices for uranium, and other factors discussed under the heading Price sensitivity analysis: uranium segment

· that the construction of new nuclear power plants and the relicensing of existing nuclear power plants not being more adversely affected than expected by changes in regulation or in the public perception of the safety of nuclear power plants

· our ability to continue to supply our products and services in the expected quantities and at the expected times

· our expected production level

· our cost expectations, including production costs, purchase costs and the success of our cost reduction strategies

· our expectations regarding tax rates and payments, royalty rates, currency exchange rates and interest rates

· the accounting treatment for the change in ownership interests in JV Inkai is as expected

· our expectations about the outcome of disputes with CRA and with TEPCO

· we are able to utilize letters of credit to the extent anticipated in our dispute with CRA

· our decommissioning and reclamation expenses

· our mineral reserve and resource estimates, and the assumptions upon which they are based, are reliable

· our understanding of the geological, hydrological and other conditions at our uranium properties

· our McArthur River development, mining and production plans succeed, including the resumption of production after the end of the production suspension

· our Cigar Lake development, mining and production plans succeed, including the resumption of production after the end of the extended shutdown scheduled for the third quarter

· the McClean Lake mill is able to process Cigar Lake ore as expected

· that care and maintenance costs will be as expected

· our and our contractors’ ability to comply with current and future environmental, safety and other regulatory requirements, and to obtain and maintain required regulatory approvals

· our operations are not significantly disrupted as a result of political instability, nationalization, terrorism, sabotage, blockades, civil unrest, breakdown, natural disasters, governmental or political actions, litigation or arbitration proceedings, the unavailability of reagents, equipment, operating parts and supplies critical to production, labour shortages, labour relations issues, strikes or lockouts, underground floods, cave-ins, ground movements, tailings dam failure, lack of tailings capacity, transportation disruptions or accidents, unanticipated consequences of our cost reduction strategies, or other development or operating risks

MANAGEMENT’S DISCUSSION AND ANALYSIS 3

Our business
We are a pure-play nuclear fuel investment with a proven track record and the strengths to take advantage of the world’s rising demand for safe, clean and reliable energy. Nuclear energy plants around the world use our uranium products to generate one of the cleanest sources of electricity available today.
Our operations and investments span the nuclear fuel cycle, from exploration to fuel manufacturing. Our head office is in Saskatoon, Saskatchewan. c.
URANIUM
Operations
We are one of the world’s largest uranium producers, and in 2017 accounted for about 16% of the world’s production. We have controlling ownership of the world’s largest high-grade reserves.
Uranium Projects under Evaluation
We use a stage gate process to evaluate our uranium projects and will advance them at a pace aligned with market opportunities, in order to respond when the market signals a need for more uranium.
Uranium Exploration (grey shaded)
Our exploration program is directed at replacing mineral reserves as they are depleted by our production. We have a total of about 1 million hectares of land holdings on three continents. Our active exploration programs are focused on Canada.
FUEL SERVICES
We are an integrated uranium fuel supplier, offering refining, conversion and fuel manufacturing services. We control 25% of world primary conversion capacity.
MARKETING
We sell uranium and fuel services to nuclear utilities in 13 countries, with sales commitments to supply about 150 million pounds of U3O8 and over 40 million kilograms of UFg conversion services.
OTHER FUEL CYCLE INVESTMENTS
ENRICHMENT
GE-Hitachi Global Laser Enrichment (GLE) is testing a third-generation technology that, if successful, will use lasers to commercially enrich uranium. We have a 24% interest in GLE, which is currently undergoing restructuring.
McArthur River/Key Lake* Cigar Lake Rabbit Lake*
Millennium
Corporate Office Cameco Marketing Inc. Smith Ranch-Highland* Crow Butte*
GLE Blind River Port Hope Cameco Fuel Manufacturing Inc.
* Operation suspended/curtailed due to current market conditions
4 CAMECO CORPORATION

Advantages
With our extraordinary assets, long-term contract portfolio, employee expertise, comprehensive industry knowledge and strong balance sheet, we are confident in our ability to increase long-term shareholder value.
Cameco Europe Ltd. Inkai Yeelirrie Kintyre
MANACEMENT’S DISCUSSION AND ANALYSIS 5

2017 performance highlights

Our focus throughout 2017 continued to be on lowering our costs and improving efficiency amid ongoing difficult uranium market conditions. We continue to anticipate a market shift as demand increases in the form of restarts and new reactors, while current and future supply decreases through curtailments and lack of investment. However, until we see that shift emerge, we will continue to take the necessary actions intended to shield the company from the nearer-term risks we face and that we expect will reward shareholders for their continued patience and support of our strategy to build long-term value.

Financial performance

HIGHLIGHTS
DECEMBER 31 ($ MILLIONS EXCEPT WHERE INDICATED)	2017		2016		CHANGE
Revenue		2,157		2,431		(11)%
Gross profit		436		463		(6)%
Net loss attributable to equity holders		(205)		(62)		>(100%)
$ per common share (diluted)		(0.52)		(0.16)		>(100%)
Adjusted net earnings (non-IFRS, see page 24)		59		143		(59)%
$ per common share (adjusted and diluted)		0.15		0.36		(58)%
Cash provided by operations (after working capital changes)		596		312		91%

Net loss attributable to equity holders (net loss) and adjusted net earnings were lower in 2017 compared to 2016, in-line with the outlook we provided. See 2017 consolidated financial results beginning on page 23 for more information.

Our uranium segment continued to outperform the market

In our uranium segment, annual production was slightly below expectations as a result of both planned and unplanned reductions. Key highlights:

● annual production of 23.8 million pounds—1% lower than the guidance provided in our 2017 third quarter MD&A

● quarterly production of 6.9 million pounds in the fourth quarter—3% lower than in 2016 due to the curtailment of production at the US operations, lower production at Inkai and from McArthur River/Key Lake

● achieved ramp up to full production at the Cigar Lake mine and Orano’s (formerly AREVA) McClean Lake mill

● closed the agreement with our partner Kazatomprom and JV Inkai to restructure and enhance JV Inkai

● successfully implemented operational changes at our mining operations resulting in capital and operating cost savings

● announced the temporary production suspension at McArthur River/Key Lake commencing in 2018

See Our operations and projects beginning on page 51 for more information.

Updates on our other segments and investments

Production in 2017 from our fuel services segment was 6% lower than in 2016, as planned, due to weak market conditions for conversion services.

In 2017, the Canadian Nuclear Safety Commission (CNSC) approved a 10-year operating licence for Port Hope.

6 CAMECO CORPORATION

HIGHLIGHTS			2017		2016		CHANGE
Uranium	Production volume (million lbs)			23.8		27.0		(12)%
	Sales volume (million lbs)1			33.6		31.5		7%
	Average realized price	($US/lb)		36.13		41.12		(12)%
		($Cdn/lb)		46.80		54.46		(14)%
	Revenue ($ millions)1			1,574		1,718		(8)%
	Gross profit ($ millions)			395		444		(11)%
Fuel services	Production volume (million kgU)			7.9		8.4		(6)%
	Sales volume (million kgU)1			11.5		12.7		(9)%
	Average realized price	($Cdn/kgU)		27.20		25.37		7%
	Revenue ($ millions)1			313		321		(2)%
	Gross profit ($ millions)			64		63		2%
NUKEM	Sales volume U3O8 (million lbs)1			10.0		7.1		41%
	Average realized price	($Cdn/lb)		32.25		47.90		(33)%
	Revenue ($ millions)1			321		391		(18)%
	Gross loss ($ millions)2			(15)		(28)		46%

¹  Includes sales and revenue between our uranium, fuel services and NUKEM segments. Please see 2017 Financial results by segment beginning on page 41.

²  Gross loss includes net inventory write-downs of $9 million in 2017 and $18 million in 2016 due to a decline in the spot price during the year.

Industry prices

In 2017, the uranium spot price ranged from a high of $24.50 (US) per pound to a low of about $19 (US) per pound, averaging around $22 (US) for the year. Utilities continue to be well covered under existing contracts, and, given the current uncertainties in the market, we expect they and other market participants will continue to be opportunistic in their buying. As a result, contracting is expected to remain discretionary in 2018.

	2017		2016		CHANGE
Uranium ($US/lb U3O8)1
Average annual spot market price		21.78		25.64		(15)%
Average annual long-term price		31.92		39.00		(18)%
Fuel services ($US/kgU as UF6)1
Average annual spot market price
North America		5.26		6.40		(18)%
Europe		5.69		6.91		(18)%
Average annual long-term price
North America		14.00		12.58		11%
Europe		14.04		13.56		4%
Note: the industry does not publish UO2 prices.

¹  Average of prices reported by TradeTech and Ux Consulting (Ux)

Also of note

TEPCO contract dispute

On January 31, 2017, TEPCO confirmed that it would not accept a uranium delivery scheduled for February 1, 2017, and would not withdraw the contract termination notice it provided to Cameco Inc. on January 24, 2017 with respect to a uranium supply agreement between TEPCO and Cameco Inc. TEPCO alleged that an event of “force majeure” has occurred because it has been unable to operate its nuclear reactors for 18 consecutive months due to the Fukushima nuclear accident in March 2011 and the resulting government regulations. Cameco Inc. sees no basis for terminating the agreement and is pursuing all its legal rights and remedies against TEPCO.

MANAGEMENT’S DISCUSSION AND ANALYSIS 7

Under the agreement, TEPCO has already received and paid for 2.2 million pounds of uranium since 2014. The termination would affect approximately 9.3 million pounds of uranium deliveries through 2028, worth approximately $1.3 billion in revenue to Cameco, including about $126 million in each of 2017, 2018 and 2019 based on 855,000 pounds of deliveries in each of those years. All estimates and uranium volumes are provided on a consolidated basis for Cameco using expected contract prices and an exchange rate of $1.00 (US) for $1.30 (Cdn) and do not reflect any resale of the cancelled deliveries under the contract with TEPCO.

Three arbitrators have been appointed and based on the current schedule set by them, we expect the case will be heard in the first quarter of 2019. We are seeking $682 million (US) in damages plus interest and legal costs. The $682 million (US) primarily represents the present value of the remaining contracted volumes at the January 2017 contract price less the January 2017 market price of the equivalent volume of uranium concentrates.

The timing for a final decision will be dependent on how long the arbitrators deliberate following the conclusion of the hearing.

In this MD&A, our 2018 financial outlook and other disclosures relating to our contract portfolio are presented on a basis that excludes this agreement with TEPCO, which is under dispute.

JV Inkai restructuring

On December 11, 2017, we announced that the restructuring of JV Inkai outlined in the implementation agreement dated May 27, 2016 with Kazatomprom and JV Inkai closed and would take effect on January 1, 2018. Our ownership interest in JV Inkai is now 40% and Kazatomprom’s is 60%. As a result, we will account for JV Inkai on an equity basis commencing on January 1, 2018.

In addition, we will recognize a gain on the change in ownership interests of approximately $66 million. The resulting gain on restructuring will be reflected in our financial results for the first quarter.

  SHARES AND STOCK OPTIONS OUTSTANDING   At February 7, 2018, we had:   ●  395,792,732 common shares and one Class B share outstanding   ●  8,322,866 stock options outstanding, with exercise prices ranging from $14.70 to $39.53     DIVIDEND   In 2017, our board of directors reduced the planned dividend to $0.08 per common share to be paid annually. The decision to declare a dividend by our board will be based on our cash flow, financial position, strategy and other relevant factors including appropriate alignment with the cyclical nature of our earnings.

8 CAMECO CORPORATION

Market overview and 2017 developments

Cautiously optimistic

Despite the ongoing market challenges in 2017, we remain cautiously optimistic. We are cautious because we continue to face difficult market conditions and have seen a reduction in global demand expectations, driven by early reactor retirements, delays in reactor construction programs and by changes in governments that have created additional uncertainty for the nuclear industry. At the same time, the industry continues to work its way through supply that was incented during previous price runs. However, we are optimistic because today’s uranium prices are too low to motivate even some of the lowest-cost, profit-driven producers to maintain existing production, let alone invest in new projects that we believe will be required to ensure adequate uranium production is in the market. Additional uranium supply will be needed to support the reactor construction programs currently underway but not yet consuming uranium, the return of idled reactors to the grid, and to satisfy utilities uncovered requirements.

2017: A STORY OF OVERSUPPLY

In 2017, excess uranium supply continued to have a significant impact on the uranium market. Abundant spot material was available to satisfy utilities’ appetite for low-priced pounds to meet near- to mid-term requirements.

Secondary supplies, consisting largely of government inventories, enricher underfeeding and tails re-enrichment, where the economics differ considerably from mined production, have been a significant contributor to the supply-demand imbalance in the market. In addition, supply from some producers, whose production decisions are not necessarily driven by the economics of the uranium market, such as large diversified miners and companies mining uranium for strategic or social purposes, has been a contributor to the imbalance. Finally, higher-cost production, though sensitive to the uranium price, continues to be supported by higher prices under long-term contracts and/or advantageous foreign exchange rates. However, in 2017, we started to see evidence that at today’s low uranium prices, not only is some of the higher cost production at risk, even the lowest-cost production faces planned and unplanned risks.

These industry dynamics make it difficult to predict the timing of a market recovery. However, given that Ux Consulting Company, LLC (UxC) reports that over the last five years only 320 million pounds have been locked-up in the long-term market, while over 788 million pounds have been consumed in reactors, we remain confident that utilities have a growing gap to fill. As annual supply adjusts and utilities’ annual uncovered requirements grow, we believe the pounds available in the spot market won’t be enough to satisfy demand in the long run.

OPPORTUNITIES FOR THOSE WHO CAN WAIT

MANAGEMENT’S DISCUSSION AND ANALYSIS  9

Like other commodities, the uranium industry is cyclical and the low level of contracting at low prices that we’re seeing today is not new. When prices are low, there is no urgency to contract. The heavy contracting that took place during the previous price run, which drove investment in higher-cost sources of production, contributes to the perception that uranium is abundant and always will be. History demonstrates that the opposite tends to occur when prices rise. After years of low investment in supply, as has been the case so far this decade, security of supply tends to overtake price concerns at some point, and utilities re-enter the long-term market to ensure they have the reliable supply of uranium they need to run their reactors.

We believe the backlog of future contracting needs created by the low-price environment presents a substantial opportunity for suppliers like us that can weather the low-price part of the cycle. As a low-cost producer, we plan our business with these price cycles in mind.

In our industry, customers don’t come to the market right before they need to load uranium into their reactors. To operate a reactor that could run for more than 60 years, natural uranium and the downstream services have to be purchased years in advance, allowing time for a number of processing steps before it arrives at the power plant as a finished fuel bundle. At present, we believe there is a significant amount of uranium that needs to be contracted to keep reactors running into the next decade.

Estimates by industry consultants show cumulative uncovered requirements to be about 730 million pounds over the next ten years. While annual uncovered requirements do not ramp up significantly in the near-term, the longer the delay in the recovery of the long-term market, the less certainty there is around the availability of future supply to fill growing demand. Ultimately, we expect the current price-sensitive sentiment to give way to increasing concerns about the security of future supply.

SUPPLY IS NOT GUARANTEED

Economic difficulties are beginning to take a toll on the supply side. Not only is there a lack of investment in future supply – we are seeing evidence that existing supply is at risk. Higher-cost producers who have been protected from the low market prices under long-term contracts, are beginning to emerge from that protection, some cutting production, and others having to be recapitalized or seeking protection from bankruptcy. Even the lowest-cost producers are deciding to preserve long-term value by leaving uranium in the ground. Overall, based on a number of developments throughout the year, global production is expected to decrease:

● In addition to the curtailments at Rabbit Lake and in the US in 2016, we announced our plan to temporarily suspend production at the McArthur River/Key Lake operation in 2018, removing 18 million pounds from the market.

● In November, Kazatomprom announced its 2017 uranium production in Kazakhstan would be about 58 million pounds, about 10% less than the nearly 64 million pounds produced in 2016, and in-line with the planned reduction target it announced in January of 2017. In December, it announced a 20% reduction in planned production for 2018 through 2020, which it indicated will result in production volumes similar to 2017.

● Paladin entered administration seeking to restructure and recapitalize due to its inability to meet its debt repayment obligations.

● Orano, who was recapitalized by the French government, announced plans to cut production at its Somair mine in Niger in 2018, and along with us, agreed to the temporary suspension of production at McArthur River/Key Lake in 2018.

10 CAMECO CORPORATION

● Multiple US ISR projects announced output reductions in 2018.

● In 2017, reports regarding production at the Husab mine in Namibia continued to raise uncertainty about the timing and even the possibility of reaching name-plate capacity of 15 million pounds annually.

● In the conversion space, earlier in the year, Honeywell announced a capacity reduction, which was followed by an announcement at the end of the year of its plans to temporarily idle its Metropolis site until business conditions improve.

Coupled with looming uncovered requirements, we expect the risks to future and existing supply could decrease the availability of spot material and increase the pressure for a return to long-term contracting.

DEMAND SIDE DEVELOPMENTS

There was mixed news for the broader nuclear industry in 2017. On a regional demand basis, some of the more significant positive and negative developments were:

● As part of Bruce Power’s commitment to refurbish its CANDU reactors, in 2017 Bruce Power signed an agreement worth approximately $2 billion with us to extend its fuel supply agreement to 2030.

● The US division of Westinghouse Electric Company declared bankruptcy, ultimately resulting in the pending abandonment of the two V.C. Summer units under construction in South Carolina. However, completion of the Vogtle units in Georgia was approved.

● Several additional early reactor retirements were announced in the US due to high costs. However, efforts are being made in several states to enact incentives to support the continued operation of nuclear plants, an issue that has also been taken up at the federal level.

● In January 2018, two US uranium producers put forward a petition under Section 232 of the Trade Expansion Act due to pressures from state-sponsored (Russia, Kazakhstan, Uzbekistan and China) imports. The petition aims to have 25% of US nuclear reactor requirements sourced from the US and a Buy America policy for US government agencies. Currently less than 5% of US requirements are met by US uranium producers.

● China continued to face challenges from excess capacity in the energy sector and first-of-a-kind reactor delays on its AP1000 and EPR reactors. However, with Xi Jinping continuing as President of China we believe China will continue with its nuclear growth ambitions. A recent report quotes a Bloomberg analyst who anticipates that nuclear installed capacity could increase tenfold between 2016 and 2050 to over 300 GW in China.

● South Korea’s new government announced its plan to phase-out nuclear power. However, a public panel voted in favour of completing the two reactors under construction that the government had previously suspended.

● In France, the new government reaffirmed its commitment to reduce its reliance on nuclear by 2025, but later acknowledged that target as unrealistic, postponing the reduction until the 2030 to 2035 timeframe.

● Construction on the first nuclear plants in Turkey and Bangladesh was started.

● Egypt signed a contract with Russia to build four reactors.

● Saudi Arabia is working to prequalify reactor vendors as it moves forward with plans for its first nuclear power plant, marking progress on its ambitions to install 17 gigawatts of nuclear capacity by 2040.

While 2017 offered some progress in bringing supply and demand closer to equilibrium, uncertainty persists.

WHAT HAS TO CHANGE?

Ultimately, the industry needs to fill the demand gap left by forced and premature shut-downs since March of 2011 by continuing to safely bring reactors online. This means Japanese restarts, successful commissioning of new reactors under construction, and continued development of new construction plans. And we’re seeing positive progress on all fronts:

● Japanese utilities have now successfully navigated through the new, rigorous safety inspection process, with the restart of five reactors and another four expected to restart in 2018.

● In 2017, there were four new reactors connected to the grid. Currently there are 57 reactors under construction around the world, the majority of which are expected to come online in the next three years, if startups occur as planned.

● There is a growing acknowledgment that adherence to global climate change goals requires a material dedication to all non-emitting energy sources, including nuclear. The World Nuclear Associations target of 25% nuclear in 2050 is an example of this movement. Additionally, as a result of the closure of its nuclear plants, Germany has acknowledged that it will no longer be able to meet its climate goals despite its substantial rollout of renewable energy under the government’s policy.

MANAGEMENT’S DISCUSSION AND ANALYSIS 11

Global population is on the rise, and with the world’s need for safe, clean, reliable baseload energy, nuclear remains an important part of the mix. We remain confident in the future of the nuclear industry, while at the same time recognizing that uncertainty persists.

With demand coming on in the form of restarts and new reactors, and supply declining on curtailments and lack of investment, we’re continuing to expect a market shift. Until that time, we will continue to take the actions we believe are necessary to position the company for long-term success. Therefore, we will undertake contracting activity which aligns with the uncertain timing of a market recovery and is intended to ensure we have adequate protection under our contract portfolio, while maintaining exposure to the rewards that come from having uncommitted, low-cost supply to deliver into a strengthening market.

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Our strategy

Tier-one focus

Our strategy is set within the context of a challenging market environment, which we expect to give way to strong long-term fundamentals driven by increasing population, electricity demand and clean air concerns.

We are a pure-play nuclear fuel supplier, focused on taking advantage of the long-term growth we see coming in our industry, while maintaining the ability to respond to market conditions as they evolve. Our strategy is to focus on our tier-one assets and profitably produce at a pace aligned with market signals in order to preserve the value of those assets and increase long-term shareholder value, and to do that with an emphasis on safety, people and the environment.

URANIUM

Uranium production is central to our strategy, as it is the biggest value driver of the nuclear fuel cycle and our business. In accordance with market conditions, and to mitigate risk, we will evaluate the optimal mix of our production, inventory and purchases in order to satisfy our contractual commitments and in order to return the best value possible. During a prolonged period of uncertainty, this could mean leaving our uranium in the ground. As conditions improve, we expect to meet rising demand with production from our best margin operations.

In light of today’s oversupplied market and the lingering uncertainty as to how long the weak market conditions will persist, we are focused on preserving the value of our lowest cost assets, on maintaining a strong balance sheet, on protecting and extending the value of our contract portfolio and on efficiently managing the company in a low price environment. We have undertaken a number of deliberate and disciplined actions. We have reduced supply, resisted selling into a weak spot market, restructured our global marketing organization, streamlined our operations and reduced costs. In 2017, these actions resulted in lower:

● capital expenditures

● direct administration costs

● exploration costs

● uranium average unit cost of sales

Consistent with these actions, we have reduced our planned 2018 annual dividend to $0.08 per share and it will be paid annually instead of quarterly. In addition, we are temporarily suspending production at our McArthur River/Key Lake operation, which we expect will remove 18 million pounds of uranium from the market in 2018. Although these actions will have a cost in the short-term, they are intended to position us to be able to self-manage the risks we face and ensure our tier-one assets are available to us in a market that values them appropriately.

FUEL SERVICES

Our fuel services division is a source of profit and supports our uranium segment while allowing us to vertically integrate across the fuel cycle. Our focus is on maintaining and optimizing profitability.

ENRICHMENT

We continue to explore opportunities in the second largest value driver of the fuel cycle. Having operational control of both uranium production and enrichment facilities would offer operational synergies that could enhance profit margins.

NUKEM

In 2017, we made changes to the way our global marketing activities are organized. To better co-ordinate our marketing activities and reduce costs, all future Canadian and international marketing activities have been consolidated in Saskatoon. These changes have a significant impact on the activities historically performed by NUKEM. We will continue to be active in the spot market when it makes sense for us and in support of our long-term contract portfolio. However, our marketing activities will now largely be undertaken by our new marketing entity, Cameco Marketing Inc., based out of Saskatoon.

Capital allocation – focus on value

Delivering returns to our long-term shareholders is a top priority. We continually evaluate our investment options to ensure we allocate our capital in a way that we believe will:

● create the greatest long-term value for our shareholders

● allow us to maintain our investment-grade rating

● allow us to execute on our dividend while ensuring it is appropriately aligned with the cyclical nature of our earnings

MANAGEMENT’S DISCUSSION AND ANALYSIS 13

To deliver value, free cash flow must be productively reinvested in the business or returned to shareholders, which requires good execution and disciplined allocation. We have a multidisciplinary capital allocation team that evaluates all possible uses of investable capital.

We start by determining how much cash we have to invest (investable capital), which is based on our expected cash flow from operations minus expenses we consider to be a higher priority, such as dividends and financing costs, and could include others. This investable capital can be reinvested in the company or returned to shareholders.

Amid the uncertain times we are facing today, the objective of our capital allocation is to maximize cash flow, while maintaining our investment-grade rating through close management of our balance sheet metrics, allowing us to self-manage risks. Risks like:

● a market that remains low for longer

● litigation risk related to the CRA and TEPCO disputes

● refinancing risk

With the metrics that inform an investment-grade rating in mind, and in this period of low uranium prices, we have taken steps to improve margin and cash flow by:

● responsibly managing our sources of supply and preserving the value of our tier-one assets

● restructuring our activities to reduce our operating, capital, and general and administrative spending

● reducing our planned annual dividend from $0.40 per share to $0.08 per share in 2018

REINVESTMENT

If a decision is made to reinvest capital in sustaining, capacity replacement, or growth, all opportunities are ranked and only those that meet the required risk-adjusted return criteria are considered for investment. We also must identify, at the corporate level, the expected impact on cash flow, earnings, and the balance sheet. All project risks must be identified, including the risks of not investing. Allocation of capital only occurs once an investment has cleared these hurdles.

This may result in some opportunities being held back in favour of higher return investments, and should allow us to generate the best return on investment decisions when faced with multiple prospects, while also controlling our costs. If there are not enough good investment prospects internally or externally, this may result in residual investable capital, which we would then consider returning directly to shareholders.

Given the weak uranium market, our focus for 2018 through 2020 is primarily on sustaining and capacity replacement capital to ensure we have the ability to meet our contractual commitments and to maintain optionality longer term. All growth capital has been curtailed.

RETURN

We believe in returning cash to shareholders, but are also focused on protecting the company and rewarding those shareholders who understand and support our strategy to build long-term value. If we determine the best use of cash is to return it to shareholders, we can do that through a share repurchase or dividend—an annual dividend, one-time supplemental dividend or a progressive dividend. When deciding between these options, we consider a number of factors, including generation of excess cash, growth prospects for the company, growth prospects for the industry, and the nature of the excess cash.

Share buyback: If we were generating excess cash while there were few or no growth prospects for the company or the industry, then a share buyback might make sense. However, our current view is that the long-term fundamentals for Cameco and the industry remain strong.

Dividend: The amount and type of dividend paid, annual, progressive or one-time supplemental is evaluated by our board of directors with careful consideration of our cash flow, financial position, strategy, and other relevant factors including appropriate alignment with the cyclical nature of our earnings.

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Marketing strategy – balanced contract portfolio

As with our corporate strategy and approach to capital allocation, the purpose of our marketing strategy is to deliver value. Our approach is to secure a solid base of earnings and cash flow by maintaining a balanced contract portfolio that optimizes our realized price.

Uranium is not traded in meaningful quantities on a commodity exchange. Utilities have historically bought the majority of their uranium and fuel services products under long-term contracts with suppliers, and have met the rest of their needs on the spot market. We sell uranium and fuel services directly to nuclear utilities around the world as uranium concentrates, UO₂ and UF₆, conversion services, or fuel fabrication. We have a solid portfolio of long-term sales contracts that reflect the long-term, trusting relationships we have with our customers.

In accordance with market conditions, and to mitigate risk, we evaluate the optimal mix of our production, inventory and purchases in order to satisfy our contractual commitments and in order to return the best value possible. During a prolonged period of uncertainty, this could mean leaving our uranium in the ground.

In general, we are always active in the market, buying and selling uranium when it is beneficial for us and in support of our long-term contract portfolio. We undertake activity in the spot and term markets prudently, looking at the prices and other business factors to decide whether it is appropriate to purchase or sell into the spot or term market. Not only is this activity a source of profit, it gives us insight into underlying market fundamentals.

In particular, in 2018, in addition to our purchase commitments, we intend to be active buyers in the spot market. This activity may mean we give up some margin in the near-term, however, we believe it will provide us with the supply flexibility we need to meet our sales commitments and will allow us to preserve the value of our tier-one assets. Our goal is to protect and extend the value of our contract portfolio on terms that recognize the value of our assets and are consistent with our marketing strategy – providing adequate protection when prices go down and allow us to benefit when prices rise.

LONG-TERM CONTRACTING

We deliver large volumes of uranium every year, therefore our net earnings and operating cash flows are affected by changes in the uranium price. Market prices are influenced by the fundamentals of supply and demand, geopolitical events, disruptions in planned supply and demand, and other market factors.

The objectives of our contracting strategy are to:

● maximize realized price while reducing volatility of our future earnings and cash flow

● focus on meeting the nuclear industry’s growing annual uncovered requirements with our future uncommitted supply while ensuring adequate regional diversity

● establish and grow market share with strategic customers

We target a ratio of 40% fixed-pricing and 60% market-related pricing in our portfolio of long-term contracts, including mechanisms to protect us when the market price is declining and allow us to benefit when market prices go up. This is a balanced and flexible approach that allows us to adapt to market conditions and put a floor on our average realized price, and deliver the best value to shareholders over the long term.

This strategy has allowed us to realize prices higher than the market prices during periods of weak uranium demand, and we expect it will enable us to realize increases linked to higher market prices in the future.

Fixed-price contracts for uranium: are typically based on a term-price indicator at the time the contract is accepted and escalated over the term of the contract.

Market-related contracts for uranium: are different from fixed-price contracts in that they may be based on either the spot price or the long-term price, and that price is as quoted at the time of delivery rather than at the time the contract is accepted. These contracts sometimes provide for discounts, and often include floor prices and/or ceiling prices, which are usually escalated over the term of the contract.

Fuel services contracts: the majority of our fuel services contracts are at a fixed price per kgU, escalated over the term of the contract, and reflect the market at the time the contract is accepted.

MANAGEMENT’S DISCUSSION AND ANALYSIS 15

OPTIMIZING THE CONTRACT PORTFOLIO

In today’s weak market environment, we have been working with certain customers to optimize the value of our existing contract portfolio. In cases where a customer is seeking relief due to a challenging policy, operating, or economic environment, we evaluate their specific circumstances and assess their long-term sustainability. Where we deem the customer’s long-term demand to be at risk, we may consider options that allow us to benefit from converting that uncertain future value into certain present value. In contrast, where the customer is considered to have a more certain and predictable future, we may offer relief, for example by blending in more market-related volumes in the near term, but only where the customer is willing to extend the terms and conditions of that contract out into the future, and only where it is beneficial to us.

CONTRACT PORTFOLIO STATUS

We have commitments to sell almost 150 million pounds of U₃O₈ with 39 customers worldwide in our uranium segment, and over 40 million kilograms as UF₆ conversion with 31 customers worldwide in our fuel services segment. The annual average sales commitments over the next five years in our uranium segment is 22 million pounds, with commitment levels through 2020 higher than in 2021 and 2022.

Customers – U₃O₈:

Five largest customers account for 55% of commitments

COMMITTED U₃O₈ SALES BY REGION

Customers – UF₆ conversion:

Five largest customers account for 59% of commitments

COMMITTED UF₆ SALES BY REGION

MANAGING OUR CONTRACT COMMITMENTS

To meet our delivery commitments, we use our uranium supply, which includes uranium obtained from:

● our existing production

● purchases under our JV Inkai agreement, under long-term agreements and in the spot market

● our existing inventory

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We allow sales volumes to vary year-to-year depending on:

● the level of sales commitments in our long-term contract portfolio

● our production volumes

● purchases under existing and/or new arrangements

● discretionary use of inventories

● market opportunities

Focusing on cost efficiency

PRODUCTION COSTS

In order to operate efficiently and cost-effectively, we manage operating costs and improve plant reliability by prudently investing in production infrastructure, new technology, and business process improvements. Like all mining companies, our uranium segment is affected by the cost of inputs such as labour and fuel.

2017 URANIUM OPERATING COSTS BY CATEGORY

            

Operating costs in our fuel services segment are mainly fixed. In 2017, labour accounted for about 56% of the total. The largest variable operating cost is for zirconium, followed by energy (natural gas and electricity), maintenance supplies, and anhydrous hydrogen fluoride.

PURCHASES AND INVENTORY COSTS

Our costs are also affected by the purchases of uranium and conversion services we make under long-term contracts and on the spot market.

To meet our delivery commitments, we make use of our mined production and inventories, and we purchase material where it is beneficial to do so. The cost of purchased material may be higher or lower than our other sources of supply, depending on market conditions. The cost of purchased material affects our cost of sales, which is determined by calculating the average of all of our sources of supply, including opening inventory, production, and purchases.

FINANCIAL IMPACT

As greater certainty returns to the uranium market, based on our view that the market will transition from being supply-driven to being demand-driven, we expect uranium prices will rise to reflect the cost of bringing on new primary production to meet growing demand.

We believe the deliberate and disciplined actions we have taken to reduce supply, streamline operations and reduce costs will help shield the company from the nearer term risks we face and will reward shareholders for their continued patience and support of our strategy to build long-term value.

Committed to our values

Our values are at the core of everything we do and define who we are as a company.

SAFETY AND ENVIRONMENT

The safety of people and protection of the environment are the foundations of everything we do, locally and globally.

MANAGEMENT’S DISCUSSION AND ANALYSIS 17

PEOPLE

We value the contribution of every employee and demonstrate respect for individual dignity, creativity and cultural diversity.

INTEGRITY

We lead by example, earn trust, honour our commitments and conduct our business ethically.

EXCELLENCE

Through leadership, collaboration and innovation, we strive to achieve our full potential and inspire others to reach theirs.

Sustainable development: A key part of our strategy, reflecting our values

Social responsibility, safety of our workforce and the public, as well as environmental protection are top priorities for us. In fact, we have built our corporate objectives around them within our four measures of success: a safe, healthy and rewarding workplace, a clean environment, supportive communities, and outstanding financial performance. Sustainability is at the core of our company culture. It helps us:

● build trust, credibility and corporate reputation

● gain and enhance community support for our operations and plans

● attract and retain employees

● manage risk

● drive innovation and continual improvement to build competitive advantage

Given this, we have sustainable development principles and practices embedded throughout our organization, from our overall corporate strategy to day-to-day operations.

Consequently, we recognize that changes in our operations and support functions, including the suspension of production at Rabbit Lake and curtailment at the US operations in 2016, the temporary suspension of production at our McArthur River/Key Lake operation in 2018, the reduction of the workforce at our northern Saskatchewan operations and at our corporate office, and the changes made to the way our global marketing activities are organized all have a significant impact on the communities where we operate. While we regret the negative impact that these carefully deliberated decisions have on affected employees and other stakeholders, these actions are deemed necessary for the long-term health of the company in a uranium market that continues to be weak and oversupplied. Improving operational efficiency is part of our strategy to effectively manage costs and remain competitive through these low times, while positioning the company and our stakeholders to benefit as the market improves.

SAFE, HEALTHY, REWARDING WORKPLACE

We are committed to living a strong safety culture, while looking to continually improve. As a result of this commitment, we have a long history of strong safety performance at our operations and across the organization.

2017 Highlights:

● several operations reached significant safety milestones, including the Blind River refinery and the Crow Butte operation passing eleven and ten years respectively without a lost time incident

● continued low average dose of radiation to workers, including the Cigar Lake operation as it increased production to licensed capacity

● Port Hope conversion facility, Cameco Fuel Manufacturing and Key Lake made significant improvements in their safety performance over 2016

● recognized for several top employer awards

● continued improvement of safety systems for support groups, such as exploration and corporate facilities

A CLEAN ENVIRONMENT

We are committed to being a leading environmental performer. We strive to be a leader not only by complying with legal requirements, but also by keeping risks as low as reasonably achievable, and looking for opportunities to continually improve our performance.

We track our progress by monitoring the air, water and land near our operations, and by measuring the amount of energy we use and the amount of waste generated. We use this information to help identify opportunities to improve.

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2017 Highlights:

● brought Cigar Lake up to full production without exceeding an environmental limit or having a significant environmental incident

● while readying to implement the new version of the ISO 14001 standard, added Cameco Fuel Manufacturing to our corporate ISO 14001 certification, which now encompasses all Cameco operations

● completed the multi-year implementation of an environmental monitoring database for all Cameco operations

● continued efforts to reduce low level radioactive waste stored at our Fuel Services division facilities

● successfully managed an extended summer shutdown at Key Lake, McArthur River and Cigar Lake with no significant environmental incidents

● implemented new Canadian Standards Association (CSA) environmental standards at our Fuel Services Division facilities

● continued efforts to systematically improve energy conservation and efficiency in our Fuel Services and Saskatchewan facilities

● continued to carry out industry leading research and innovation in groundwater restoration at our US in situ recovery operations

SUPPORTIVE COMMUNITIES

Gaining the trust and support of our communities, indigenous people, and governments is necessary to sustain our business. We earn support and trust through excellent safety and environmental performance, by proactively engaging our stakeholders in an open and transparent way, and by making a difference in communities wherever we operate. These efforts are critical to obtaining and maintaining the necessary regulatory approvals.

2017 Highlights:

● over $170 million in procurement from locally owned northern Saskatchewan companies (80% of total)

● 954 local personnel from northern Saskatchewan (603 Cameco employees, 351 contractors)

● signed a Collaboration Agreement with the Lac La Ronge Indian Band

● for the first time in three years, we held a northern leaders roundtable – featuring nearly 50 northern Saskatchewan leaders, discussing the current uranium market

OUTSTANDING FINANCIAL PERFORMANCE

Long-term financial stability and profitability are essential to our sustainability as a company. We believe that sound governance is the foundation for strong corporate performance.

2017 Highlights:

● continue to achieve an average realized price that outperforms the market

● ranked 32nd out of 242 Canadian companies by Globe and Mail in governance practices

Our governance practices

We believe that sound governance is the foundation for strong corporate performance. Our board of directors is responsible for overseeing management and our strategy and business affairs. Its goal is to ensure we operate as a successful business, optimizing financial returns while effectively managing risk.

In 2017, our board consisted of 11 directors who were selected based on their collective ability to contribute expertise to the broad range of issues the board faces when carrying out its responsibilities in overseeing our business and affairs.

WHAT WE DO:

● Independent board – nine of our ten directors (90%) are independent

● Non-executive chair leads the board – we maintain separate chair and CEO positions and have had a non-executive, independent chair of the board since 2003

● Share ownership – we require our directors and executives to own shares, or have an equity interest in Cameco to align their interests with those of our shareholders and share ownership is disclosed

● Majority voting for directors – the board adopted a majority voting policy in 2006

MANAGEMENT’S DISCUSSION AND ANALYSIS 19

● Strong risk oversight – the board and committees oversee our risk management program and strategic, financial and operational risks

● Formal assessment process – the directors assess the board, committees and individual directors’ performance

● Independent third-party review – the director assessment process is augmented by a third-party review every three years

● Serving on other boards – we limit the number of other public company boards our directors can serve on, and serve on together

● Director recruitment and board succession – we have term limits and a retirement policy for directors

● Diverse board – our board has a diverse mix of skills, background and experience and 30% of this year’s director nominees are female

● Independent advice – board committees have full authority to retain independent advisors to help them carry out their duties and responsibilities

● Code of conduct and ethics – directors, officers and employees must comply with our code of conduct and confirm their compliance every year

● Long-standing shareholder engagement – we communicate openly with shareholders and other stakeholders

● Say on pay – we have held an advisory vote on our approach to executive compensation every year since 2010

More information about our shareholder commitment, our governance principles, how our board operates and profiles of each of our directors can be found in our most recent management proxy circular and on our website at cameco.com/about/board-of-directors.

MONITORING AND MEASUREMENT

We take the integration of sustainable development and measurement of our performance seriously. We have been producing a Sustainable Development (SD) Report since 2005, using the Global Reporting Initiative’s Sustainability Framework (GRI). It is our sustainability report card to our stakeholders. It tells them how we’re performing against globally recognized key indicators that measure our social, environmental and economic impacts in the areas that matter most to them. It provides information about our goals, where we’ve met, exceeded or struggled with them, and how we plan to do better. Our most recent SD Report was released in August, 2016. We produced a data update in 2017, with one more coming in 2018. Our next full report is tentatively scheduled for 2019.

All of our operating sites are ISO 14001 compliant. In addition, we have now transitioned from individual site-based ISO 14001 certifications to a single corporate certification. We have begun to roll our operations into this single certification.

Achievements

We are a five-time Gold award winner through the Progressive Aboriginal Relations program as judged by the Canadian Council for Aboriginal Business. We are also proud to have been named one of Canada’s Top 100 Employers, Saskatchewan’s Top Employers, Canada’s Best Diversity Employers, and Canada’s Top Employers for Young People for 2017. We are a leading employer of indigenous peoples in Canada, and have procured nearly $3.6 billion in services from local suppliers in northern Saskatchewan since 2004.

We encourage you to review our SD report at cameco.com/about/sustainability which outlines our commitment to people and the environment in more detail.

20 CAMECO CORPORATION

Measuring our results

Each year, we set corporate objectives that are aligned with our strategic plan. These objectives fall under our four measures of success, and performance against specific targets under these objectives forms the foundation for a portion of annual employee and executive compensation. See our most recent management proxy circular for more information on how executive compensation is determined.

2017 OBJECTIVES1	TARGET	RESULTS
OUTSTANDING FINANCIAL PERFORMANCE
Earnings measure	Achieve targeted adjusted net earnings.	Did not achieve	●   adjusted net earnings was below the minimum target
Cash flow measure	Achieve cash flow from operations (after working capital changes).	Exceeded	●   cash flow from operations was above the target
SAFE, HEALTHY AND REWARDING WORKPLACE
Workplace safety measure	Strive for no injuries at all Cameco-operated sites. Maintain a long-term downward trend in combined employee and contractor injury frequency and severity, and radiation doses.	Did not achieve	●   injury rates did not meet the planned reduction target for the year ●   average radiation doses remained low and stable
CLEAN ENVIRONMENT
Environmental performance measures	Achieve divisional environmental aspect improvement targets.	Achieved	●   performance was within the targeted range ●   there were no significant environmental incidents in 2017
SUPPORTIVE COMMUNITIES
Stakeholder support measure	Implement Collaboration Agreements by supporting northern business development opportunities and build corporate reputation.	Exceeded	●   sourcing of northern services from Northern Saskatchewan vendors was above the target

¹  Detailed results for our 2017 corporate objectives and the related targets will be provided in our 2018 management proxy circular prior to our Annual Meeting of Shareholders on May 16, 2018.

2018 objectives

OUTSTANDING FINANCIAL PERFORMANCE

●  Achieve targeted adjusted net earnings and cash flow from operations.

SAFE, HEALTHY AND REWARDING WORKPLACE

●  Improve workplace safety performance at all sites.

CLEAN ENVIRONMENT

●  Improve environmental performance at all sites.

SUPPORTIVE COMMUNITIES

●  Build and sustain strong stakeholder support for our activities.

MANAGEMENT’S DISCUSSION AND ANALYSIS 21

Financial results

This section of our MD&A discusses our performance, financial condition and outlook for the future.

23	2017 CONSOLIDATED FINANCIAL RESULTS
34	OUTLOOK FOR 2018
36	LIQUIDITY AND CAPITAL RESOURCES
41	2017 FINANCIAL RESULTS BY SEGMENT
41	URANIUM
43	FUEL SERVICES
43	NUKEM
45	FOURTH QUARTER FINANCIAL RESULTS
45	CONSOLIDATED RESULTS
48	URANIUM
50	FUEL SERVICES
50	NUKEM

22 CAMECO CORPORATION

2017 consolidated financial results

In this MD&A, our 2018 financial outlook and other disclosures relating to our contract portfolio are presented on a basis which excludes the agreement with TEPCO, which is under dispute. See Also of Note on page 7.

HIGHLIGHTS									CHANGE FROM
DECEMBER 31 ($ MILLIONS EXCEPT WHERE INDICATED)	2017			2016			2015		2016 TO 2017
Revenue		2,157			2,431			2,754		(11)%
Gross profit		436			463			697		(6)%
Net earnings (loss) attributable to equity holders		(205	)		(62	)		65		>100%
$ per common share (basic)		(0.52	)		(0.16	)		0.16		>100%
$ per common share (diluted)		(0.52	)		(0.16	)		0.16		>100%
Adjusted net earnings (non-IFRS, see page 24)		59			143			344		(59)%
$ per common share (adjusted and diluted)		0.15			0.36			0.87		(58)%
Cash provided by operations (after working capital changes)		596			312			450		91%

Net earnings

Our net earnings normally trend with revenue, but, in recent years, have been significantly influenced by impairment charges due to the continued weakness in the uranium market.

The following table shows what contributed to the change in net earnings in 2017 compared to 2016 and 2015.

($ MILLIONS)		2017			2016			2015
Net earnings (losses) - previous year			(62	)		65			58
Change in gross profit by segment (we calculate gross profit by deducting from revenue the cost of products and services sold, and depreciation and amortization (D&A), net of hedging benefits)
Uranium	Higher (lower) sales volume		29			(16	)		(27	)
	Lower realized prices ($US)		(222	)		(129	)		(76	)
	Foreign exchange impact on realized prices		(36	)		30			245
	Lower (higher) costs		180			(49	)		(136	)
	change – uranium		(49	)		(164	)		6
Fuel services	Lower sales volume		(5	)		(4	)		(5	)
	Higher realized prices ($Cdn)		21			25			50
	Higher costs		(15	)		(19	)		(22	)
	change – fuel services		1			2			23
NUKEM	Gross profit		14			(70	)		20
	change – NUKEM		14			(70	)		20
Other changes
Lower (higher) administration expenditures			44			(20	)		(10	)
Lower (higher) impairment charges			4			(147	)		112
Lower (higher) exploration expenditures			13			(2	)		6
Change in Rabbit Lake reclamation provision			(34	)		34			-
Lower (higher) loss on disposal of assets			16			(21	)		43
Change in gains or losses on derivatives			22			315			(160	)
Change in foreign exchange gains or losses			(17	)		(65	)		24
Lower loss on equity-accounted investments			-			1			16
Gain on customer contract settlements in 2016			(59	)		59			-
Contract termination fee (SFL) in 2014			-			-			18
Arbitration award in 2014			-			-			(66	)
Debenture redemption premium in 2014			-			-			12
Change in income tax recovery or expense			(91	)		(49	)		(32	)
Other			(7	)		-			(5	)
Net earnings (losses) – current year			(205	)		(62	)		65

MANAGEMENT’S DISCUSSION AND ANALYSIS 23

Impairment charges

In the third quarter, in line with the other disciplined actions we have taken, we made changes to the way our global marketing activities are organized. The changes significantly impact the marketing activities historically performed by NUKEM. As a result, we recognized an impairment charge for the full carrying value of goodwill of $111 million. See note 9 for more information.

During the fourth quarter we announced our plan to temporarily suspend production at the McArthur River/Key Lake operation in 2018. As a result, we have re-evaluated the project to complete the new calciner at Key Lake, which was undertaken to allow for increased production. Given the production suspension, current market conditions, and that we have determined the existing calciner has sufficient capacity to reliably meet our ongoing production requirements, it has been determined that no further investment will be made to complete the project. As a result, we have recognized an impairment charge related to the new calciner of $55 million. See note 8 for more information.

Also during the fourth quarter, we recorded a $184 million write down of our US assets. Due to the continued weakening of the uranium market and the reduction in mineral reserves, we concluded that it was appropriate to recognize an impairment charge for these assets. See note 8 to the financial statements.

Non-IFRS measures

ADJUSTED NET EARNINGS

Adjusted net earnings is a measure that does not have a standardized meaning or a consistent basis of calculation under IFRS (non-IFRS measure). We use this measure as a more meaningful way to compare our financial performance from period to period. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our performance. Adjusted net earnings is our net earnings attributable to equity holders, adjusted to better reflect the underlying financial performance for the reporting period. The adjusted earnings measure reflects the matching of the net benefits of our hedging program with the inflows of foreign currencies in the applicable reporting period, and is adjusted for NUKEM purchase price inventory recovery, impairment charges, Rabbit Lake reclamation provision adjustment, and income taxes on adjustments.

Adjusted net earnings is non-standard supplemental information and should not be considered in isolation or as a substitute for financial information prepared according to accounting standards. Other companies may calculate this measure differently, so you may not be able to make a direct comparison to similar measures presented by other companies.

To facilitate a better understanding of these measures, the table below reconciles adjusted net earnings with our net earnings for the years ended 2017, 2016 and 2015.

($ MILLIONS)	2017			2016			2015
Net earnings (loss) attributable to equity holders		(205	)		(62	)		65
Adjustments
Adjustments on derivatives		(108	)		(130	)		166
NUKEM purchase price inventory recovery		-			(6	)		(3	)
Impairment charges		358			362			215
Rabbit Lake reclamation provision adjustment		-			(34	)		-
Income taxes on adjustments		14			13			(99	)
Adjusted net earnings		59			143			344

24 CAMECO CORPORATION

The following table shows what contributed to the change in adjusted net earnings (non-IFRS measure, see above) in 2017 compared to the same period in 2016 and 2015.

($ MILLIONS)		2017			2016			2015
Net earnings - previous year			143			344			412
Change in gross profit by segment (we calculate gross profit by deducting from revenue the cost of products and services sold, and depreciation and amortization (D&A), net of hedging benefits)
Uranium	Higher (lower) sales volume		29			(16	)		(27	)
	Lower realized prices ($US)		(222	)		(129	)		(76	)
	Foreign exchange impact on realized prices		(36	)		30			245
	Lower (higher) costs		180			(49	)		(136	)
	change – uranium		(49	)		(164	)		6
Fuel services	Lower sales volume		(5	)		(4	)		(5	)
	Higher realized prices ($Cdn)		21			25			50
	Higher costs		(15	)		(19	)		(22	)
	change – fuel services		1			2			23
NUKEM	Gross profit		20			(72	)		22
	change – NUKEM		20			(72	)		22
Other changes
Lower (higher) administration expenditures			44			(20	)		(10	)
Lower (higher) exploration expenditures			13			(2	)		6
Lower (higher) loss on disposal of assets			16			(21	)		1
Change in gains or losses on derivatives			44			19			(40	)
Change in foreign exchange gains or losses			(17	)		(65	)		25
Lower loss on equity-accounted investments			-			-			16
Gain on customer contract settlements in 2016			(59	)		59			-
Contract termination fee (SFL) in 2014			-			-			18
Arbitration award in 2014			-			-			(66	)
Debenture redemption premium in 2014			-			-			12
Change in income tax recovery or expense			(90	)		63			(76	)
Other			(7	)		-			(5	)
Net earnings - current year			59			143			344

Average realized prices

		2017		2016		2015		CHANGE FROM 2016 TO 2017
Uranium1	$US/lb		36.13		41.12		45.19		(12)%
	$Cdn/lb		46.80		54.46		57.58		(14)%
Fuel services	$Cdn/kgU		27.20		25.37		23.37		7%
NUKEM	$Cdn/lb		32.25		47.90		48.82		(33)%

¹  Average realized foreign exchange rate ($US/$Cdn): 2017 – 1.30, 2016 – 1.32 and 2015 – 1.27.

MANAGEMENT’S DISCUSSION AND ANALYSIS 25

Revenue

The following table shows what contributed to the change in revenue for 2017.

($ MILLIONS)
Revenue – 2016	2,431
Uranium
Higher sales volume	114
Lower realized prices ($Cdn)	(258	)
Change in intersegment sales	(4	)
Fuel services
Lower sales volume	(29	)
Higher realized prices ($Cdn)	21
Change in intersegment sales	1
NUKEM
Change in revenue	(70	)
Change in intersegment sales	(49	)
Revenue – 2017	2,157

See 2017 Financial results by segment on page 41 for more detailed discussion.

THREE-YEAR TREND

In 2016, revenue decreased by 12% compared to 2015 due to lower sales revenues in all of our operating segments as a result of reduced sales volumes in response to market conditions. In addition, we had lower revenues in our uranium and NUKEM segments as a result of the lower US dollar average realized price which was due to lower prices on market-related contracts. This was partially offset by further weakening of the Canadian dollar exchange rate realized on sales during 2016. The realized foreign exchange rate was 1.32 compared to 1.27 in 2015.

In 2017, revenue decreased by 11% compared to 2016 due to a decrease in the uranium spot price, resulting in an overall lower average realized price. In addition, prices on fixed price contracts were lower. This was partially offset by an increase in sales volumes in our uranium segment.

Revenue Outlook for 2018

We expect consolidated revenue to decrease in 2018 (outlook of $1,800 million to $1,930 million), based on currently committed sales volumes, due to a decrease in average realized prices in our uranium segment as a result of lower prices under both fixed and market-related contracts and an expected decrease in sales volumes from NUKEM due to the restructuring of our marketing activities. In addition to our purchase and sales commitments, we will be active buying and selling uranium in the spot market if it makes sense for us. If we make additional sales with deliveries in 2018, we would expect our revenue outlook to increase.

In our uranium and fuel services segments, our customers choose when in the year to receive deliveries. As a result, our quarterly delivery patterns and, therefore, our sales volumes and revenue can vary significantly. We expect the quarterly distribution of uranium deliveries in 2018 to be weighted to the second half of the year as shown below. However, not all delivery notices have been received to date and the expected delivery pattern could change. Typically, we receive notices six months in advance of the requested delivery date.

26 CAMECO CORPORATION

ANNUAL DELIVERY VOLUME DISTRIBUTION QUARTER

Corporate expenses

ADMINISTRATION

($ MILLIONS)	2017		2016		CHANGE
Direct administration		151		195		(23)%
Stock-based compensation		12		12		-
Total administration		163		207		(21)%

Direct administration costs in 2017 were $44 million lower than in 2016. The decrease was mainly due to higher costs in 2016 related to:

· one-time costs related to collaboration agreements

· charges related to the consolidation of office space

· legal costs as our CRA dispute progressed towards trial

· restructuring of our NUKEM segment

We recorded $12 million in stock-based compensation expenses in 2017 under our stock option, restricted share unit, deferred share unit, performance share unit and phantom stock option plans, the same as in 2016. See note 22 to the financial statements.

Administration outlook for 2018

We expect administration costs (not including stock-based compensation) to be between $120 million to $130 million, lower compared to 2017, due to the restructuring we completed in 2017, our continued actions to reduce costs and lower expected costs related to our CRA litigation.

EXPLORATION

Our 2017 exploration activities focused on Canada and Australia. Our spend decreased from $43 million in 2016 to $30 million in 2017.

Exploration outlook for 2018

We expect exploration expenses to be about $20 million in 2018 due to an overall decrease in activity on our regional exploration projects. The focus for 2018 will be on our core projects in Saskatchewan.

FINANCE COSTS

Finance costs were $111 million, largely unchanged from $112 million in 2016. See note 17 to the financial statements.

FINANCE INCOME

Finance income was $5 million compared to $4 million in 2016.

MANAGEMENT’S DISCUSSION AND ANALYSIS 27

GAINS AND LOSSES ON DERIVATIVES

In 2017, we recorded $56 million in gains on our derivatives compared to $34 million in 2016. The increase reflects more significant strengthening in the Canadian dollar compared to the US dollar in 2017 compared to 2016. See Foreign exchange on page 32 and note 24 to the financial statements.

INCOME TAXES

We recorded an income tax recovery of $3 million in 2017 compared to a recovery of $94 million in 2016. The decrease in recovery was primarily due to the change in the distribution of earnings between jurisdictions compared to 2016. See note 19 to the financial statements.

In 2017, we recorded losses of $54 million in Canada compared to losses of $464 million in 2016, while earnings in foreign jurisdictions decreased to a loss of $154 million from earnings of $310 million. The tax rate in Canada is higher than the average of the rates in the foreign jurisdictions in which our subsidiaries operate.

On an adjusted earnings basis, we recognized a tax recovery of $17 million in 2017 compared to a recovery of $107 million in 2016. The table below presents our adjusted earnings and adjusted income tax expenses attributable to Canadian and foreign jurisdictions.

($ MILLIONS)	2017			2016
Pre-tax adjusted earnings1
Canada		(101	)		(504	)
Foreign		143			542
Total pre-tax adjusted earnings		42			38
Adjusted income taxes1
Canada		(27	)		(128	)
Foreign		10			21
Adjusted income tax recovery		(17	)		(107	)

¹  Pre-tax adjusted earnings and adjusted income taxes are non-IFRS measures. Our IFRS-based measures have been adjusted by the amounts reflected in the table in adjusted net earnings (non-IFRS measures on page 24).

TRANSFER PRICING DISPUTES

We have been reporting on our transfer pricing disputes with CRA since 2008, when it originated, and with the IRS since the first quarter of 2015. We have now settled our IRS dispute related to the 2009 through 2012 tax years, and in the third quarter we paid $198,000 (US) comprised of $122,000 (US) taxes owing plus interest.

Below, we discuss the general nature of transfer pricing disputes and, more specifically, the ongoing dispute we have.

Transfer pricing is a complex area of tax law, and it is difficult to predict the outcome of cases like ours. However, tax authorities generally test two things:

• the governance (structure) of the corporate entities involved in the transactions

• the price at which goods and services are sold by one member of a corporate group to another

We have a global customer base and we established a marketing and trading structure involving foreign subsidiaries, including Cameco Europe Limited (CEL), which entered into various intercompany arrangements, including purchase and sale agreements, as well as uranium purchase and sale agreements with third parties. Cameco and its subsidiaries made reasonable efforts to put arm’s-length transfer pricing arrangements in place, and these arrangements expose the parties to the risks and rewards accruing to them under these contracts. The intercompany contract prices are generally comparable to those established in comparable contracts entered into between arm’s-length parties at that time.

For the years 2003 to 2011, CRA has shifted CEL’s income (as recalculated by CRA) back to Canada and applied statutory tax rates, interest and instalment penalties, and, from 2007 to 2011, transfer pricing penalties. Taxes of approximately $321 million for the 2003 – 2017 years have already been paid to date in a jurisdiction outside Canada, and we are considering our options under bilateral international tax treaties to limit double taxation of this income. There is a risk that we will not be successful in eliminating all potential double taxation. The expected income adjustments under our CRA tax dispute are represented by the amounts claimed by CRA and are described below.

28 CAMECO CORPORATION

CRA dispute

Since 2008, CRA has disputed our corporate structure and the related transfer pricing methodology we used for certain intercompany uranium sale and purchase agreements. To date, we received notices of reassessment for our 2003 through 2011 tax returns. We have recorded a cumulative tax provision of $61 million, where an argument could be made that, based on our methodology, our transfer price may have fallen outside of an appropriate range of pricing in uranium contracts for the period from 2003 through 2017. We are confident that we will be successful in our case and continue to believe the ultimate resolution of this matter will not be material to our financial position, results of operations and cash flows in the year(s) of resolution.

For the years 2003 through 2011, CRA issued notices of reassessment for approximately $4.1 billion of additional income for Canadian tax purposes, which would result in a related tax expense of about $1.2 billion. CRA has also issued notices of reassessment for transfer pricing penalties for the years 2007 through 2011 in the amount of $371 million. The Canadian income tax rules include provisions that require larger companies like us to remit or otherwise secure 50% of the cash tax plus related interest and penalties at the time of reassessment. To date, under these provisions, after applying elective deductions, we have remitted a net amount of $303 million in cash. In addition, we have provided $421 million in letters of credit (LC) to secure 50% of the cash taxes and related interest amounts reassessed after 2014. The amounts paid or secured are shown in the table below.

YEAR PAID ($ MILLIONS)	CASH TAXES		INTEREST AND INSTALMENT PENALTIES		TRANSFER PRICING         PENALTIES		TOTAL		CASH   REMITTANCE		SECURED BY LC
Prior to 2014		1		22		36		59		59		-
2014		106		47		-		153		153		-
2015		202		71		79		352		20		332
2016		51		38		31		120		32		88
2017		-		1		39		40		39		1
Total		360		179		185		724		303		421

Using the methodology we believe CRA will continue to apply, and including the $4.1 billion already reassessed, we expect to receive notices of reassessment for a total of approximately $8.4 billion of additional income taxable in Canada for the years 2003 through 2017, which would result in a related tax expense of approximately $2.5 billion. As well, CRA may continue to apply transfer pricing penalties to taxation years subsequent to 2011. As a result, we estimate that cash taxes and transfer pricing penalties for these years would be between $1.95 billion and $2.15 billion. In addition, we estimate there would be interest and instalment penalties applied that would be material to us. While in dispute, we would be required to remit or otherwise provide security for 50% of the cash taxes and transfer pricing penalties (between $970 million and $1.07 billion), plus related interest and instalment penalties assessed, which would be material to us.

Under the Canadian federal and provincial tax rules, the amount required to be paid or secured each year will depend on the amount of income reassessed in that year and the availability of elective deductions and tax loss carryovers. CRA has decided to disallow the use of any loss carry-backs for any transfer pricing adjustment, starting with the 2008 tax year. This does not impact the anticipated income tax expense for a particular year, but does impact the timing of any required security or payment. As noted above, beginning with the 2010 tax year, as an alternative to remitting cash, we used letters of credit to satisfy our obligations related to the reassessed income tax and related interest amounts. We believe we will be able to continue to provide security in the form of letters of credit to satisfy these requirements. The estimated amounts summarized in the table below reflect actual amounts paid or secured and estimated future amounts owing based on the actual and expected reassessments for the years 2003 through 2017, and include the expected timing adjustment for the inability to use any loss carry-backs starting with the 2008 tax year. We plan to update this table annually to include the estimated impact of reassessments expected for completed years subsequent to 2017.

MANAGEMENT’S DISCUSSION AND ANALYSIS 29

$ MILLIONS	2003-2017		2018-2019		2020-2023		TOTAL
50% of cash taxes and transfer pricing penalties paid, secured or owing in the period
Cash payments		226		65 - 90		120 - 145		410 - 460
Secured by letters of credit		319		10 - 35		230 - 255		560 - 610
Total paid1		545		75 - 125		350 - 400		970 - 1070

¹ These amounts do not include interest and instalment penalties, which totaled approximately $179 million to December 31, 2017.

In light of our view of the likely outcome of the case as described above, we expect to recover the amounts remitted, including the $724 million already paid or otherwise secured to date.

We have spent a total of about $57 million disputing the CRA reassessments and presenting our appeal in Tax Court. This amount includes legal fees, expert witness fees, consultant fees, filing expenses, and other costs related to the case, from the time we started specifically tracking such costs in 2009, through 2017. The largest expenditures have been incurred in 2016 and 2017 during trial preparation and court proceedings. If the decision of the Tax Court is appealed, additional costs will be incurred.

The trial for the 2003, 2005 and 2006 tax years concluded on September 13, 2017 and we expect to receive a Tax Court decision within six to 18 months of that date. Once the decision is issued, the rules that apply to our case permit either party to appeal the Tax Court decision to the Federal Court of Appeal. The decision of the Federal Court of Appeal can be appealed to the Supreme Court of Canada, but only if the Supreme Court agrees to hear the appeal. An appeal of a Tax Court of Canada decision to the Federal Court of Appeal must be filed within 30 days after the issuance of a Tax Court decision (excluding the months of July and August). The request to appeal a decision of the Federal Court of Appeal to the Supreme Court of Canada must be made within 60 days of issuance of a Federal Court of Appeal decision.

In the event that either party appeals the Tax Court decision, we anticipate that it would take about two years from the date the Tax Court decision is issued to receive a decision from the Federal Court of Appeal. If a further appeal is pursued, it would likely take about two years from the date the Federal Court of Appeal decision is issued to receive a decision from the Supreme Court of Canada.

The total tax amount reassessed for the 2003, 2005 and 2006 tax years was $11 million, and we remitted 50% of such amount at the time the reassessments were issued. In certain circumstances, including where neither party pursues an appeal of the Tax Court decision, CRA would issue revised reassessments for the 2003, 2005 and 2006 tax years that comply with the Tax Court decision. Following those reassessments, the corresponding tax payments or refunds, as applicable, plus interest, would be made or received, as applicable, within a reasonable period. Where one or more appeals are pursued by either party, reassessments might not be issued until after the decision on the final appeal is received. If the Tax Court decision results in an aggregate tax amount in excess of what we have already remitted, and we pursue an appeal of that decision, we may be required to remit additional cash tax amounts not exceeding the remaining unpaid portion of the original $11 million (plus interest) while that appeal is underway. Where the Tax Court decision results in a refund of the remitted portion of the original $11 million (with interest), we may not receive that refund until and unless the Tax Court decision is confirmed after the final appeal.

Once the Tax Court has delivered a decision for the 2003, 2005 and 2006 tax years we will consider how the decision relates to other years in issue (being 2004 and years subsequent to 2006). While the decision would not be legally binding for any year other than the trial years, we expect the ultimate decision for the trial years to be an important factor in resolving the dispute for the other years in issue.

30 CAMECO CORPORATION

Caution about forward-looking information relating to our CRA tax dispute

This discussion of our expectations relating to our tax dispute with CRA and future tax reassessments by CRA is forward-looking information that is based upon the assumptions and subject to the material risks discussed under the heading Caution about forward-looking information beginning on page 2 and also on the more specific assumptions and risks listed below. Actual outcomes may vary significantly.

Assumptions

· CRA will reassess us for the years 2012 through 2017 using a similar methodology as for the years 2003 through 2011, and the reassessments will be issued on the basis we expect

· we will be able to apply elective deductions and utilize letters of credit to the extent anticipated

· CRA will seek to impose transfer pricing penalties (in a manner consistent with penalties charged in the years 2007 through 2011) in addition to interest charges and instalment penalties

· we will be substantially successful in our dispute with CRA and the cumulative tax provision of $61 million to date will be adequate to satisfy any tax liability resulting from the outcome of the dispute to date

Material risks that could cause actual results to differ materially

· CRA reassesses us for years 2012 through 2017 using a different methodology than for years 2003 through 2011, or we are unable to utilize elective deductions or letters of credit to the extent anticipated, resulting in the required cash payments or security provided to CRA pending the outcome of the dispute being higher than expected

· the time lag for the reassessments for each year is different than we currently expect

· we are unsuccessful and the outcome of our dispute with CRA results in significantly higher cash taxes, interest charges and penalties than the amount of our cumulative tax provision, which could have a material adverse effect on our liquidity, financial position, results of operations and cash flows

· cash tax payable increases due to unanticipated adjustments by CRA not related to transfer pricing

· we are unable to effectively eliminate all double taxation

Tax outlook for 2018

On an adjusted net earnings basis, we expect a tax recovery of $40 to $50 million in 2018 as care and maintenance costs at our McArthur River/Key Lake operation will decrease earnings in Canada.

Our consolidated tax rate is a blend of the statutory rates applicable to taxable income earned or tax losses incurred in Canada and in our foreign subsidiaries. We have a global customer base and we have established a marketing and trading structure involving foreign subsidiaries, which entered into various intercompany purchase and sale arrangements, as well as uranium purchase and sale agreements with third parties. Cameco and its subsidiaries made reasonable efforts to put arm’s-length transfer pricing arrangements in place, and these arrangements expose the parties to the risks and rewards accruing to them under these contracts. The intercompany contract prices are generally comparable to those established in comparable contracts between arm’s-length parties entered into at that time. Beginning in 2016, many of the existing intercompany purchase and sale arrangements in our portfolio expired, and were replaced with new intercompany arrangements which reflect current market conditions. In addition, we recently changed our global marketing organization. The existing purchase and sale arrangements will continue to be in place until they expire. As the existing contracts expire, we anticipate that more income will be earned in Canada.

In 2019, we expect our consolidated tax rate will transition to a modest expense, and then, trend toward the Canadian statutory rate in the longer term. The actual effective tax rate will vary from year-to-year, primarily due to the actual distribution of earnings among jurisdictions and the market conditions at the time transactions occur under both our intercompany and third-party purchase and sale arrangements.

During December 2017, United States (US) tax reform legislation was substantively enacted. This new legislation will not result in a significant impact on our financial statements as we derecognized the amounts related to our US deferred tax asset in 2015. At that time, it was determined that it was no longer probable that there would be sufficient taxable profit in the future against which the US operating losses and other tax deductions could be used. The change in legislation does however, significantly reduce the value of our unrecognized US deferred tax assets due to the US tax rate decrease. In addition, we have alternative minimum tax credits of US $4,073,479 that will be refunded between 2018 and 2021.

MANAGEMENT’S DISCUSSION AND ANALYSIS 31

FOREIGN EXCHANGE

The exchange rate between the Canadian dollar and US dollar affects the financial results of our uranium and fuel services segments.

We sell the majority of our uranium and fuel services products under long-term sales contracts, which are routinely denominated in US dollars, while our production costs are largely denominated in Canadian dollars. To provide cash flow predictability we hedge a portion of our net US/Cdn exposure (e.g. total US dollar sales less US dollar expenditures and product purchases) to manage shorter term exchange rate volatility.

Our risk management policy is based on a 60-month period and permits us to hedge 35% to 100% of our expected net exposure in the first 12 month period. Our normal practice is to layer in hedge contracts over a three- to four-year period with the hedge percentage being highest in the first 12 months and decreasing hedge percentages in subsequent years. The portion of our net exposure that remains unhedged is subject to prevailing market exchange rates for the period. Therefore, our results are affected by the movements in the exchange rate on our hedge portfolio (explained below), and on the unhedged portion of our net exposure. A weakening Canadian dollar would have a positive effect on the unhedged exposure, and a strengthening Canadian dollar would have a negative effect. See Revenue, adjusted net earnings, and cash flow sensitivity analysis on page 35 for more information on how a change in the exchange rate will impact our revenue, cash flow, adjusted net earnings (ANE), and gains and losses on derivatives, presented on an ANE basis.

Impact of hedging on IFRS earnings

We do not use hedge accounting under IFRS and, therefore, we are required to report gains and losses on all hedging activity, both for contracts that close in the period and those that remain outstanding at the end of the period. For the contracts that remain outstanding, we must treat them as though they were settled at the end of the reporting period (mark-to-market).

However, we do not believe the gains and losses that we are required to report under IFRS appropriately reflect the intent of our hedging activities, so we make adjustments in calculating our ANE to better reflect the benefits of our hedging program in the applicable reporting period.

Impact of hedging on ANE

We designate contracts for use in particular periods, based on our expected net exposure in that period. Hedge contracts are layered in over time based on this expected net exposure. The result is that our current hedge portfolio is made up of a number of contracts which are currently designated to net exposures we expect in 2018, 2019 and 2020 and we will recognize the gains or losses in ANE in those periods.

For the purposes of ANE, gains and losses on derivatives are reported based on the difference between the effective hedge rate of the contracts designated for use in the particular period and the exchange rate at the time of settlement. This results in an adjustment to current period IFRS earnings to effectively remove reported gains or losses on derivatives that arise from contracts put in place for use in future periods. The effective hedge rate will lag the market in periods of rapid currency movement. See Non-IFRS measures on page 24.

The table below provides a summary of our hedge portfolio at December 31, 2017. You can use this information to estimate the expected gains or losses on derivatives for 2018 on an ANE basis. However, if we add contracts to the portfolio that are designated for use in 2018 or if there are changes in the US/Cdn exchange rates in the year, those expected gains or losses could change.

32 CAMECO CORPORATION

HEDGE PORTFOLIO SUMMARY

DECEMBER 31, 2017 ($ MILLIONS)		2018	AFTER 2018		TOTAL
US dollar forward contracts	($ millions)	390		195		585
Average contract rate 1	(US/Cdn dollar)	1.30		1.28		1.30
US dollar option contracts	($ millions)	150		185		335
Average contract rate range1	(US/Cdn dollar)	1.27 to 1.31		1.26 to 1.31		1.26 to 1.31
Total US dollar hedge contracts	($ millions)	540		380		920
Effective hedge rate range2	(US/Cdn dollar)	1.23 to 1.25		1.26 to 1.28		1.24 to 1.26
Hedge ratio3		55%		10%		19%

¹ The average contract rate is the weighted average of the rates stipulated in the outstanding contracts.

² The effective hedge rate is the exchange rate on the original hedge contract at the time it was established and designated for use. Therefore the effective hedge rate range shown reflects an average of contract exchange rates at the time of designation.

³ Hedge ratio is calculated by dividing the amount (in foreign currency) of outstanding derivative contracts by estimated future net exposures.

At December 31, 2017:

● The value of the US dollar relative to the Canadian dollar was $1.00 (US) for $1.25 (Cdn), down from $1.00 (US) for $1.34 (Cdn) at December 31, 2016. The exchange rate averaged $1.00 (US) for $1.30 (Cdn) over the year.

● The mark-to-market position on all foreign exchange contracts was a $34 million gain compared to a $25 million loss at December 31, 2016.

We manage counterparty risk associated with hedging by dealing with highly rated counterparties and limiting our exposure. At December 31, 2017, all of our hedging counterparties had a Standard & Poor’s (S&P) credit rating of A or better.

For information on the impact of foreign exchange on our intercompany balances, see note 24 to the financial statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS 33

Outlook for 2018

Our strategy is to focus on our tier-one assets and profitably produce at a pace aligned with market signals, in order to preserve the value of those assets and increase long-term shareholder value, and to do that with a focus on safety, people and the environment.

Our outlook for 2018 reflects the expenditures necessary to help us achieve our strategy and is based on the assumptions found below the table, including a given uranium spot price, uranium term price, and foreign exchange rate. For more information on how changes in the exchange rate or uranium prices can impact our outlook see Revenue, adjusted net earnings, and cash flow sensitivity analysis on page 35, and Foreign exchange on page 32.

Our 2018 financial outlook is presented on the basis of equity accounting for our minority ownership interest in JV Inkai. Under equity accounting, our share of the profits earned by JV Inkai on the sale of its production will be included in “income from equity-accounted investees” on our consolidated statement of earnings. Our share of production will be purchased at a discount to the spot price and included at this value in inventory. In addition, JV Inkai capital is not included in our outlook for capital expenditures. Please see JV Inkai Planning for the future on page 67 and Capital spending on page 37 for more details.

In addition, the financial outlook and other disclosures relating to our contract portfolio have been presented on a basis that excludes our contract with TEPCO, which is under dispute.

The changes made to the organization of our global marketing activities in 2017, consolidating of all future Canadian and international marketing activities in Saskatoon, had a significant impact on the activities historically performed by NUKEM. As a result, we will no longer provide outlook for NUKEM.

We do not provide an outlook for the items in the table that are marked with a dash.

See 2017 Financial results by segment on page 41 for details.

2018 FINANCIAL OUTLOOK

	CONSOLIDATED		URANIUM		FUEL SERVICES
EXPECTED CONTRIBUTION TO GROSS PROFIT		100%		85%		15%
Production (owned and operated properties)		-		9.1 million lbs		9 to 10 million kgU
Purchases		-		8 to 9 million lbs1		-
Sales/delivery volume2		-		32 to 33 million lbs3		11 to 12 million kgU
Revenue 2		$1,800-1,930 million		$1,460-1,550 million4		$280-310
Average realized price3		-		$46.30/lb4		-
Average unit cost of sales (including D&A)		-		$38.00-40.00/lb5		$21.60-22.60/kgU
Direct administration costs6		$120-130 million		-		-
Exploration costs		-		$20 million		-
Expected loss on derivatives - ANE basis4		$0-10 million		-		-
Tax recovery - ANE basis7		$40-50 million		-		-
Capital expenditures		$90 million		-		-

¹  Based on the volumes we currently have commitments to acquire under contract in 2018. This includes our JV Inkai purchases.

²  Our 2018 outlook for sales volume and revenue does not include sales between our uranium, fuel services and NUKEM segments.

³  Based on the volumes we currently have commitments to deliver under contract in 2018.

⁴  Based on a uranium spot price of $22.00 (US) per pound (the Ux spot price as of January 31, 2018), a long-term price indicator of $30.00 (US) per pound (the Ux long-term indicator on January 31, 2018) and an exchange rate of $1.00 (US) for $1.25 (Cdn).

⁵  Based on the expected unit cost of sales for produced material and committed long-term purchases including our JV Inkai purchases. If we make discretionary purchases in 2018, then we expect the overall unit cost of sales may be affected.

⁶  Direct administration costs do not include stock-based compensation expenses. See page 27 for more information.

⁷  Our outlook for the tax recovery is based on adjusted net earnings and the other assumptions listed in the table. The outlook does not include our share of taxes on JV Inkai profits as the income from JV Inkai is net of taxes. If other assumptions change then the expected recovery may be affected.

34 CAMECO CORPORATION

We now expect sales volumes for 2018 to be between 32 and 33 million pounds (previously 28 to 30 million pounds). The increase in our expected deliveries is primarily due to optimization of our contract portfolio, where we have brought forward deliveries into 2018.

REVENUE, ADJUSTED NET EARNINGS, AND CASH FLOW SENSITIVITY ANALYSIS

		IMPACT ON:
FOR 2018 ($ MILLIONS)	CHANGE	REVENUE		ANE		CASH FLOW
Uranium spot and term price1	$5(US)/lb increase		54		32		42
	$5(US)/lb decrease		(53)		(31)		(41)
Value of Canadian dollar vs US dollar	One cent decrease in CAD		14		4		4
	One cent increase in CAD		(14)		(4)		(4)

¹  Assuming change in both Ux spot price ($22.00 (US) per pound on January 31, 2018) and the Ux long-term price indicator ($30.00 (US) per pound on January 31, 2018).

PRICE SENSITIVITY ANALYSIS: URANIUM SEGMENT

The following table is not a forecast of prices we expect to receive. The prices we actually realize will be different from the prices shown in the table. It is designed to indicate how the portfolio of long-term contracts we had in place on December 31, 2017 would respond to different spot prices. In other words, we would realize these prices only if the contract portfolio remained the same as it was on December 31, 2017, and none of the assumptions we list below change.

We intend to update this table each quarter in our MD&A to reflect deliveries made and changes to our contract portfolio. As a result, we expect the table to change from quarter to quarter.

Expected realized uranium price sensitivity under various spot price assumptions

(rounded to the nearest $1.00)

SPOT PRICES ($US/lb U3O8)	$20		$40		$60		$80		$100		$120		$140
2019		33		43		55		65		74		81		87
2020		31		41		55		64		73		81		87
2021		28		41		55		66		75		84		93
2022		27		41		56		66		76		85		95

The table illustrates the mix of long-term contracts in our December 31, 2017 portfolio, and is consistent with our marketing strategy. It has been updated to reflect contracts entered into up to December 31, 2017.

Our portfolio includes a mix of fixed-price and market-related contracts, which we target at a 40:60 ratio. Those that are fixed at lower prices or have low ceiling prices will yield prices that are lower than current market prices.

Our portfolio is affected by more than just the spot price. We made the following assumptions (which are not forecasts) to create the table:

Sales

· sales volumes on average of 22 million pounds per year, with commitment levels in 2018 through 2020 higher than in 2021 and 2022

· excludes sales between our uranium, fuel services and NUKEM segments

· excludes the contract under dispute with TEPCO

Deliveries

· deliveries include best estimates of requirements contracts and contracts with volume flex provisions

Annual inflation

· is 2% in the US

Prices

· the average long-term price indicator is the same as the average spot price for the entire year (a simplified approach for this purpose only). Since 1996, the long-term price indicator has averaged 20% higher than the spot price. This differential has varied significantly. Assuming the long-term price is at a premium to spot, the prices in the table and graph will be higher.

MANAGEMENT’S DISCUSSION AND ANALYSIS 35

Liquidity and capital resources

Our financial objective is to ensure we have the cash and debt capacity to fund our operating activities, investments and other financial obligations.

At the end of 2017, we had cash and short-term investments of $592 million, while our total debt amounted to $1.5 billion.

We have large, creditworthy customers that continue to need uranium even during weak economic conditions, and we expect the uranium contract portfolio we have built to continue to provide a solid revenue stream. Over the next five years, we have commitments to deliver an average of 22 million pounds per year, with commitments levels in 2018 through 2020 higher than in 2021 and 2022.

In the currently weak uranium price environment, our focus is on preserving the value of our tier-one assets and reducing our operating, capital and general and administrative spending. We have a number of alternatives to fund future capital requirements, including using our operating cash flow, drawing on our existing credit facilities, entering new credit facilities, and raising additional capital through debt or equity financings. We are always considering our financing options so we can take advantage of favourable market conditions when they arise. Due to the deliberate cost reduction measures implemented over the past five years, the reduction in our 2018 dividend, and the temporary suspension of production at our McArthur River/Key Lake operation, we expect to generate significant cash flow in 2018. Therefore, we expect our cash balances and operating cash flows to meet our capital requirements during 2018, and will help position us to self-manage risk.

We have an ongoing transfer pricing dispute with CRA. See page 28 for more information. Until this dispute is resolved, we expect to pay cash or provide security in the form of letters of credit for future amounts owing to the Government of Canada for 50% of the cash taxes payable and the related interest and penalties. We have provided an estimate of the amount and timing of the expected cash taxes and transfer pricing penalties paid, secured or owing in the table on page 30.

FINANCIAL CONDITION

	2017		2016
Cash position ($ millions) (cash and cash equivalents)		592		320
Cash provided by operations ($ millions) (net cash flow generated by our operating activities after changes in working capital)		596		312
Cash provided by operations/net debt (net debt is total consolidated debt, less cash position)		66%		27%
Net debt/total capitalization (total capitalization is net debt and equity)		16%		18%

CREDIT RATINGS

The credit ratings assigned to our securities by external ratings agencies are important to our ability to raise capital at competitive pricing to support our business operations. We remain focused on maintaining our investment-grade credit rating.

Third-party ratings for our commercial paper and senior debt as of February 7, 2018:

SECURITY	DBRS		S&P
Commercial paper		R-2 (high)		A-21
Senior unsecured debentures		BBB (high)		BBB1
Rating trend / rating outlook		Negative2		Negative3

¹  On February 24, 2017, S&P lowered its long term corporate credit rating from BBB+ to BBB and commercial paper to A-2.

²  On May 26, 2017, DBRS changed Cameco’s rating trend to negative from stable.

³  On November 14, 2017, S&P changed Cameco’s rating outlook to negative from stable.

DBRS provides guidance for the outlook of the assigned rating using the rating trend. The rating trend represents their assessment of the likelihood and direction that the rating could change in the future, should present tendencies continue, or in some cases, if challenges are not overcome.

S&P uses rating outlooks to assess the potential direction of a long-term credit rating over the intermediate term. Their outlook indicates the likelihood that the rating could change in the future.

36 CAMECO CORPORATION

The rating agencies may revise or withdraw these ratings if they believe circumstances warrant. A change in our credit ratings could affect our cost of funding and our access to capital through the capital markets.

Liquidity

($ MILLIONS)	2017			2016
Cash and cash equivalents at beginning of year		320			459
Cash from operations		596			312
Investment activities
Additions to property, plant and equipment and acquisitions		(114	)		(217	)
Other investing activities		21			(1	)
Financing activities
Interest paid		(69	)		(71	)
Dividends		(158	)		(158	)
Exchange rate on changes on foreign currency cash balances		(4	)		(4	)
Cash and cash equivalents at end of year		592			320

CASH FROM OPERATIONS

Cash from operations was 91% higher than in 2016 due in part to a decrease in working capital requirements. This was a result of a decrease in inventory compared to an increase in 2016. Working capital required $156 million less in 2017. In addition, while we had lower gross profits in our operating segments, less cash was required by our hedge portfolio as derivative contracts matured and cost reduction measures resulted in a lower use of cash. Not including working capital requirements, our operating cash flows in the year were up $128 million. See note 21 to the financial statements.

INVESTING ACTIVITIES

Cash used in investing includes acquisitions and capital spending.

Capital spending

We classify capital spending as sustaining, capacity replacement or growth. As a mining company, sustaining capital is the money we spend to keep our facilities running in their present state, which would follow a gradually decreasing production curve, while capacity replacement capital is spent to maintain current production levels at those operations. Growth capital is money we invest to generate incremental production, and for business development.

CAMECO’S SHARE ($ MILLIONS)	2017 PLAN1		2017 ACTUAL			2018 PLAN
Sustaining capital
McArthur River/Key Lake		10		12			5
Cigar Lake		10		10			20
US ISR		5		3			-
Inkai		10		8			-
Fuel services		15		11			30
Other		5		6			-
Total sustaining capital		55		50			55
Capacity replacement capital
McArthur River/Key Lake		35		34			-
Cigar Lake		35		30			35
Inkai		15		12			-
Total capacity replacement capital		85		76			35
Growth capital
McArthur River/Key Lake		10		10			-
Cigar Lake		10		2			-
Inkai		-		5			-
Total growth capital		20		17			-
Total uranium & fuel services		160		143	2		90
JV Inkai (our 40% share)3		-		-			24

¹  Capital spending outlook was updated to $175 million (from $190 million) in our second quarter MD&A and to $160 million (from $175 million) in our third quarter MD&A.

²  Total uranium & fuel services capital spending does not include adjustments for revenue from sales of pre-commercial production from Inkai block 3.

³  Our share of JV Inkai capital spending for the 2018 plan is shown separately on the basis of equity accounting for our minority ownership interest. JV Inkai cash flows are expected to cover capital expenditures in 2018.

MANAGEMENT’S DISCUSSION AND ANALYSIS  37

Outlook for investing activities

CAMECO’S SHARE ($ MILLIONS)	2019 PLAN		2020 PLAN
Total uranium & fuel services		100-150		100-150
Sustaining capital		55-80		55-80
Capacity replacement capital		45-70		45-70
Growth capital		-		-

We expect total 2018 capital expenditures for uranium and fuel services to be about 37% lower than in 2017 mainly due to the temporary suspension of operations at McArthur River/Key Lake, and the removal of capital spend at JV Inkai which will now be reflected in our overall investment due to the change to equity accounting. Capital expenditures for JV Inkai are expected to be covered by JV Inkai cash flows in 2018.

Major sustaining and capacity replacement expenditures in 2018 include:

● Fuel Services – ramp up of work on our Vision in Motion project

● Cigar Lake – work to expand freezing capacity and freeze hole drilling

Our expectation of capital spend in 2019 has been reduced to between $100 million and $150 million (previously $200 million to $250 million) as a result of the operational changes that resulted in cost savings, and removal of JV Inkai capital.

This information regarding currently expected capital expenditures for future periods is forward-looking information, and is based upon the assumptions and subject to the material risks discussed on pages 2 and 3. Our actual capital expenditures for future periods may be significantly different.

FINANCING ACTIVITIES

Cash from financing includes borrowing and repaying debt, and other financial transactions including paying dividends and providing financial assurance.

Long-term contractual obligations

DECEMBER 31 ($ MILLIONS)	2018		2019 AND 2020		2021 AND 2022		2023 AND BEYOND		TOTAL
Long-term debt		-		500		400		600		1,500
Interest on long-term debt		69		110		82		144		405
Provision for reclamation		37		88		99		828		1,052
Provision for waste disposal		2		2		4		-		8
Other liabilities		-		-		-		75		75
Capital commitments		23		-		-		-		23
Total		131		700		585		1,647		3,063

We have contractual capital commitments of approximately $23 million at December 31, 2017. Certain of the contractual commitments may contain cancellation clauses; however, we disclose the commitments based on management’s intent to fulfil the contracts.

We have unsecured lines of credit of about $2.8 billion, which include the following:

● A $1.25 billion unsecured revolving credit facility that matures November 1, 2021. Each year on the anniversary date, and upon mutual agreement, the facility can be extended for an additional year. In addition to borrowing directly from this facility, we can use up to $100 million of it to issue letters of credit. We may increase the revolving credit facility above $1.25 billion, by increments of no less than $50 million, up to a total of $1.75 billion. The facility ranks equally with all of our other senior debt. At December 31, 2017, there were no amounts outstanding under this facility.

● At December 31, 2017, we had approximately $1.5 billion outstanding in letters of credit provided by various financial institutions. We use these facilities mainly to provide financial assurance for future decommissioning and reclamation of our operating sites, for our obligations relating to the CRA dispute, and as overdraft protection.

38 CAMECO CORPORATION

In total we have $1.5 billion in senior unsecured debentures outstanding:

● $500 million bearing interest at 5.67% per year, maturing on September 2, 2019

● $400 million bearing interest at 3.75% per year, maturing on November 14, 2022

● $500 million bearing interest at 4.19% per year, maturing on June 24, 2024

● $100 million bearing interest at 5.09% per year, maturing on November 14, 2042

Debt covenants

Our revolving credit facility includes the following financial covenants:

● our funded debt to tangible net worth ratio must be 1:1 or less

● other customary covenants and events of default

Funded debt is total consolidated debt less non-recourse debt, $100 million in letters of credit, cash and short-term investments.

Not complying with any of these covenants could result in accelerated payment and termination of our revolving credit facility. At December 31, 2017, we complied with all covenants, and we expect to continue to comply in 2018.

OFF-BALANCE SHEET ARRANGEMENTS

We had three kinds of off-balance sheet arrangements at the end of 2017:

● purchase commitments

● financial assurances

● other arrangements

Purchase commitments

We make purchases under long-term contracts where it is beneficial for us to do so and in order to support our long-term contract portfolio. The following table is based on our purchase commitments in our uranium, fuel services and NUKEM segments at December 31, 2017 but does not include purchases of our share of Inkai production. These commitments include a mix of fixed-price and market-related contracts. Actual payments will be different as a result of changes to our purchase commitments and, in the case of contracts with market-related pricing, the market prices in effect at the time of delivery. We will update this table as required in our MD&A to reflect material changes to our purchase commitments and changes in the prices used to estimate our commitments under market-related contracts.

DECEMBER 31, 2017 ($ MILLIONS)	2018		2019 AND 2020		2021 AND 2022		2023 AND BEYOND		TOTAL
Purchase commitments1		434		206		120		2		762

¹ Denominated in US dollars, converted to Canadian dollars at the rate of 1.25.

As of December 31, 2017, we had committed to $762 million (Cdn) for the following:

● approximately 19 million pounds of U₃O₈ equivalent from 2018 to 2024

● approximately 2 million kgU as UF₆ in conversion services in 2018 and 2019

● about 0.3 million Separative Work Units (SWU) of enrichment services to meet existing forward sales commitments under agreements with a non-Western supplier

The suppliers do not have the right to terminate agreements other than pursuant to customary events of default provisions.

Financial assurances

Standby letters of credit mainly provide financial assurance for the decommissioning and reclamation of our mining and conversion facilities as well as for our obligations relating to the CRA dispute. We are required to provide letters of credit to various regulatory agencies until decommissioning and reclamation activities are complete. We are also providing letters of credit until the CRA dispute is resolved. Letters of credit are issued by financial institutions for a one-year term. At December 31, 2017 our financial assurances totaled $1.5 billion unchanged from December 31, 2016.

MANAGEMENT’S DISCUSSION AND ANALYSIS 39

Other arrangements

We use factoring arrangements where receivables arising from certain sales contracts are sold to a financial institution. Upon the sale, we assign the rights to the accounts receivable to the financial institution without recourse. This arrangement provides immediate access to cash and requires we collect payment from our customers and remit the payments to the financial institution. Expenses incurred under the arrangement are recognized within finance costs in the consolidated statement of earnings.

In addition, we enter into arrangements with third parties where receivables arising from certain sales contracts are sold to financial institutions in exchange for cash. Upon the sale, we assign the rights to the accounts receivable to the financial institution without recourse. These arrangements require us to satisfy our delivery obligations under the sales contracts; however, the customer is responsible for making payment directly to the financial institution. The discount at which the financial institution purchases the receivable is offset against the revenue we record on delivery of the product to the customer.

BALANCE SHEET

DECEMBER 31, 2017 ($ MILLIONS EXCEPT PER SHARE AMOUNTS)	2017		2016		2015		CHANGE     2016 TO 2017
Inventory		950		1,288		1,285	(26)%
Total assets		7,779		8,249		8,795	(6)%
Long-term financial liabilities		2,448		2,459		2,500	(0)%
Dividends per common share		0.40		0.40		0.40	-

Total product inventories decreased by 26% to $950 million this year due to sales being higher than the quantities produced and purchased during the year. In 2017, total volume of product inventories for the uranium segment decreased by 6% while the average cost of inventory decreased by 11% due to the addition of low cost produced material. This was somewhat offset by material purchased during the year at rates higher than the average cost of inventory. At December 31, 2017, our average cost for uranium was $30.72 per pound, down from $34.69 per pound at December 31, 2016. As of December 31, 2017, we held an inventory of 26.7 million pounds of U₃O₈ equivalent in our uranium segment (excluding broken ore).

At the end of 2017, our total assets amounted to $7.8 billion, a decrease of $0.5 billion compared to 2016, primarily due to a decrease in property, plant and equipment due to asset impairments. In 2016, the total asset balance decreased by $0.5 billion compared to 2015, also due to asset impairments.

The major components of long-term financial liabilities are long-term debt, the provision for reclamation, deferred sales and financial derivatives. Our balance did not change significantly in 2017 or 2016.

40 CAMECO CORPORATION

2017 financial results by segment

Uranium

HIGHLIGHTS		2017		2016		CHANGE
Production volume (million lbs)			23.8		27.0	(12)%
Sales volume (million lbs)1			33.6		31.5	7%
Average spot price	($US/lb)		21.78		25.64	(15)%
Average long-term price	($US/lb)		31.92		39.00	(18)%
Average realized price	($US/lb)		36.13		41.12	(12)%
	($Cdn/lb)		46.80		54.46	(14)%
Average unit cost of sales (including D&A)	($Cdn/lb)		35.04		40.39	(13)%
Revenue ($ millions)1			1,574		1,718	(8)%
Gross profit ($ millions)			395		444	(11)%
Gross profit (%)			25		26	(4)%

¹  Includes sales and revenue between our uranium, fuel services and NUKEM segments (101,000 pounds in sales and revenue of $3.9 million in 2017, nil in 2016).

Production volumes in 2017 decreased by 12% compared to 2016. Planned lower production from Inkai and our US operations, a lack of production from the suspended Rabbit Lake operation, and lower production from McArthur River/Key Lake due to calciner issues that delayed the mill restart following the extended summer shutdown and an unplanned calciner outage in October were partially offset by higher production from Cigar Lake as a result of the scheduled rampup of the operation. See Uranium – production overview on page 55 for more information.

Uranium revenues this year were down 8% compared to 2016 due to a decrease of 14% in the Canadian dollar average realized price, partially offset by an increase in sales volumes of 7%. The spot price for uranium averaged $21.78 (US) per pound in 2017, a decline of 15% compared to the 2016 average price of $25.64 (US) per pound. In addition, overall prices were lower than the prior year as a result of lower prices under fixed price contracts.

Total cost of sales (including D&A) decreased by 7% ($1.18 billion compared to $1.27 billion in 2016) due to lower unit cost of sales partially offset by higher sales volumes. The lower unit cost of sales was mainly due to higher costs in 2016 at Rabbit Lake and our US operations associated with curtailing production and lower production costs this year as a result of the ramp-up of production at Cigar Lake, and the other measures we have taken to reduce costs. The cost of our purchases have decreased as well.    

The net effect was a $49 million decrease in gross profit for the year.

The following table shows the costs of produced and purchased uranium incurred in the reporting periods (non-IFRS measures, see below). These costs do not include selling costs such as royalties, transportation and commissions, nor do they reflect the impact of opening inventories on our reported cost of sales.

($CDN/LB)	2017		2016		CHANGE
Produced
Cash cost		15.11		17.01	(11)%
Non-cash cost		11.67		11.81	(1)%
Total production cost		26.78		28.82	(7)%
Quantity produced (million lbs)		23.8		27.0	(12)%
Purchased
Cash cost		37.19		49.33	(25)%
Quantity purchased (million lbs)		6.1		8.4	(27)%
Totals
Produced and purchased costs		28.90		33.69	(14)%
Quantities produced and purchased (million lbs)		29.9		35.4	(16)%

MANAGEMENT’S DISCUSSION AND ANALYSIS 41

The average cash cost of production was 11% lower in the year than in 2016. The change was primarily due to the rampup of lower cost production from Cigar Lake, and the impact of our actions in 2016 to curtail production from Rabbit Lake and our US operations, where production costs were higher.

Although purchased pounds are transacted in US dollars, we account for the purchases in Canadian dollars. In the year, the average cash cost of purchased material was $37.19 (Cdn), or $29.23 (US) per pound, compared to $36.21 (US) per pound in the same period in 2016.

Cash cost per pound, non-cash cost per pound and total cost per pound for produced and purchased uranium presented in the above table are non-IFRS measures. These measures do not have a standardized meaning or a consistent basis of calculation under IFRS. We use these measures in our assessment of the performance of our uranium business. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our performance and ability to generate cash flow.

These measures are non-standard supplemental information and should not be considered in isolation or as a substitute for measures of performance prepared according to accounting standards. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently, so you may not be able to make a direct comparison to similar measures presented by other companies.

To facilitate a better understanding of these measures, the following table presents a reconciliation of these measures to our unit cost of sales for the years ended 2017 and 2016 as reported in our financial statements.

CASH AND TOTAL COST PER POUND RECONCILIATION

($ MILLIONS)	2017			2016
Cost of product sold		910.7			993.0
Add / (subtract)
Royalties		(66.6	)		(115.3	)
Other selling costs		(7.5	)		(8.9	)
Care and maintenance and severance costs		(38.3	)		(69.6	)
Change in inventories		(211.8	)		74.5
Cash operating costs (a)		586.5			873.7
Add / (subtract)
Depreciation and amortization		267.9			281.2
Change in inventories		9.8			37.7
Total operating costs (b)		864.2			1,192.6
Uranium produced & purchased (million lbs) (c)		29.9			35.4
Cash costs per pound (a ÷ c)		19.62			24.68
Total costs per pound (b ÷ c)		28.90			33.69

URANIUM SEGMENT OUTLOOK

In November 2017 we announced our plan to temporarily suspend production at the McArthur River/Key Lake operation in 2018, and therefore, we expect to produce 9.1 million pounds in 2018. In addition, we have commitments under long-term contracts to purchase approximately 8 to 9 million pounds, including our purchases from JV Inkai. We anticipate an average purchase price of $34.70/lb, based on the uranium price and foreign exchange rate assumptions used in our outlook table on page 34.

Based on the contracts we have in place, and not including sales between our segments, we expect to deliver between 32 and 33 million pounds of U₃O₈ in 2018. We expect the unit cost of sales to be higher than in 2017 (outlook between $38.00/lb to $40.00/lb), primarily due to increased costs for care and maintenance associated with the temporary suspension of production at our McArthur River/Key Lake operation. If we make additional discretionary purchases in 2018 at a cost different than our other sources of supply, then we expect the overall unit cost of sales to be affected.

We expect revenue to be lower than in 2017 as a result of lower average realized price (outlook $1,460 million to $1,550 million).

42 CAMECO CORPORATION

ROYALTIES

We pay royalties on the sale of all uranium extracted at our mines in the province of Saskatchewan. Two types of royalties are paid:

● Basic royalty: calculated as 5% of gross sales of uranium, less the Saskatchewan resource credit of 0.75%.

● Profit royalty: a 10% royalty is charged on profit up to and including $22.75/kg U₃O₈ ($10.26/lb) and a 15% royalty is charged on profit in excess of $22.75/kg U₃O₈. Profit is determined as revenue less certain operating, exploration, reclamation and capital costs. Both exploration and capital costs are deductible at the discretion of the producer.

As a resource corporation in Saskatchewan, we also pay a corporate resource surcharge of 3% of the value of resource sales.

During the period from 2013 to 2015, transitional rules for the new profit royalty regime were applied whereby only 50% of capital costs were deductible. The remaining 50% was accumulated and was deductible beginning in 2016. In addition, the capital allowance related to Cigar Lake under the previous system was grandfathered and was also deductible beginning in 2016. The applicable profit royalty tier(s) will depend on both profitability and the optimal use of capital cost deductions.

Fuel services

(includes results for UF₆, UO₂ and fuel fabrication)

HIGHLIGHTS		2017		2016		CHANGE
Production volume (million kgU)			7.9		8.4	(6)%
Sales volume (million kgU)1			11.5		12.7	(9)%
Average realized price	($Cdn/kgU)		27.20		25.37	7%
Average unit cost of sales (including D&A)	($Cdn/kgU)		21.66		20.36	6%
Revenue ($ millions)1			313		321	(2)%
Gross profit ($ millions)			64		63	2%
Gross profit (%)			20		20	-

¹  Includes sales and revenue between our uranium, fuel services and NUKEM segments (60,000 kgU in sales and revenue of $0.3 million in 2017, 115,000 kgU in sales and revenue of $0.9 million in 2016).

Total revenue decreased by 2% due to a 9% decrease in sales volumes, partially offset by a 7% increase in the realized price.

The total cost of products and services sold (including D&A) decreased by 3% compared to 2016 to $249 million, as a 9% decrease in sales volumes was partially offset by a 6% increase in the average unit cost of sales (including D&A). When compared to 2016, the average unit cost of sales was 6% higher due to the mix of fuel services products sold.

The net effect was a $1 million increase in gross profit.

FUEL SERVICES OUTLOOK

In 2018, we plan to produce 9 to 10 million kgU, and we expect sales volumes, not including intersegment sales, to be 11 to 12 million kgU. Overall revenue is expected to be lower than 2017 (outlook $280 million to $310 million) due to a lower anticipated average realized price. We expect the average unit cost of sales (including D&A) to increase to between $21.60/kgU and $22.60/kgU.

NUKEM

(financial results include U₃O₈, UF₆, and SWU)

HIGHLIGHTS		2017			2016			CHANGE
Sales volume U3O8 (million lbs)1			10.0			7.1		41%
Average realized price	($Cdn/lb)		32.25			47.90		(33)%
Cost of product sold (including D&A)			336			419		(20)%
Revenue ($ millions)1			321			391		(18)%
Gross profit (loss) ($ millions)			(15	)		(28	)	46%
Gross profit (loss) (%)			(5	)		(7	)	29%

¹  Includes sales and revenue between our uranium, fuel services and NUKEM segments (1.7 million pounds in sales and revenue of $49 million in 2017, 48,000 pounds in sales and revenue of $0.4 million in 2016).

MANAGEMENT’S DISCUSSION AND ANALYSIS 43

During 2017, NUKEM delivered 10.0 million pounds of uranium, an increase of 2.9 million pounds compared to the previous year due to planned inventory reductions after the restructuring of Cameco’s global marketing activities. Revenues from NUKEM amounted to $321 million. Despite higher sales volumes, revenue decreased by 18% compared to 2016 as a result of a decline in the average realized price in the oversupplied uranium market. Gross loss percentage was 5% for 2017, compared to 7% for 2016.

The net effect was a $13 million increase in gross profit. Included in the 2017 gross loss is a $9 million net write-down of inventory compared to an $18 million write-down in 2016.

NUKEM OUTLOOK

The changes made to the organization of our global marketing activities in 2017, consolidating of all future Canadian and international marketing activities in Saskatoon, had a significant impact on the activities historically performed by NUKEM. As a result, we will no longer provide outlook for NUKEM.

44 CAMECO CORPORATION

Fourth quarter financial results

Consolidated results

HIGHLIGHTS	THREE MONTHS ENDED DECEMBER 31
($ MILLIONS EXCEPT WHERE INDICATED)	2017			2016			CHANGE
Revenue		809			887		(9)%
Gross profit		237			157		51%
Net loss attributable to equity holders		(62	)		(144	)	57%
$ per common share (basic)		(0.16	)		(0.36	)	56%
$ per common share (diluted)		(0.16	)		(0.36	)	56%
Adjusted net earnings (non-IFRS, see page 24)		181			90		>100%
$ per common share (adjusted and diluted)		0.4	6		0.2	3	100%
Cash provided by operations (after working capital changes)		320			255		25%

NET EARNINGS

The following table shows what contributed to the change in net earnings and adjusted net earnings (non-IFRS measure, see page 8) in the fourth quarter of 2017 compared to the same period in 2016.

($ MILLIONS)		IFRS			ADJUSTED
Net earnings (losses) - 2016			(144	)		90
Change in gross profit by segment
(we calculate gross profit by deducting from revenue the cost of products and services sold, and depreciation and amortization (D&A), net of hedging benefits)
Uranium	Higher sales volume		11			11
	Higher realized prices ($US)		23			23
	Foreign exchange impact on realized prices		(29	)		(29	)
	Lower costs		68			68
	change – uranium		73			73
Fuel services	Higher sales volume		3			3
	Lower realized prices ($Cdn)		(13	)		(13	)
	Lower costs		13			13
	change – fuel services		3			3
NUKEM	Gross profit		2			2
	change – NUKEM		2			2
Other changes
Lower administration expenditures			16			16
Higher impairment charges			(9	)		-
Lower exploration expenditures			1			1
Change in Rabbit Lake reclamation provision			(43	)		-
Lower loss on disposal of assets			13			13
Change in gains or losses on derivatives			29			4
Change in foreign exchange gains or losses			(2	)		(2	)
Change in income tax recovery or expense			5			(13	)
Other			(6	)		(6	)
Net earnings (losses) - 2017			(62	)		181

MANAGEMENT’S DISCUSSION AND ANALYSIS 45

ADJUSTED NET EARNINGS

We use adjusted net earnings, a non-IFRS measure, as a more meaningful way to compare our financial performance from period to period. See page 24 for more information. The following table reconciles adjusted net earnings with our net earnings.

	THREE MONTHS ENDED DECEMBER 31
($ MILLIONS)	2017			2016
Net loss attributable to equity holders		(62	)	(144)
Adjustments
Adjustments on derivatives		(2	)	23
Impairment charges		247		238
Rabbit Lake reclamation provision adjustment		15		(28)
Income taxes on adjustments		(17	)	1
Adjusted net earnings		181		90

ADMINISTRATION

	THREE MONTHS ENDED DECEMBER 31
($ MILLIONS)	2017		2016		CHANGE
Direct administration		36		49	(27)%
Stock-based compensation		3		6	(50)%
Total administration		39		55	(29)%

Direct administration costs were $36 million in the quarter, $13 million lower than the same period last year due to higher legal costs in 2016 related to our CRA trial, as well as cost reduction actions which reduced administration costs in 2017. Stock-based compensation expenses were $3 million lower than the fourth quarter of 2016. See note 22 to the financial statements.

Quarterly trends

HIGHLIGHTS	2017								2016
($ MILLIONS EXCEPT PER SHARE AMOUNTS)	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Revenue		809		486		470		393		887		670		466		408
Net earnings (loss) attributable to equity holders		(62)		(124)		(2)		(18)		(144)		142		(137)		78
$ per common share (basic)		(0.16)		(0.31)		(0.00)		(0.05)		(0.36)		0.36		(0.35)		0.20
$ per common share (diluted)		(0.16)		(0.31)		(0.00)		(0.05)		(0.36)		0.36		(0.35)		0.20
Adjusted net earnings (loss) (non-IFRS, see page 24)		181		(50)		(44)		(29)		90		118		(57)		(7)
$ per common share (adjusted and diluted)		0.46		(0.13)		(0.11)		(0.07)		0.23		0.30		(0.14)		(0.02)
Cash provided by (used in) operations (after working capital changes)		320		154		130		(8)		255		385		(51)		(277)

Key things to note:

● Our financial results are strongly influenced by the performance of our uranium segment, which accounted for 78% of consolidated revenues in the fourth quarter of 2017 and 66% of consolidated revenues in the fourth quarter of 2016.

● The timing of customer requirements, which tends to vary from quarter to quarter, drives revenue in the uranium and fuel services segments.

● Net earnings do not trend directly with revenue due to unusual items and transactions that occur from time to time. We use adjusted net earnings, a non-IFRS measure, as a more meaningful way to compare our results from period to period (see page 24 for more information).

● Cash from operations tends to fluctuate as a result of the timing of deliveries and product purchases in our uranium and fuel services segments.

● Quarterly results are not necessarily a good indication of annual results due to the variability in customer requirements noted above.

46 CAMECO CORPORATION

The table that follows presents the differences between net earnings and adjusted net earnings for the previous seven quarters.

HIGHLIGHTS	2017								2016
($ MILLIONS EXCEPT PER SHARE AMOUNTS)	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Net earnings (loss) attributable to equity holders		(62)		(124)		(2)		(18)		(144)		142		(137)		78
Adjustments
Adjustments on derivatives		(2)		(40)		(44)		(22)		23		(27)		(10)		(116)
NUKEM purchase price inventory recovery		-		-		-		-		-		-		(6)		-
Impairment charges		247		111		-		-		238		-		124		-
Rabbit Lake reclamation provision adjustment		15		(9)		(12)		6		(28)		(6)		-		-
Income taxes on adjustments		(17)		12		14		5		1		9		(28)		31
Adjusted net earnings (losses) (non-IFRS, see page 24)		181		(50)		(44)		(29)		90		118		(57)		(7)

MANAGEMENT’S DISCUSSION AND ANALYSIS 47

Fourth quarter financial results by segment

Uranium

		THREE MONTHS ENDED DECEMBER 31
HIGHLIGHTS		2017		2016		CHANGE
Production volume (million lbs)			6.9		7.1	(3)%
Sales volume (million lbs)1			12.6		11.7	8%
Average spot price	($US/lb)		22.32		19.00	17%
Average long-term price	($US/lb)		30.67		32.83	(7)%
Average realized price	($US/lb)		39.44		38.04	4%
	($Cdn/lb)		50.04		50.51	(1)%
Average unit cost of sales (including D&A)	($Cdn/lb)		32.91		38.29	(14)%
Revenue ($ millions)1			631		589	7%
Gross profit ($ millions)			216		143	51%
Gross profit (%)			34		24	42%

¹  Includes sales and revenue between our uranium, fuel services and NUKEM segments (101,000 pounds in sales and revenue of $3.9 million in Q4 2017, nil in Q4 2016).

Production volumes this quarter were 3% lower compared to the fourth quarter of 2016, due to curtailment of production at the US operations, lower production at Inkai, and from McArthur River/Key Lake. See Uranium – production overview on page 55 for more information.

Uranium revenues were up 7% due primarily to an 8% increase in sales volumes, as average realized price remained relatively constant.

Total cost of sales (including D&A) decreased by 7% ($415 million compared to $447 million in 2016). This was the result of a 14% decrease in the average unit cost of sales partially offset by an 8% increase in sales volumes. The decrease in the average unit cost of sales compared to last year was mainly due to timing of royalty costs. Also, the rampup of production at Cigar Lake, and the other measures we have taken to reduce costs, have resulted in lower production costs this year. The cost of our purchases have decreased as well.

The net effect was a $73 million increase in gross profit for the quarter.

The following table shows the costs of produced and purchased uranium incurred in the reporting periods (which are non-IFRS measures, see the paragraphs below the table). These costs do not include selling costs such as royalties, transportation and commissions, nor do they reflect the impact of opening inventories on our reported cost of sales.

	THREE MONTHS ENDED DECEMBER 31
($CDN/LB)	2017		2016		CHANGE
Produced
Cash cost		13.28		15.00	(11)%
Non-cash cost		12.08		10.74	12%
Total production cost		25.36		25.74	(1)%
Quantity produced (million lbs)		6.9		7.1	(3)%
Purchased
Cash cost		34.74		50.49	(31)%
Quantity purchased (million lbs)		3.1		2.2	41%
Totals
Produced and purchased costs		28.27		31.59	(11)%
Quantities produced and purchased (million lbs)		10.0		9.3	8%

The average cash cost of production was 11% lower for the quarter than in the comparable period in 2016.

48 CAMECO CORPORATION

Although purchased pounds are transacted in US dollars, we account for the purchases in Canadian dollars. In the fourth quarter, the average cash cost of purchased material was $34.74 (Cdn) per pound, or $28.41 (US) per pound in US dollar terms, compared to $37.61 (US) per pound in the fourth quarter of 2016.

Cash cost per pound, non-cash cost per pound and total cost per pound for produced and purchased uranium presented in the above table are non-IFRS measures. These measures do not have a standardized meaning or a consistent basis of calculation under IFRS. We use these measures in our assessment of the performance of our uranium business. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our performance and ability to generate cash flow.

These measures are non-standard supplemental information and should not be considered in isolation or as a substitute for measures of performance prepared according to accounting standards. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently, so you may not be able to make a direct comparison to similar measures presented by other companies.

To facilitate a better understanding of these measures, the following table presents a reconciliation of these measures to our unit cost of sales for the fourth quarters of 2017 and 2016.

CASH AND TOTAL COST PER POUND RECONCILIATION

	THREE MONTHS ENDED DECEMBER 31
($ MILLIONS)	2017			2016
Cost of product sold		319.2			338.4
Add / (subtract)
Royalties		(20.4	)		(38.0	)
Other selling costs		(1.8	)		(0.3	)
Care and maintenance and severance costs		(9.5	)		(10.8	)
Change in inventories		(88.2	)		(71.7	)
Cash operating costs (a)		199.3			217.6
Add / (subtract)
Depreciation and amortization		95.8			108.1
Change in inventories		(12.4	)		(31.9	)
Total operating costs (b)		282.7			293.8
Uranium produced & purchased (million lbs) (c)		10.0			9.3
Cash costs per pound (a ÷ c)		19.93			23.40
Total costs per pound (b ÷ c)		28.27			31.59

MANAGEMENT’S DISCUSSION AND ANALYSIS 49

Fuel services

(includes results for UF₆, UO₂ and fuel fabrication)

		THREE MONTHS ENDED DECEMBER 31
HIGHLIGHTS		2017		2016		CHANGE
Production volume (million kgU)			2.5		1.9		32%
Sales volume (million kgU)1			4.6		4.0		15%
Average realized price	($Cdn/kgU)		23.13		26.03		(11)%
Average unit cost of sales (including D&A)	($Cdn/kgU)		18.43		21.17		(13)%
Revenue ($ millions)1			107		104		3%
Gross profit ($ millions)			22		19		16%
Gross profit (%)			21		18		17%

¹  Includes sales and revenue between our uranium, fuel services and NUKEM segments (60,000 kgU in sales and revenue of $0.3 million in Q4 2017, 115,000 kgU in sales and revenue of $0.9 million in Q4 2016).

Total revenue increased by 3% due to a 15% increase in sales volumes, partially offset by an 11% decrease in average realized price. The decrease in average realized price was due to the mix of products sold.

Despite the increase in sales volume, total cost of sales (including D&A) remained unchanged at $85 million compared to the fourth quarter of 2016 due to a decrease of 13% in the average unit cost of sales, primarily as a result of the mix of products sold.

The net effect was a $3 million increase in gross profit.

NUKEM

(financial results include U₃O₈, UF₆, and SWU)

		THREE MONTHS ENDED DECEMBER 31
HIGHLIGHTS		2017		2016			CHANGE
Uranium sales (million lbs)1			4.0		3.1			29%
Average realized price	($Cdn/lb)		30.81		46.63			(34)%
Cost of product sold (including D&A)			122		195			(37)%
Revenue ($ millions)1			124		194			(36)%
Gross profit (loss) ($ millions)			2		(1	)		>100%
Gross profit (loss) (%)			2		(1	)		>100%

¹  Includes sales and revenue between our uranium, fuel services and NUKEM segments (1.7 million pounds in sales and revenue of $49.0 million in Q4 2017, 48,000 pounds in sales and revenue of $0.4 million in Q4 2016).

NUKEM delivered 4.0 million pounds of uranium, an increase of 0.9 million pounds compared to 2016. NUKEM revenues amounted to $124 million compared to $194 million in 2016 due to a lower average realized price, partially offset by the increase in uranium volumes delivered due to planned inventory reductions after the restructuring of our global marketing activities. In addition, sales of UF₆ and SWU in the fourth quarter 2016 contributed to the higher revenues last year.

Gross profit percentage was 2% in the fourth quarter of 2017, compared to a gross loss of 1% in the fourth quarter of 2016.

The net effect was a $3 million increase in gross profit.

50 CAMECO CORPORATION

Operations and projects

This section of our MD&A is an overview of the mining properties we operate or have an interest in, our curtailed operations and our projects, what we accomplished this year, our plans for the future and how we manage risk.

52	MANAGING THE RISKS
55	URANIUM – PRODUCTION OVERVIEW
55	PRODUCTION OUTLOOK
56	URANIUM – TIER-ONE OPERATIONS
56	MCARTHUR RIVER MINE / KEY LAKE MILL
61	CIGAR LAKE
65	INKAI
68	URANIUM – TIER-TWO CURTAILED OPERATIONS
68	RABBIT LAKE
68	SMITH RANCH-HIGHLAND
68	CROW BUTTE
69	URANIUM – PROJECTS UNDER EVALUATION
69	MILLENNIUM
69	YEELIRRIE
69	KINTYRE
70	URANIUM – EXPLORATION AND CORPORATE DEVELOPMENT
71	FUEL SERVICES
71	BLIND RIVER REFINERY
72	PORT HOPE CONVERSION SERVICES
72	CAMECO FUEL MANUFACTURING INC. (CFM)
73	NUKEM GMBH

MANAGEMENT’S DISCUSSION AND ANALYSIS 51

Managing the risks

The nature of our operations means we face many potential risks and hazards that could have a significant impact on our business. Our risk policy and process involves a broad, systematic approach to identifying, assessing, reporting and managing the significant risks we face in our business and operations. The policy establishes clear accountabilities for enterprise risk management. We use a common risk matrix throughout the company and consider any risk that has the potential to significantly affect our ability to achieve our corporate objectives or strategic plan as an enterprise risk. However, there is no assurance we will be successful in preventing the harm any of these risks and hazards could cause. We recommend you read our most recent management proxy circular for more information about our risk oversight.

Below we list the regulatory, environmental and operational risks that generally apply to all of our operations and projects under evaluation. We also talk about how we manage specific risks in each operation or project update. These risks could have a material impact on our business in the near term.

We recommend you also review our annual information form, which includes a discussion of other material risks that could have an impact on our business.

Regulatory risks

A significant part of our economic value depends on our ability to:

● obtain and renew the licences and other approvals we need to operate, to increase production at our mines and to develop new mines. If we do not receive the regulatory approvals we need, or do not receive them at the right time, then we may have to delay, modify or cancel a project, which could increase our costs and delay or prevent us from generating revenue from the project. Regulatory review, including the review of environmental matters, is a long and complex process.

● comply with the conditions in these licences and approvals. Our right to continue operating facilities, increase production at our mines and develop new mines depends on our compliance with these conditions.

● comply with the extensive and complex laws and regulations that govern our activities. Environmental legislation imposes strict standards and controls on almost every aspect of our operations and projects, and is not only introducing new requirements, but also becoming more stringent. For example:

● we must complete the environmental assessment process before we can begin developing a new mine or make any significant change to our operations

● we may need regulatory approval to make changes to our operational processes, which can take a significant amount of time because it may require an extensive review of supporting technical information. The complexity of this process can be further compounded when regulatory approvals are required from multiple agencies.

● the federal government’s review of environmental and regulatory processes “to restore public trust” is now firmly underway. This includes reviews of the Canadian Environmental Assessment Act, 2012, along with the Fisheries Act and Navigation Protection Act. Also under review is the Canadian Environmental Protection Act, 1996. Changes to this legislation could impact any future planned projects.

● Environment Canada has brought forward a national recovery plan for woodland caribou that has the potential to impact economic and social development in northern Saskatchewan. Additional research work has resulted in a report indicating the range in which our northern Saskatchewan operations are located, hosts a secure and self-sustaining population of woodland caribou, perhaps one of the most secure boreal caribou populations in Canada. The research should lead Environment and Climate Change Canada to revise the national recovery plan to recognize the sustainability of the species in northern Saskatchewan; however, potential habitat protection measures could still have an impact on our Saskatchewan operations and projects under evaluation.

● Environment Canada has been reviewing the Metal Mining Effluent Regulations (MMER). This review could result in new limits for existing MMER substances and proposed limits for new substances that could impact our Saskatchewan operations.

● The U.S. Environmental Protection Agency (EPA) proposed adding new health and environmental protection standards that could impact Cameco Resources. Particularly concerning is the proposed requirement that groundwater must be monitored for 30 years after restoration. In early 2017, the EPA withdrew its rule, but then proposed a new rule for public comment, which is less onerous though still has a number of problematic aspects. Ultimately, the decision on moving forward with EPA’s new proposal will be decided by the US administration.

52 CAMECO CORPORATION

We use significant management and financial resources to manage our regulatory risks.

Environmental risks

We have the safety, health and environmental risks associated with any mining and chemical processing company. Our uranium and fuel services segments also face unique risks associated with radiation.

Laws to protect the environment are becoming more stringent for members of the nuclear energy industry and have inter-jurisdictional aspects (both federal and provincial/state regimes are applicable). Once we have permanently stopped mining and processing activities at an operating site, we are required to decommission the site to the satisfaction of the regulators. We have developed conceptual decommissioning plans for our operating sites and use them to estimate our decommissioning costs. Regulators review and accept our conceptual decommissioning plans on a regular basis. As the site approaches or goes into decommissioning, regulators review the detailed decommissioning plans. This can result in further regulatory process, as well as additional requirements, costs and financial assurances.

Currently, Cameco is in the process of preparing updates to all Saskatchewan operations’ Preliminary Decommissioning Plan (PDP) and Preliminary Decommissioning Cost Estimate (PDCE) documents in accordance with the five year timeline specified in the regulations. An update to the Port Hope Conversion Facility PDP was initiated in 2015 in support of the licence renewal and the PDP was finalized early in the first quarter of 2016. In February 2017, the CNSC granted a licence renewal for 10 years and accepted the updated PDP and financial assurance amount. The financial assurance was amended to $128.6 million in March 2017.

For both Cameco Fuel Manufacturing and the Blind River Refinery, the increase to the financial assurance of $1.5 million and $9.4 million, respectively was considered through a hearing in writing in October 2017 and accepted in November 2017. The financial assurance amendment was completed in December 2017.

In addition, surety costs have increased at our Smith-Ranch Highland site by approximately $32 million. The increase is largely due to an increase in groundwater restoration costs.

At the end of 2017, our estimate of total decommissioning and reclamation costs was $1.04 billion. This is the undiscounted value of the obligation and is based on our current operations. We had accounting provisions of $894 million at the end of 2017 (the present value of the $1.04 billion). Since we expect to incur most of these expenditures at the end of the useful lives of the operations they relate to, our expected costs for decommissioning and reclamation for the next five years are not material.

We provide financial assurances for decommissioning and reclamation such as letters of credit to regulatory authorities, as required. We had a total of about $1.0 billion in letters of credit supporting our reclamation liabilities at the end of 2017. All of our North American operations have letters of credit in place that provide financial assurance in connection with our preliminary plans for decommissioning of the sites.

Some of the sites we own or operate have been under ongoing investigation and/or remediation and planning as a result of historic soil and groundwater conditions. For example, we are addressing issues related to historic soil and groundwater contamination at Port Hope.

We use significant management and financial resources to manage our environmental risks.

We manage environmental risks through our safety, health, environment and quality (SHEQ) management system. Our chief executive officer is responsible for ensuring that our SHEQ management system is implemented. Our board’s safety, health and environment committee also oversees how we manage our environmental risks.

In 2017, we invested:

● $63 million in environmental protection, monitoring and assessment programs, approximately 21% less than in 2016

● $23 million in health and safety programs, or 17% less than 2016

The decrease in spend in 2017 was largely due to overall cost reductions.

Spending on environmental and health and safety programs is expected to decrease in 2018 as a result of the continued impacts of the decisions to transition Rabbit Lake into care and maintenance and to curtail production at the US operations, as well as the temporary shutdown of the McArthur River and Key Lake operations.

MANAGEMENT’S DISCUSSION AND ANALYSIS 53

Operational risks

Other operational risks and hazards include:

● environmental damage

● industrial and transportation accidents

● labour shortages, disputes or strikes

● cost increases for labour, contracted or purchased materials, supplies and services

● shortages of required materials, supplies and equipment

● transportation disruptions

● electrical power interruptions

● equipment failures

● non-compliance with laws and licences

● catastrophic accidents

● fires

● blockades or other acts of social or political activism

● natural phenomena, such as inclement weather conditions, floods and earthquakes

● unusual, unexpected or adverse mining or geological conditions

● underground floods

● ground movement or cave-ins

● tailings pipeline or dam failures

● technological failure of mining methods

● unanticipated consequences of our cost reduction strategies

We have insurance to cover some of these risks and hazards, but not all of them, and not to the full amount of losses or liabilities that could potentially arise.

54 CAMECO CORPORATION

Uranium – production overview

Production in our uranium segment in the fourth quarter was 6.9 million pounds, 3% lower compared to the same period in 2016 due to lower production at Inkai, and our McArthur River/Key Lake operation due to calciner issues. Production for the year was 23.8 million pounds, 12% lower than in 2016 due to the strategic decisions made to suspend production at Rabbit Lake, curtail production at the US operations, and lower production from McArthur River/Key Lake, partially offset by higher production at Cigar Lake as ramp up was completed. See Uranium - operations starting on page 56 for more information.

Uranium production

CAMECO SHARE	THREE MONTHS ENDED DECEMBER 31				YEAR ENDED DECEMBER 31
(MILLION LBS)	2017		2016		2017		2016		2017 PLAN1		2018 PLAN
McArthur River/Key Lake		3.5		3.8		11.2		12.6		11.5		0.1
Cigar Lake		2.5		2.5		9.0		8.7		9.0		9.0
Inkai		0.9		0.7		3.2		3.4		3.1		- 2
Rabbit Lake		-		-		-		1.1		-		- 3
Smith Ranch-Highland		-		0.1		0.3		0.9		0.3		- 3
Crow Butte		-		-		0.1		0.3		0.1		- 3
Total		6.9		7.1		23.8		27.0		24.0		9.1

¹  We reduced our initial 2017 production plan to 24.0 million pounds (from 25.2 million pounds) due to reductions at McArthur River/Key Lake and Smith Ranch-Highland in the third quarter.

²  We expect total production from Inkai to be 6.9 million pounds in 2018. Due to the transition to equity accounting, our share of production, 3.4 million pounds, will be shown as a purchase. Please see JV Inkai – planning for the future beginning on page 67 for more information.

³  The Rabbit Lake operation is in a safe and sustainable state of care and maintenance, and we are no longer developing new wellfields at Crow Butte and Smith Ranch-Highland. Please see Uranium – Tier-two curtailed operations beginning on page 68 for more information.

Production Outlook

We remain focused on taking advantage of the long-term growth we see coming in our industry, while maintaining the ability to respond to market conditions as they evolve. Our strategy is to focus on our tier-one assets and profitably produce at a pace aligned with market signals in order to preserve the value of those assets and increase long-term shareholder value, and to do that with an emphasis on safety, people and the environment.

Given today’s weak market conditions and to mitigate risk, we plan to:

● ensure we continue to operate safely

● evaluate the optimal mix of production, inventory and purchases in order to retain the flexibility to deliver long-term value

● focus on maximizing margins through cost management, productivity improvements, and supply discipline

MANAGEMENT’S DISCUSSION AND ANALYSIS 55

Uranium – Tier-one operations

McArthur River mine / Key Lake mill

2017 Production (our share)   11.2M lbs   2018 Production Outlook (our share)   0.1M lbs   Estimated Reserves (our share)   250.7M lbs   Estimated Mine Life   2038 Proportion of 2017 U production  

McArthur River is the world’s largest, high-grade uranium mine, and Key Lake is the world’s largest uranium mill.

Ore grades at the McArthur River mine are 100 times the world average, which means it can produce more than 18 million pounds per year by mining only 150 to 200 tonnes of ore per day. We are the operator of both the mine and mill.

In 2018, production at the mine and mill is temporarily suspended.

McArthur River is considered a material uranium property for us.

Location		Saskatchewan, Canada
Ownership		McArthur River – 69.805%
		Key Lake – 83.33%
Mine type		Underground
Mining methods		Primary: blasthole stoping
		Secondary: raiseboring
End product		Uranium concentrate
Certification		ISO 14001 certified
Estimated reserves		250.7 million pounds (proven and probable), average grade U3O8: 9.63%
Estimated resources		4.9 million pounds (measured and indicated), average grade U3O8: 3.00%
		5.9 million pounds (inferred), average grade U3O8: 5.01%
Licensed capacity		Mine and mill: 25.0 million pounds per year
Licence term		Through October, 2023
Total packaged production:	2000 to 2017	325.2 million pounds (McArthur River/Key Lake) (100% basis)
	1983 to 2002	209.8 million pounds (Key Lake) (100% basis)
2017 production		11.2 million pounds (16.1 million pounds on 100% basis)
2018 production outlook		0.1 million pounds (0.2 million pounds on 100% basis)
Estimated decommissioning cost		$48 million – McArthur River (100% basis)
		$218 million – Key Lake (100% basis)

All values shown, including reserves and resources, represent our share only, unless indicated.

BACKGROUND

Mine description

McArthur River currently has six zones with delineated mineral reserves and resources (zones 1 to 4, zones A and B) and one additional area with delineated mineral resources (McArthur north). We are currently mining zone 2 and zone 4.

56  CAMECO CORPORATION

Zone 2 has been actively mined since production began in 1999. The ore zone was initially divided into three freeze panels (panels 1-2, 3 and 5). As the freeze wall was expanded, the inner connecting freeze walls were decommissioned in order to recover the inaccessible uranium around the active freeze pipes. The majority of the remaining zone 2 mineral reserves are in the upper portion of panel 5.

Zone 4 is divided into three mining areas: north, central, and south. Prior to the production suspension, we were actively mining the lower central, and north areas. In the final quarter of 2017, we began mining in the upper central area following the successful completion of ground freezing and the first stages of development and construction. Similar to zone 2, the inner connecting freeze walls are decommissioned as new panels are brought on line in order to maximize ore recovery.

Zone 1 freeze hole drilling is on hold for 2018 during the production suspension and will resume following the mine start-up. Following freeze hole drilling, outfitting and freezing will commence prior to production access drift development. Production from zone 1 is expected to begin in 2021.

We have successfully extracted over 325 million pounds (100% basis) since we began mining in 1999.

Mining methods and techniques

We use a number of innovative methods to mine the McArthur River deposit:

Ground freezing

The sandstone that overlays the deposit and metasedimentary basement rocks is water-bearing and more permeable, which results in significant water pressure at mining depths. In order to isolate the high-pressure water, ground freezing is used to form an impermeable wall around the area being mined. This prevents water from entering the mine, and helps stabilize weak rock formations. To date, we have isolated seven mining areas with freeze walls and an eighth mining area is under development.

Blasthole stoping

Our use of blasthole stoping began in 2011 and has expanded; the majority of ore extraction is now carried out with blasthole stoping. The use of this method has allowed the site to improve operating costs by significantly reducing waste rock handling, backfill dilution, and backfill placement. This mining method has been used extensively in the mining industry, including uranium mining. It involves:

● establishing drill access above the ore and extraction access below the ore

● setting up a raisebore drill in the drill chamber, drilling a pilot hole down to the extraction chamber, attaching a 3-metre wide reaming head to the drill string, and pulling it back up through the ore zone

● expanding the circumference of the raise by drilling longholes around the raisebore hole and blasting the ore

● funneling the blasted material into the raisebore hole and dropping it to the extraction level below

● collecting the broken rock by line-of-sight remote-controlled scoop trams, and transporting it to the underground grinding circuit

● once the stope is mined out, backfilling it with concrete to maintain ground stability and allowing the next stope and/or raise to be mined

Raisebore mining

Raisebore mining is an innovative non-entry approach that we adapted to meet the unique challenges at McArthur River, and it has been used since mining began in 1999. It involves:

● establishing a drill chamber above the ore and an extraction chamber below the ore

● setting up a raisebore drill in the drill chamber, drilling a pilot hole down to the extraction chamber, attaching a 3-metre wide reaming head to the drill string, and pulling it back up through the ore zone

● collecting the high-grade broken ore at the bottom of the raises using line-of-sight remote-controlled scoop trams, and transporting it to an underground grinding circuit

● filling each raisebore hole with concrete

● when a series of overlapping raisebore holes in a chamber is complete, removing the equipment and filling the entire chamber with concrete

● starting the process again in an adjacent raisebore chamber

MANAGEMENT’S DISCUSSION AND ANALYSIS 57

Boxhole mining was tested and approved for use at McArthur River. It is a higher-cost mining method that is not currently being used.

Initial processing

We carry out initial processing of the extracted ore at McArthur River:

● the underground circuit grinds the ore and mixes it with water to form a slurry

● the slurry is pumped 680 metres to the surface and stored in one of four ore slurry holding tanks

● it is blended and thickened, removing excess water

● the final slurry, at an average grade of 12% - 20% U₃O₈, is pumped into transport truck containers and shipped to Key Lake mill on an 80 kilometre all-weather road

Water from this process, including water from underground operations, is treated on the surface. Any excess treated water is released into the environment.

Tailings capacity

We expect to have sufficient tailings capacity at Key Lake to mill all the known McArthur River mineral reserves and resources, should they be converted to reserves, with additional capacity to toll mill ore from other regional deposits.

Licensed annual production capacity

The McArthur River mine and Key Lake mill are both licensed to produce up to 25 million pounds (100% basis) per year.

2017 UPDATE

Production

This year, in alignment with our efforts to reduce costs, our production plan included an extended summer shutdown during the third quarter. The shutdown, consisted of a four-week vacation period in July, followed by a two-week maintenance period at McArthur River and a four-week maintenance period at Key Lake. Production was expected to restart at the end of August, however, work on the calciner at Key Lake took longer than expected. Also, there was additional work required on the calciner in October, resulting in an unplanned outage at Key Lake. As a result, we lowered our 2017 production target to 11.5 million pounds (Cameco’s share) from 12.6 million pounds (Cameco’s share). Production from McArthur River/Key Lake for the year was 16.1 million pounds; our share was 11.2 million pounds. This was 11% lower than 2016 and 3% lower than our previous forecast for the year.

During the year, we reduced the workforce by about 10%, and made changes to the commuter flight services at the site. These measures were made to further reduce costs and improve efficiency at the operation.

Key Lake mill upgrades

The Key Lake mill began operating in 1983 and we have continually upgraded circuits with new technology to simplify operations, improve environmental performance, and allow the mill’s nominal annual production rate to closely follow production from the McArthur River mine. As part of the mill upgrades, a new calciner was installed at the Key Lake mill to accommodate an eventual annual production increase to 25 million pounds. During the fourth quarter we announced our plan to temporarily suspend production at the McArthur River/Key Lake operation in 2018. As a result, we have re-evaluated the project to complete the new calciner at Key Lake, which was undertaken to allow for increased production. Given the production suspension, current market conditions, and that we have determined the existing calciner has sufficient capacity to reliably meet our ongoing production requirements it has been determined that no further investment will be made to complete the project. As a result, we have recognized an impairment charge related to the new calciner of $55 million. See note 9 for more information.

New mining areas

We must bring on new mining zones to sustain production. The two new areas under active development included the upper central portion of zone 4 and zone 1. In the fourth quarter of 2017, sufficient development and construction was complete to enable initial production from the upper central part of zone 4.

58 CAMECO CORPORATION

In 2017, zone 1 freeze drilling was advanced from 48% to 90% completion. In addition, construction of the brine distribution piping system was advanced to approximately 20% completion. Remaining freeze drilling and brine distribution construction will be deferred until after mine restart.

In 2017, the south freeze plant construction and commissioning was completed followed by a 3 month operating period when chilled brine was supplied to zone 4. The plant has been since shut-down for the care and maintenance period and will be restarted when freezing of Zone 1 is ready to begin.

The mine life of McArthur River/Key Lake has been extended from 2037 to 2038 as a result of the planned temporary production suspension in 2018. See Mineral reserves and resources on page 74 for more information.

Exploration

In 2017, we continued with underground infill definition drilling of zone B in order to provide the information required for more detailed mining plans. Underground exploration drilling has been halted during the care and maintenance period.

PLANNING FOR THE FUTURE

Production

Due to continued uranium price weakness, and in accordance with our announcement at the end of 2017, we have temporarily suspended production. During January 2018, activities at the mine and mill were focused on putting the operation into a state of safe care and maintenance. As a result of the suspension, and the time required to restart the mine and mill, we do not expect the operation to produce any significant amount of uranium in 2018. The cost to maintain both operations during the suspension is expected to range between $6.5 million and $7.5 million per month.

Expansion potential

Once the market signals that new supply is needed and a decision is made to begin increasing annual production, we will undertake the work necessary to optimize the capacity of both the McArthur River mine and Key Lake mill with a view to achieving annual licensed capacity of 25 million pounds per year (100% basis). We expect that this paced approach will allow us to extract maximum value from the operation as the market transitions.

MANAGING OUR RISKS

Production at McArthur River/Key Lake poses many challenges: control of groundwater, weak rock formations, radiation protection, water inflow, mine area transitioning, and regulatory approvals. Operational experience gained since the start of production has resulted in a significant reduction in risk.

Operational changes

The operational changes we have made, including the extended summer shutdown, the workforce reduction, changes to the commuter flight services at the site, and the temporary suspension of production in 2018, which are intended to achieve cost savings and improve efficiency, carry with them increased risk of production disruption.

Labour relations

The collective agreement with the United Steelworkers local 8914 expired in December 2017, and the collective bargaining process has begun. There is a risk to the restart of operations after the production suspension if we are unable to reach agreement and there is a labour dispute.

Transition to new mining areas

In order to successfully achieve the planned production schedule, we must continue to successfully transition into new mining areas, which includes mine development and investment in critical support infrastructure.

Water inflow risk

The greatest risk is production interruption from water inflows. A 2003 water inflow resulted in a three-month suspension of production. We also had a small water inflow in 2008 that did not impact production.

MANAGEMENT’S DISCUSSION AND ANALYSIS 59

The consequences of another water inflow at McArthur River would depend on its magnitude, location and timing, but could include a significant interruption or reduction in production, a material increase in costs or a loss of mineral reserves.

We take the following steps to reduce the risk of inflows, but there is no guarantee that these will be successful:

● Ground freezing: Before mining, we drill freezeholes and freeze the ground to form an impermeable freeze wall around the area being mined. Ground freezing reduces but does not eliminate the risk of water inflows.

● Mine development: We plan for our mine development to take place away from known groundwater sources whenever possible. In addition, we assess all planned mine development for relative risk and apply extensive additional technical and operating controls for all higher risk development.

● Pumping capacity and treatment limits: Our standard for this project is to secure pumping capacity of at least one and a half times the estimated maximum sustained inflow. We review our dewatering system and requirements at least once a year and before beginning work on any new zone.

We believe we have sufficient pumping, water treatment and surface storage capacity to handle the estimated maximum sustained inflow.

We also manage the risks listed on pages 52 to 54.

60 CAMECO CORPORATION

Uranium – Tier-one operations

Cigar Lake
	2017 Production (our share) 9.0M lbs 2018 Production Outlook (our share) 9.0M lbs Estimated Reserves (our share) 99.0M lbs Estimated Mine Life 2028	Proportion of 2017 U production

Cigar Lake is the world’s highest grade uranium mine, with grades that are 100 times the world average. We are a 50% owner and the mine operator. Cigar Lake uranium is milled at Orano’s (previously AREVA) McClean Lake mill.

Cigar Lake is considered a material uranium property for us.

Location	Saskatchewan, Canada
Ownership	50.025%
Mine type	Underground
Mining method	Jet boring system
End product	Uranium concentrate
Certification	ISO 14001 certified
Estimated reserves	99.0 million pounds (proven and probable), average grade U3O8: 14.91%
Estimated resources	49.1 million pounds (measured and indicated), average grade U3O8: 14.48%
	11.8 million pounds (inferred), average grade U3O8: 5.97%
Licensed capacity	18.0 million pounds per year (our share 9.0 million pounds per year)
Licence term	Through June, 2021
Total packaged production: 2014 to 2017	46.9 million pounds (100% basis)
2017 production	9.0 million pounds (18.0 million pounds on 100% basis)
2018 production outlook	9.0 million pounds (18.0 million pounds on 100% basis)
Estimated decommissioning cost	$49 million (100% basis)

All values shown, including reserves and resources, represent our share only, unless indicated.

BACKGROUND

Development

We began developing the Cigar Lake underground mine in 2005, but development was delayed due to water inflows in 2006 and 2008. The underground workings were successfully remediated and secured in 2011 and, in October 2014 the McClean Lake mill produced the first uranium concentrate from ore mined at the Cigar Lake operation. Commercial production was declared in May 2015.

Mine description

Cigar Lake’s geological setting is similar to McArthur River’s: the permeable sandstone, which overlays the deposit and basement rocks, contains large volumes of water at significant pressure. However, unlike McArthur River, the Cigar Lake deposit has the shape of a flat- to cigar-shaped lens. As a result of these challenging geological conditions, we are unable to utilize traditional mining methods that require access above the ore, necessitating the development of a non-entry mining method specifically adapted for this deposit: the Jet Boring system (JBS).

MANAGEMENT’S DISCUSSION AND ANALYSIS 61

We continue development below the mineralization and we are currently mining in the eastern part of the ore body (referred to as Phase 1). Surface delineation drilling for the western portion (Phase 2) was completed in 2017.

Mining method

Bulk ground freezing

The sandstone that overlays the deposit and basement rocks is water-bearing, and to prevent water from entering the mine, help stabilize weak rock formations, and meet our production schedule, the ore zone and surrounding ground in the area to be mined must meet specific ground freezing requirements before we begin jet boring.

During construction, development and remediation of the underground infrastructure, we employed a hybrid ground freezing approach using a combination of underground and surface freezing. The costs related to each technique are similar; however, there are significant advantages to freezing the ground from the surface. With surface freezing, less mine development is required, which results in less waste rock and greater ground stability, since freeze tunnels are not required between production tunnels. In addition, congestion is reduced and underground development for freeze infrastructure is no longer a critical path mine activity. Based on these advantages, we have elected to proceed exclusively using surface freezing to mine current mineral reserves at Cigar Lake.

Jet boring system (JBS) mining

After many years of test mining, we selected jet boring, a non-entry mining method, which we have developed and adapted specifically for this deposit. This method involves:

● drilling a pilot hole into the frozen orebody, inserting a high pressure water jet and cutting a cavity out of the frozen ore

● collecting the ore and water mixture (slurry) from the cavity and pumping it to storage (sump storage), allowing it to settle

● using a clamshell, transporting the ore from sump storage to an underground grinding and processing circuit

● once mining is complete, filling each cavity in the orebody with concrete

● starting the process again with the next cavity

We have divided the orebody into production panels and at least three production panels need to be frozen at one time to achieve the full annual production rate of 18.0 million pounds. One JBS machine will be located below each frozen panel and the three JBS machines required are currently in operation. Two machines actively mine at any given time while the third is moving, setting up, or undergoing maintenance.

Initial processing

We carry out initial processing of the extracted ore at Cigar Lake:

● the underground circuit grinds the ore and mixes it with water to form a slurry

● the slurry is pumped 500 metres to the surface and stored in one of two ore slurry holding tanks

● it is blended and thickened, removing excess water

● the final slurry, at an average grade of approximately 15% U₃O₈, is pumped into transport truck containers and shipped to McClean Lake mill on a 69 kilometre all-weather road

62 CAMECO CORPORATION

Water from this process, including water from underground operations, is treated on the surface. Any excess treated water is released into the environment.

Milling

All of Cigar Lake’s ore slurry is being processed at the McClean Lake mill, operated by Orano. Given the McClean Lake mill’s capacity, it is able to:

● operate at Cigar Lake’s targeted annual production level of 18.0 million pounds U₃O₈

● process and package all of Cigar Lake’s current mineral reserves

Licensing annual production capacity

The Cigar Lake mine is licensed to produce up to 18.0 million pounds (100% basis) per year. Orano’s McClean Lake mill is licensed to produce 24.0 million pounds annually.

2017 UPDATE

Production

Total packaged production from Cigar Lake was 18.0 million pounds U₃O₈; our share was 9.0 million pounds, achieving our forecast.

During the year, we:

● implemented an extended summer shutdown, reduced the workforce by about 10%, made changes to the shift rotation schedule, and made changes to the commuter flight services at the site. All of these measures were made to further reduce costs and improve efficiency at the operation.

● completed a freeze pad extension to enable surface freeze drilling to resume in 2017

● advanced the freeze plant expansion project through the pre-feasibility stage and commenced construction

Underground development

In 2017, we substantially completed two new production crosscuts tunnels to ensure we maintain continuous access to frozen ore inventory once mining in the current crosscuts is complete.

McClean Lake mill update

On June 29, the CNSC approved a 10-year renewal of the operating licence for Orano’s McClean Lake mill. The licence is valid until June 30, 2027.

Exploration

In 2017, we completed 16,571 metres of diamond drilling as part of the second year of a three-year surface drilling program to confirm and upgrade mineral resources contained in the western portion of the deposit (Phase 2). The objective of the program is to complete a detailed geological and geotechnical interpretation, a mineral resource estimate, and a pre-feasibility study for Phase 2. Sufficient information has been obtained from the first two years of drilling to support completion of the pre-feasibility study.

PLANNING FOR THE FUTURE

Production

In 2018, we expect to produce 18.0 million packaged pounds at Cigar Lake; our share is 9.0 million pounds.

In alignment with our continued efforts to reduce costs, our 2018 production plan for the Cigar Lake mine includes an extended shutdown during the third quarter, which is expected to result in reduced flight and camp costs. The shut-down will consist of a four-week vacation period, preceded by a one- to two-week maintenance period with mine start-up planned before the end of the third quarter.

MANAGEMENT’S DISCUSSION AND ANALYSIS 63

In 2018, we expect to:

● resume surface freeze drilling and advance planning and construction for the freeze plant infrastructure expansion in support of future production

● transition to two new production crosscuts tunnels as per the mine plan, and backfill two crosscut tunnels where production is complete

MANAGING OUR RISKS

Cigar Lake is a challenging deposit to develop and mine. These challenges include control of groundwater, weak rock formations, radiation protection, chemical ore characteristics, performance of the water treatment system, water inflow, regulatory approvals, surface and underground fires and other mining-related challenges. To reduce this risk, we are applying our operational experience and the lessons we have learned about water inflows at McArthur River and Cigar Lake.

Operational changes

The operational changes we have made, including the extended summer shutdown, the workforce reduction, changes to the shift rotation schedule, and changes to the commuter flight services at the site, which are intended to achieve cost savings and improve efficiency, carry with them increased risk of production disruption.

Transition to new mining areas

In order to successfully achieve the planned production schedule, we must continue to successfully transition into new mining areas, which includes mine development and investment in critical support infrastructure.

Ground freezing

To manage our risks and meet our production schedule, the areas being mined must meet specific ground freezing requirements before we begin jet boring. We have identified greater variation of the freeze rates of different geological formations encountered in the mine, based on new information obtained through surface freeze drilling. As a mitigation measure, we have increased the site freeze capacity to facilitate the mining of ore cavities as planned.

Environmental performance

The Cigar Lake orebody contains elements of concern with respect to the water quality and the receiving environment. The distribution of elements such as arsenic, molybdenum, selenium and others is non-uniform throughout the ore body, and this can result in complications in attaining effluent concentrations included in the licensing basis. Materialization of this risk could result in a potential deferral of production and additional capital and operating expenses required to modify the water treatment process to ensure environmental performance.

Water inflow risk

A significant risk to development and production is from water inflows. The 2006 and 2008 water inflows were significant setbacks.

The consequences of another water inflow at Cigar Lake would depend on its magnitude, location and timing, but could include a significant delay or disruption in Cigar Lake production, a material increase in costs or a loss of mineral reserves.

We take the following steps to reduce the risk of inflows, but there is no guarantee that these will be successful:

● Bulk freezing: Two of the primary challenges in mining the deposit are control of groundwater and ground support. Bulk freezing reduces but does not completely eliminate the risk of water inflows.

● Mine development: We plan for our mine development to take place away from known groundwater sources whenever possible. In addition, we assess all planned mine development for relative risk and apply extensive additional technical and operating controls for all higher risk development.

● Pumping capacity and treatment limits: We have pumping capacity to meet our standard for this operation of at least one and a half times the estimated maximum inflow.

We believe we have sufficient pumping, water treatment and surface storage capacity to handle the estimated maximum inflow.

We also manage the risks listed on pages 52 to 54.

64 CAMECO CORPORATION

Uranium – Tier-one operations

Inkai

2017 Production (our share)   3.2M lbs   2018 Production Outlook (100% basis)   6.9 M lbs   Estimated Reserves (our share)   107.8M lbs   Estimated Mine Life   2045 (based on licence term) Proportion of 2017 U production  

Inkai is a very significant uranium deposit, located in Kazakhstan. The operator is JV Inkai limited liability partnership, which we jointly own (40%) with Kazatomprom (60%)¹.

Inkai is considered a material uranium property for us.

Location	South Kazakhstan
Ownership	40%1
Mine type	In situ recovery (ISR)
End product	Uranium concentrate
Certifications	BSI OHSAS 18001
	ISO 14001 certified
Estimated reserves	107.8 million pounds (proven and probable), average grade U3O8: 0.03%
Estimated resources	12.8 million pounds (measured and indicated), average grade U3O8: 0.03%
	30 million pounds (inferred), average grade U3O8: 0.03%
Licensed capacity (wellfields)	10.4 million pounds per year (our share 4.2 million pounds per year)1
Licence term	Through July 2045
Total packaged production: 2009 to 2017	42.3 million pounds (100% basis)
2017 production	3.2 million pounds (5.5 million pounds on 100% basis)
2018 production outlook	6.9 million pounds (100% basis)1
Estimated decommissioning cost (100% basis)	$11 million (US) (100% basis) (this estimate is currently under review)

All values shown, including reserves and resources, represent our share only, unless indicated.

¹  We signed an agreement with our partner Kazatomprom and JV Inkai to restructure and enhance JV Inkai. Under the agreement, effective January 1, 2018, our ownership interest in the joint venture dropped to 40% and we will equity account for our investment. However, our share of production will gradually be reduced to 40% as JV Inkai increases production as provided for under the agreement. Due to the transition to equity accounting, our share of production will be shown as a purchase. See JV Inkai Restructuring Agreement for more information.

BACKGROUND

Mine description

The Inkai uranium deposit is a roll-front type orebody within permeable sandstones. The more porous and permeable units host several stacked and relatively continuous, sinuous “roll-fronts” of low-grade uranium forming a regional system. Superimposed over this regional system are several uranium projects and active mines.

Inkai’s mineralization ranges in depths from about 260 metres to 530 metres. The deposit has a surface projection of about 40 kilometres in length, and the width ranges from 40 to 1600 metres. The deposit has hydrogeological and mineralization conditions favorable for use of in-situ recovery (ISR) technology.

MANAGEMENT’S DISCUSSION AND ANALYSIS 65

Mining and milling method

JV Inkai uses conventional, well-established, and very efficient ISR technology, developed after extensive test work and operational experience. The process involves five major steps:

● leach the uranium in-situ by circulating an acid-based solution through the host formation

● recover it from solution with ion exchange resin (takes place at both main and satellite processing plants)

● precipitate the uranium with hydrogen peroxide

● thicken, dewater, and dry it

● package the uranium peroxide product in drums

Production

Total 2017 production from Inkai was 5.5 million pounds; our share was 3.2 million pounds, a decrease from 2016, in accordance with Kazatomproms’s planned 10% production decrease for 2017. The subsoil use law in Kazakhstan allows producers to produce within 20% (above or below) of their licensed capacity in a year.

Project funding

We have an outstanding loan for Inkai’s work on block 3 prior to the restructuring and, as of December 31, 2017, the principal and interest amounted to $117 million (US). Under the restructuring agreement, the partners have agreed that JV Inkai will distribute excess cash first as priority repayment of this loan. On January 12, 2018, a payment of $6 million (US) was received.

JV Inkai Restructuring Agreement

In 2016, we signed an agreement with our partner Kazatomprom and JV Inkai to restructure and enhance JV Inkai. The restructuring closed in December 2017 and took effect January 1, 2018. This restructuring was subject to obtaining all required government approvals including an amendment to JV Inkai’s Resource Use Contract, which were obtained. The restructuring consists of the following:

● JV Inkai has the right to produce 10.4 million pounds of U₃O₈ per year (our share 4.2 million pounds), an increase from the prior licensed annual production of 5.2 million pounds (our share 3.0 million pounds)

● JV Inkai has the right to produce until 2045 (previously, the licence terms, based on the boundaries prior to the restructuring, were to 2024 and 2030)

● our ownership interest in JV Inkai is 40% and Kazatomprom’s share is 60%. However, during production rampup, our share of annual production remains at 57.5% on the first 5.2 million pounds. As annual production increases above 5.2 million pounds, we are entitled to 22.5% of any incremental production, to the maximum annual share of 4.2 million pounds. Once the rampup to 10.4 million pounds annually is complete, our share in all production will be 40%, matching our ownership interest.

● a governance framework that provides protection for us as a minority owner

● the boundaries of the mining area match the agreed production profile for JV Inkai to 2045

● the loan that our subsidiary made to JV Inkai to fund exploration and evaluation of the historically defined block 3 area provides for priority repayment

We along with Kazatomprom have also completed and reviewed a feasibility study for the purpose of evaluating the design, construction and operation of a uranium refinery in Kazakhstan. In accordance with the agreement, a decision has been made not to proceed with construction of the uranium refinery, as contemplated in the feasibility study. Kazatomprom has, pursuant to its option under the agreement, requested to licence our proprietary conversion technology for the purposes of investigating the feasibility of constructing and operating a UF₆ conversion facility in Kazakhstan.

Our 2018 financial outlook is presented on the basis of equity accounting for our minority ownership interest in JV Inkai. Under equity accounting, our share of the profits earned by JV Inkai on the sale of its production will be included in “income from equity-accounted investees” on our consolidated statement of earnings. Our share of production will be purchased at a discount to the spot price and included at this value in inventory. In addition, JV Inkai capital is not included in our outlook for capital expenditures. Please see JV Inkai Planning for the future below for more details.

66 CAMECO CORPORATION

Block 3 exploration (prior to restructuring)

In 2017, Inkai completed the test leach on block 3, which resulted in drummed production of 207,065 pounds (not included in Inkai’s annual production). With the restructuring, a portion of block 3 was included in JV Inkai’s new mining area. JV Inkai has the right to mine this new area until mid-2045.

PLANNING FOR THE FUTURE

Production

We expect total production from Inkai to be 6.9 million pounds in 2018. Due to the transition to equity accounting, our share of production, 3.4 million pounds, will be shown as a purchase at a discount to the spot price and included in inventory at this value at the time of delivery. Our share of the profits earned by JV Inkai on the sale of its production will be included in “income from equity-accounted investees” on our consolidated statement of earnings.

MANAGING OUR RISKS

Political risk

Kazakhstan declared itself independent in 1991 after the dissolution of the Soviet Union. Our investment in JV Inkai is subject to the risks associated with doing business in developing countries, which have significant potential for social, economic, political, legal and fiscal instability. Kazakh laws and regulations are complex and still developing and their application can be difficult to predict. The other owner of JV Inkai is Kazatomprom, an entity owned by the government of Kazakhstan. We have entered into agreements with JV Inkai and Kazatomprom intended to mitigate political risk. This risk includes the imposition of governmental laws or policies that could restrict or hinder JV Inkai repaying the block 3 loan, paying us dividends, or selling us our share of JV Inkai production, or that impose discriminatory taxes or currency controls on these transactions. The restructuring of JV Inkai, which took effect January 1, 2018, was undertaken with the objective to better align the interests of Cameco and Kazatomprom and includes a governance framework that provides for protection for us as a minority owner of JV Inkai. We believe the political risk related to our investment in JV Inkai is manageable.

For more details on this risk, please our most recent annual information form under the heading political risks.

JV Inkai manages risks listed on pages 52 to 54.

MANAGEMENT’S DISCUSSION AND ANALYSIS 67

Uranium – Tier-two curtailed operations

Rabbit Lake

Located in Saskatchewan, Canada, our 100% owned Rabbit Lake operation, which opened in 1975, is the longest operating uranium production facility in North America, and the second largest uranium mill in the world. Due to market conditions, we suspended production at Rabbit Lake during the second quarter of 2016.

PRODUCTION AND PRODUCTION SUSPENSION

The facilities remained in a state of safe and sustainable care and maintenance throughout 2017. As a result, there was no production in 2017.

We are continually weighing the value of maintaining the operation in standby, against the cost of doing so. However, as long as production is suspended, we expect care and maintenance costs to range between $35 million and $40 million annually for the first few years. The estimated decommissioning cost for the Rabbit Lake mine site is $203 million, based on the preliminary decommissioning cost estimate that has been accepted by the Province of Saskatchewan and the CNSC.    

IMPAIRMENT

In 2016, as a result of the production suspension, we recognized an impairment charge for the full carrying value of $124 million.

US ISR Operations

We operate Crow Butte and Smith Ranch-Highland. They each have their own processing facilities, but the Highland plant is currently idle.

PRODUCTION AND CURTAILMENT

At Smith Ranch-Highland, production for the year was 67% lower than in 2016. At Crow Butte, 2017 production was 67% lower than in 2016. Production at both operations was lower due to the decision to curtail production in 2016.

The Nuclear Regulatory Commission licence renewal for Smith Ranch - Highland continues.

FUTURE PRODUCTION

As a result of our decision to defer all wellfield development at the US operations, production will cease in 2018, which is expected to result in production of less than 100,000 pounds.

IMPAIRMENT

During the fourth quarter, we recorded a $184 million write down of our US assets. Due to the continued weakening of the uranium market and the reduction in mineral reserves, we concluded that it was appropriate to recognize an impairment charge for these assets. See note 8 to the financial statements.

MANAGING OUR RISKS

We manage the risks listed on pages 52 to 54.

68 CAMECO CORPORATION

Uranium – projects under evaluation

Work on our projects under evaluation has been scaled back and will continue at a pace aligned with market signals.

Millennium

Location	Saskatchewan, Canada
Ownership	69.9%
End product	Uranium concentrates
Potential mine type	Underground
Estimated resources (our share)	53.0 million pounds (indicated), average grade U3O8: 2.39%
	20.2 million pounds (inferred), average grade U3O8: 3.19%

BACKGROUND

The Millennium deposit was discovered in 2000, and was delineated through geophysical survey and surface drilling work between 2000 and 2013.

Yeelirrie

Location	Western Australia
Ownership	100%
End product	Uranium concentrates
Potential mine type	Open pit
Estimated resources	128.1 million pounds (measured and indicated), average grade U3O8: 0.15%

BACKGROUND

The deposit was discovered in 1972 and is a near-surface calcrete-style deposit that is amenable to open pit mining techniques. It is one of Australia’s largest undeveloped uranium deposits.

Kintyre

Location	Western Australia
Ownership	70%
End product	Uranium concentrates
Potential mine type	Open pit
Estimated resources (our share)	37.5 million pounds (indicated), average grade U3O8: 0.62%
	4.2 million pounds (inferred), average grade U3O8: 0.53%

BACKGROUND

The Kintyre deposit was discovered in 1985 and is amenable to open pit mining techniques.

2017 PROJECT UPDATES

We believe that we have some of the best undeveloped uranium projects in the world. However, in the current market environment our primary focus is on preserving the value of our tier-one uranium assets. We continue to await a signal from the market that additional production is needed prior to making any new development decisions.

PLANNING FOR THE FUTURE

2018 Planned activity

No work is planned at Millennium, Yeelirrie or Kintyre. Further progress towards a development decision is not expected until market conditions improve.

MANAGING THE RISKS

For all of our projects under evaluation, we manage the risks listed on pages 52 to 54.

MANAGEMENT’S DISCUSSION AND ANALYSIS 69

Uranium – exploration and corporate development

Our exploration program is directed at replacing mineral reserves as they are depleted by our production, and is key to sustaining our business. However, during this period of weak uranium prices, and as we have ample idled production capacity, we have reduced our spending to focus only on exploration near our existing operations where we have established infrastructure and capacity to expand. In addition, we suspended our exploration in the Northern Territory, Australia. Globally, we have land with exploration and development prospects that are among the best in the world, mainly in Canada, Australia and the US. Our land holdings total 1.0 million hectares (2.5 million acres). In northern Saskatchewan alone, we have direct interests in 640,000 hectares (1.6 million acres) of land covering many of the most prospective exploration areas of the Athabasca Basin.

2017 UPDATE

Brownfield exploration

Brownfield exploration is uranium exploration near our existing operations, and includes expenses for advanced exploration on the evaluation of projects where uranium mineralization is being defined.

In 2017, we spent about $10 million on brownfields and projects under evaluation in Saskatchewan and Australia. At Inkai and the US operations we spent $2 million.

Regional exploration

We spent about $18 million on regional exploration programs (including support costs), primarily in Saskatchewan and, to a lesser extent, in Australia.

PLANNING FOR THE FUTURE

We will continue to focus on our core projects in Saskatchewan under our long-term exploration strategy. Long-term, we look for properties that meet our investment criteria. We may partner with other companies through strategic alliances, equity holdings and traditional joint venture arrangements. Our leadership position and industry expertise in both exploration and corporate social responsibility make us a partner of choice.

ACQUISITION PROGRAM

Currently, given the conditions in the uranium market, our extensive portfolio of reserves and resources and our belief that we have ample idle production capacity, our focus is on maintaining our investment-grade rating and preserving the value of our tier-one assets. We expect that these assets will allow us to meet rising uranium demand with increased production from our best margin operations, and will help to mitigate risk in the event of prolonged uncertainty.

However, we continually evaluate acquisition opportunities within the nuclear fuel cycle that could add to our future supply options, support our sales activities, and complement and enhance our business in the nuclear industry. We will invest when an opportunity is available at the right time and the right price. We strive to pursue corporate development initiatives that will leave us and our shareholders in a fundamentally stronger position. As such, an acquisition opportunity is never assessed in isolation. Acquisitions must compete for investment capital with our own internal growth opportunities. They are subject to our capital allocation process described in the strategy section, starting on page 13.

70 CAMECO CORPORATION

Fuel services

Refining, conversion and fuel manufacturing

We control about 25% of world UF₆ primary conversion capacity and are a supplier of natural UO₂. Our focus is on cost-competitiveness and operational efficiency.

Our fuel services segment is strategically important because it helps support the growth of the uranium segment. Offering a range of products and services to customers helps us broaden our business relationships and expand our uranium market share.

Blind River Refinery

Licensed Capacity   24.0M kgU of UO₃   Licence renewal in   Feb, 2022

Blind River is the world’s largest commercial uranium refinery, refining uranium concentrates from mines around the world into UO₃.

Location	Ontario, Canada
Ownership	100%
End product	UO3
ISO certification	ISO 14001 certified
Licensed capacity	18.0 million kgU as UO3 per year, approved to 24.0 million subject to the completion of certain equipment upgrades (advancement depends on market conditions)
Licence term	Through February, 2022
Estimated decommissioning cost	$48 million

MANAGEMENT’S DISCUSSION AND ANALYSIS 71

Port Hope Conversion Services

Licensed Capacity   12.5M kgU of UF₆   2.8M kgU of UO₂   Licence renewal in Feb, 2027

Port Hope is the only uranium conversion facility in Canada and a supplier of UO₂ for Canadian-made CANDU reactors.

Location	Ontario, Canada
Ownership	100%
End product	UF6, UO2
ISO certification	ISO 14001 certified
Licensed capacity	12.5 million kgU as UF6 per year
	2.8 million kgU as UO2 per year
Licence term	Through February, 2027
Estimated decommissioning cost	$129 million

Cameco Fuel Manufacturing Inc. (CFM)

CFM produces fuel bundles and reactor components for CANDU reactors.

Location	Ontario, Canada
Ownership	100%
End product	CANDU fuel bundles and components
ISO certification	ISO 9001 certified, ISO 14001 certified
Licensed capacity	1.2 million kgU as UO2 as finished bundles
Licence term	Through February, 2022
Estimated decommissioning cost	$21 million

2017 UPDATE

Production

Fuel services produced 7.9 million kgU, 6% lower than 2016. This was a result of our decision to decrease production in response to weak market conditions.

Port Hope conversion facility cleanup and modernization (Vision in Motion)

In 2017, some early implementation aspects of the Vision in Motion project were completed and significant progress with detailed engineering was made. In 2018, detailed engineering will continue and substantial implementation activities will proceed.

Regulatory

The CNSC approved a 10-year operating licence which expires on February 28, 2027.

PLANNING FOR THE FUTURE

Production

We plan to production between 9 million and 10 million kgU in 2018.

MANAGING OUR RISKS

We manage the risks listed on pages 52 to 54.

72 CAMECO CORPORATION

NUKEM

Ownership	100%
Activity	Trading of uranium and uranium-related products
2017 sales	7.1 million pounds U3O8

BACKGROUND

In 2013, we acquired NUKEM, one of the world’s leading traders of uranium and uranium-related products.

In line with the other disciplined actions we have taken, in 2017, we made changes to the way our global marketing activities are organized. All future Canadian and international marketing activities will be consolidated in Saskatoon. These changes significantly impact the marketing activities historically performed by NUKEM. As a result, in the third quarter, we recognized an impairment charge for the full carrying value of the goodwill of $111 million.

We will continue to be active in the spot market when it makes sense for us and in support of our long-term contract portfolio. However, these activities will now largely be undertaken by our new marketing entity, Cameco Marketing Inc., based in Saskatoon.

MANAGEMENT’S DISCUSSION AND ANALYSIS 73

Mineral reserves and resources

Our mineral reserves and resources are the foundation of our company and fundamental to our success.

We have interests in a number of uranium properties. The tables in this section show the estimates of the proven and probable mineral reserves, and measured, indicated, and inferred mineral resources at those properties. However, only three of the properties listed in those tables are material uranium properties for us: McArthur River/Key Lake, Cigar Lake and Inkai. Mineral reserves and resources are all reported as of December 31, 2017 except for Inkai which for accounting purposes are reported as of January 1, 2018. Totals reported as of the end of 2017 are identical to those as of January 1, 2018.

We estimate and disclose mineral reserves and resources in five categories, using the definition standards adopted by the Canadian Institute of Mining, Metallurgy and Petroleum Council, and in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101), developed by the Canadian Securities Administrators. You can find out more about these categories at www.cim.org.

About mineral resources

Mineral resources do not have to demonstrate economic viability, but have reasonable prospects for eventual economic extraction. They fall into three categories: measured, indicated and inferred. Our reported mineral resources are exclusive of mineral reserves.

● Measured and indicated mineral resources can be estimated with sufficient confidence to allow the appropriate application of technical, economic, marketing, legal, environmental, social and governmental factors to support evaluation of the economic viability of the deposit.

● measured resources: we can confirm both geological and grade continuity to support detailed mine planning

● indicated resources: we can reasonably assume geological and grade continuity to support mine planning

● Inferred mineral resources are estimated using limited geological evidence and sampling information. We do not have enough confidence to evaluate their economic viability in a meaningful way. You should not assume that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource, but it is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated mineral resources with continued exploration.

Our share of uranium in the following mineral resource tables is based on our respective ownership interests. Mineral resources that are not mineral reserves have no demonstrated economic viability.

About mineral reserves

Mineral reserves are the economically mineable part of measured and/or indicated mineral resources demonstrated by at least a preliminary feasibility study. The reference point at which mineral reserves are defined is the point where the ore is delivered to the processing plant, except for ISR operations where the reference point is where the mineralization occurs under the existing or planned wellfield patterns. Mineral reserves fall into two categories:

● proven reserves: the economically mineable part of a measured resource for which at least a preliminary feasibility study demonstrates that, at the time of reporting, economic extraction could be reasonably justified with a high degree of confidence

● probable reserves: the economically mineable part of a measured and/or indicated resource for which at least a preliminary feasibility study demonstrates that, at the time of reporting, economic extraction could be reasonably justified with a degree of confidence lower than that applying to proven reserves

We use current geological models, average uranium prices of $44 to $54 (US) per pound U₃O₈, depending on the varying production schedules and the annual forecast realized prices, and current or projected operating costs and mine plans to estimate our mineral reserves, allowing for dilution and mining losses. We apply our standard data verification process for every estimate.

Our share of uranium in the mineral reserves table below is based on our respective ownership interests.

74 CAMECO CORPORATION

PROVEN AND PROBABLE (P+P) RESERVES, MEASURED AND INDICATED (M+I) RESOURCES, INFERRED RESOURCES

(SHOWING CHANGE FROM 2016)

at December 31, 2017

Changes this year

Our share of proven and probable mineral reserves increased from 415 million pounds U₃O₈ at the end of 2016, to 458 million pounds at the end of 2017. The change was primarily the result of:

● JV Inkai’s amended Resource Use Contract which extended the mine life, increased the annual production level, changed our percent ownership and changed the boundaries of the mining area. This resulted in increases of 40 million pounds in proven mineral reserves, and 25 million pounds in probable mineral reserves.

partially offset by:

● production, which removed 24.5 million pounds from our mineral inventory

Measured and indicated mineral resources decreased from 487 million pounds U₃O₈ at the end of 2016, to 425 million pounds at the end of 2017. Our share of inferred mineral resources is 190 million pounds U₃O₈, a decrease of 58 million pounds from the end of 2016. The variance in mineral resources was mainly the result of:

● JV Inkai’s amended Resource Use Contract, which resulted in decreases of 23 million pounds and 45 million pounds in measured and indicated resources respectively, and a decrease of 56 million pounds in inferred resources

partially offset by:

● surface delineation drilling at Cigar Lake Phase 2 which added 7 million pounds to indicated resources

● transfer of nearly 2 million pounds to resources from reserves for the US ISR operations

Qualified persons

The technical and scientific information discussed in this MD&A for our material properties (McArthur River/Key Lake, Cigar Lake and Inkai) was approved by the following individuals who are qualified persons for the purposes of NI 43-101:

MCARTHUR RIVER/KEY LAKE

● Alain G. Mainville, director, mineral resources management, Cameco

● Greg Murdock, manager, operations, McArthur River, Cameco

● Baoyao Tang, superintendent, technical, McArthur River, Cameco

● Leslie Yesnik, general manager, McArthur River/Key Lake, Cameco

CIGAR LAKE

● Scott Bishop, manager, technical services, Cameco

● Jeremy Breker, general manager, Rabbit Lake/Cigar Lake, Cameco

● Alain G. Mainville, director, mineral resources management, Cameco

● Leslie Yesnik, general manager, McArthur River/Key Lake, Cameco

INKAI    

● Darryl Clark, president, Cameco Kazakhstan LLP

● Alain G. Mainville, director, mineral resources management, Cameco

● Bryan Soliz, principal geologist, Cameco Resources

● Robert Sumner, principal metallurgist, technical services, Cameco

MANAGEMENT’S DISCUSSION AND ANALYSIS 75

Important information about mineral reserve and resource estimates

Although we have carefully prepared and verified the mineral reserve and resource figures in this document, the figures are estimates, based in part on forward-looking information.

Estimates are based on knowledge, mining experience, analysis of drilling results, the quality of available data and management’s best judgment. They are, however, imprecise by nature, may change over time, and include many variables and assumptions, including:

● geological interpretation

● extraction plans

● commodity prices and currency exchange rates

● recovery rates

● operating and capital costs

There is no assurance that the indicated levels of uranium will be produced, and we may have to re-estimate our mineral reserves based on actual production experience. Changes in the price of uranium, production costs or recovery rates could make it unprofitable for us to operate or develop a particular site or sites for a period of time. See page 2 for information about forward-looking information.

Please see our mineral reserves and resources section of our annual information form for the specific assumptions, parameters and methods used for McArthur River, Inkai and Cigar Lake mineral reserve and resource estimates.

Important information for US investors

While the terms measured, indicated and inferred mineral resources are recognized and required by Canadian securities regulatory authorities, the US Securities and Exchange Commission (SEC) does not recognize them. Under US standards, mineralization may not be classified as a ‘reserve’ unless it has been determined at the time of reporting that the mineralization could be economically and legally produced or extracted. US investors should not assume that:

● any or all of a measured or indicated mineral resource will ever be converted into proven or probable mineral reserves

● any or all of an inferred mineral resource exists or is economically or legally mineable, or will ever be upgraded to a higher category. Under Canadian securities regulations, estimates of inferred resources may not form the basis of feasibility or pre-feasibility studies. Inferred resources have a great amount of uncertainty as to their existence and economic and legal feasibility.

The requirements of Canadian securities regulators for identification of ‘reserves’ are also not the same as those of the SEC, and mineral reserves reported by us in accordance with Canadian requirements may not qualify as reserves under SEC standards.

Other information concerning descriptions of mineralization, mineral reserves and resources may not be comparable to information made public by companies that comply with the SEC’s reporting and disclosure requirements for US domestic mining companies, including Industry Guide 7.

76 CAMECO CORPORATION

Mineral reserves

As at December 31, 2017, except for Inkai which are as at January 1, 2018 (100% – only the shaded column shows our share)

PROVEN AND PROBABLE

(tonnes in thousands; pounds in millions)

			PROVEN						PROBABLE						TOTAL MINERAL RESERVES						OUR SHARE RESERVES
PROPERTY	MINING METHOD		TONNES		GRADE %  U3O8		CONTENT (LBS  U3O8)		TONNES		GRADE %  U3O8		CONTENT (LBS  U3O8)		TONNES		GRADE %  U3O8		CONTENT (LBS  U3O8)		CONTENT (LBS  U3O8)		METALLURGICAL RECOVERY (%)
Cigar Lake		UG		215.6		16.88		80.2		386.6		13.81		117.7		602.1		14.91		197.9		99.0		99
Key Lake		OP		61.1		0.52		0.7		-		-		-		61.1		0.52		0.7		0.6		92
McArthur River		UG		1,097.5		9.90		239.5		593.3		9.15		119.6		1,690.7		9.63		359.1		250.7		92
Inkai		ISR		214,104.1		0.04		167.5		166,913.0		0.03		102.1		381,017.2		0.03		269.7		107.8		85
Total				215,478.3		-		487.9		167,892.9		-		339.5		383,371.2		-		827.4		458.2		-

(UG – underground, OP – open pit, ISR – in situ recovery), totals may not add up due to rounding.

Note that the estimates in the above table:

• use constant dollar average uranium prices, varying per property, from $44 to $54 (US) per pound U₃O₈

• are based on exchange rates of $1.00 US=$1.25 Cdn and 265 Kazakhstan Tenge to $1.00 Cdn

Our estimate of mineral reserves and mineral resources may be positively or negatively affected by the occurrence of one or more of the material risks discussed under the heading Caution about forward-looking information beginning on page 2, as well as certain property-specific risks. See Uranium - operations starting on page 56.

Metallurgical recovery

We report mineral reserves as the quantity of contained ore supporting our mining plans, and provide an estimate of the metallurgical recovery for each uranium property. The estimate of the amount of valuable product that can be physically recovered by the metallurgical extraction process is obtained by multiplying the quantity of contained metal (content) by the planned metallurgical recovery percentage. The content and our share of uranium in the table above are before accounting for estimated metallurgical recovery.

MANAGEMENT’S DISCUSSION AND ANALYSIS 77

Mineral resources

As at December 31, 2017, except for Inkai which are as at January 1, 2018 (100% – only the shaded columns show our share)

MEASURED, INDICATED AND INFERRED

(tonnes in thousands; pounds in millions)

	MEASURED RESOURCES (M)						INDICATED RESOURCES (I)								OUR		INFERRED RESOURCES						OUR SHARE INFERRED CONTENT (LBS U3O8)
PROPERTY	TONNES		GRADE % U3O8		CONTENT (LBS U3O8)		TONNES		GRADE % U3O8		CONTENT (LBS U3O8)		TOTAL M+I CONTENT (LBS U3O8)		SHARE TOTAL M+I CONTENT (LBS U3O8)		TONNES		GRADE % U3O8		CONTENT (LBS U3O8)
Cigar Lake		8.7		7.35		1.4		298.8		14.69		96.8		98.2		49.1		180.0		5.97		23.7		11.8
Fox Lake		-		-		-		-		-		-		-		-		386.7		7.99		68.1		53.3
Kintyre		-		-		-		3,897.7		0.62		53.5		53.5		37.5		517.1		0.53		6.0		4.2
McArthur River		89.8		2.71		5.4		15.6		4.70		1.6		7.0		4.9		76.8		5.01		8.5		5.9
Millennium		-		-		-		1,442.6		2.39		75.9		75.9		53.0		412.4		3.19		29.0		20.2
Wheeler River		-		-		-		166.4		19.13		70.2		70.2		18.7		842.5		2.38		44.1		11.8
Rabbit Lake		-		-		-		1,836.5		0.95		38.6		38.6		38.6		2,460.9		0.62		33.7		33.7
Tamarack		-		-		-		183.8		4.42		17.9		17.9		10.3		45.6		1.02		1.0		0.6
Yeelirrie		27,172.9		0.16		95.9		12,178.3		0.12		32.2		128.1		128.1		-		-		-		-
Crow Butte		1,779.4		0.18		6.9		1,354.9		0.29		8.6		15.5		15.5		1,135.2		0.12		2.9		2.9
Gas Hills-Peach		687.2		0.11		1.7		3,626.1		0.15		11.6		13.3		13.3		3,307.5		0.08		6.0		6.0
Inkai		36,680.9		0.03		21.3		21,132.2		0.02		10.7		32.0		12.8		116,394.6		0.03		75.0		30.0
North Butte-Brown Ranch		910.1		0.08		1.7		5,530.3		0.07		8.4		10.0		10.0		294.5		0.07		0.4		0.4
Ruby Ranch		-		-		-		2,215.3		0.08		4.1		4.1		4.1		56.2		0.14		0.2		0.2
Shirley Basin		89.2		0.16		0.3		1,638.2		0.11		4.1		4.4		4.4		508.0		0.10		1.1		1.1
Smith Ranch-Highland		3,721.3		0.10		7.9		14,372.3		0.05		17.0		24.9		24.9		6,861.0		0.05		7.7		7.7
Total		71,139.6		-		142.5		69,889.1		-		451.2		593.7		425.3		133,479.0		-		307.5		189.9

Totals may not add up due to rounding.

Note that mineral resources:

• do not include amounts that have been identified as mineral reserves

• do not have demonstrated economic viability

78 CAMECO CORPORATION

Additional information

Due to the nature of our business, we are required to make estimates that affect the amount of assets and liabilities, revenues and expenses, commitments and contingencies we report. We base our estimates on our experience, our best judgment, guidelines established by the Canadian Institute of Mining, Metallurgy and Petroleum and on assumptions we believe are reasonable.

We believe the following critical accounting estimates reflect the more significant judgments used in the preparation of our financial statements. These estimates affect all of our segments, unless otherwise noted.

Decommissioning and reclamation

In our uranium and fuel services segments, we are required to estimate the cost of decommissioning and reclamation for each operation, but we normally do not incur these costs until an asset is nearing the end of its useful life. Regulatory requirements and decommissioning methods could change during that time, making our actual costs different from our estimates. A significant change in these costs or in our mineral reserves could have a material impact on our net earnings and financial position. See note 14 to the financial statements.

Property, plant and equipment

We depreciate property, plant and equipment primarily using the unit-of-production method, where the carrying value is reduced as resources are depleted. A change in our mineral reserves would change our depreciation expenses, and such a change could have a material impact on amounts charged to earnings.

We assess the carrying values of property, plant and equipment and goodwill every year, or more often if necessary. If we determine that we cannot recover the carrying value of an asset or goodwill, we write off the unrecoverable amount against current earnings. We base our assessment of recoverability on assumptions and judgments we make about future prices, production costs, our requirements for sustaining capital and our ability to economically recover mineral reserves. A material change in any of these assumptions could have a significant impact on the potential impairment of these assets.

In performing impairment assessments of long-lived assets, assets that cannot be assessed individually are grouped together into the smallest group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Management is required to exercise judgment in identifying these cash generating units.

Taxes

When we are preparing our financial statements, we estimate taxes in each jurisdiction we operate in, taking into consideration different tax rates, non-deductible expenses, valuation of deferred tax assets, changes in tax laws and our expectations for future results.

We base our estimates of deferred income taxes on temporary differences between the assets and liabilities we report in our financial statements, and the assets and liabilities determined by the tax laws in the various countries we operate in. We record deferred income taxes in our financial statements based on our estimated future cash flows, which includes estimates of non-deductible expenses, future market conditions, production levels and intercompany sales. If these estimates are not accurate, there could be a material impact on our net earnings and financial position.

Commencement of production stage

When we determine that a mining property has reached the production stage, capitalization of development ceases, and depreciation of the mining property begins and is charged to earnings. Production is reached when management determines that the mine is able to produce at a consistent or sustainably increasing level. This determination is a matter of judgment. See note 2 to the financial statements for further information on the criteria that we used to make this assessment.

MANAGEMENT’S DISCUSSION AND ANALYSIS 79

Purchase price allocations

The purchase price related to a business combination or asset acquisition is allocated to the underlying acquired assets and liabilities based on their estimated fair values at the time of acquisition. The determination of fair value requires us to make assumptions, estimates and judgments regarding future events. The allocation process is inherently subjective and impacts the amounts assigned to individually identifiable assets and liabilities. As a result, the purchase price allocation impacts our reported assets and liabilities and future net earnings due to the impact on future depreciation and amortization expense and impairment tests.

Determination of joint control

We conduct certain operations through joint ownership interests. Judgment is required in assessing whether we have joint control over the investee, which involves determining the relevant activities of the arrangement and whether decisions around relevant activities require unanimous consent. Judgment is also required to determine whether a joint arrangement should be classified as a joint venture or joint operation. Classifying the arrangement requires us to assess our rights and obligations arising from the arrangement. Specifically, management considers the structure of the joint arrangement and whether it is structured through a separate vehicle. When structured through a separate vehicle, we also consider the rights and obligations arising from the legal form of the separate vehicle, the terms of the contractual arrangements and other facts and circumstances, when relevant. This judgment influences whether we equity account or proportionately consolidate our interest in the arrangement.

Controls and procedures

We have evaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of December 31, 2017, as required by the rules of the US Securities and Exchange Commission and the Canadian Securities Administrators.

Management, including our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO), supervised and participated in the evaluation, and concluded that our disclosure controls and procedures are effective to provide a reasonable level of assurance that the information we are required to disclose in reports we file or submit under securities laws is recorded, processed, summarized and reported accurately, and within the time periods specified. It should be noted that, while the CEO and CFO believe that our disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect the disclosure controls and procedures or internal control over financial reporting to be capable of preventing all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Management, including our CEO and our CFO, is responsible for establishing and maintaining internal control over financial reporting and conducted an evaluation of the effectiveness of our internal control over financial reporting based on the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2017. We have not made any change to our internal control over financial reporting during the 2017 fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

New standards and interpretations not yet adopted

A number of new standards and amendments to existing standards are not yet effective for the year ended December 31, 2017, and have not been applied in preparing these consolidated financial statements. We do not intend to early adopt any of the following standards or amendments to existing standards, unless otherwise noted.

IFRS 15, Revenue from Contracts with Customers (IFRS 15) – In May 2014, the International Accounting Standards Board (IASB) issued IFRS 15 which is effective for periods beginning on or after January 1, 2018 and is to be applied retrospectively. IFRS 15 clarifies the principles for recognizing revenue from contracts with customers. Our assessment primarily involved reviewing our sales contracts to determine if any performance obligations exist that will need to be separately identified that may affect the timing of when revenue will be recognized under IFRS 15. Based on our assessment, we have not identified any material impacts on the timing and measurement of revenue from our existing revenue recognition practices from the adoption of the new standard, however we do expect to have additional disclosures.

80 CAMECO CORPORATION

IFRS 9, Financial Instruments (IFRS 9) – In July 2014, the IASB issued IFRS 9 which replaces the existing guidance in IAS 39, Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 includes revised guidance on the classification and measurement of financial assets, a new expected credit loss model for calculating impairment on financial assets and new hedge accounting requirements. It also carries forward, from IAS 39, guidance on recognition and derecognition of financial instruments.

IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption of the new standard permitted. We do not apply hedge accounting and do not currently intend to apply hedge accounting upon adoption of IFRS 9. Based on our assessment, we do not expect adoption of the standard to have a material impact on the financial statements, however we do expect to have additional disclosures.

IFRS 16, Leases (IFRS 16) – In January 2016, the IASB issued IFRS 16 which is effective for periods beginning on or after January 1, 2019, with early adoption permitted. IFRS 16 eliminates the current dual model for lessees, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on-balance sheet accounting model that is similar to current finance lease accounting. The extent of the impact of adoption of IFRS 16 has not yet been determined.

IFRIC 23, Uncertainty over Income Tax Treatments (IFRIC 23) – In June 2017, the IASB issued IFRIC 23 which is effective for periods beginning on or after January 1, 2019 with early adoption permitted. IFRIC 23 provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. The extent of the impact of the adoption of IFRIC 23 has not yet been determined.

MANAGEMENT’S DISCUSSION AND ANALYSIS 81

Cameco Corporation

2017 consolidated financial statements

February 7, 2018

82 CAMECO CORPORATION

Report of management’s accountability

The accompanying consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Management is responsible for ensuring that these statements, which include amounts based upon estimates and judgments, are consistent with other information and operating data contained in the annual financial review and reflect the corporation’s business transactions and financial position.

Management is also responsible for the information disclosed in the management’s discussion and analysis including responsibility for the existence of appropriate information systems, procedures and controls to ensure that the information used internally by management and disclosed externally is complete and reliable in all material respects.

In addition, management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. The internal control system includes an internal audit function and a code of conduct and ethics, which is communicated to all levels in the organization and requires all employees to maintain high standards in their conduct of the Company’s affairs. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the Company’s assets are appropriately accounted for and adequately safeguarded. Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the criteria established in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s system of internal control over financial reporting was effective as at December 31, 2017.

KPMG LLP has audited the consolidated financial statements in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).

The board of directors annually appoints an audit and finance committee comprised of directors who are not employees of the corporation. This committee meets regularly with management, the internal auditor and the shareholders’ auditors to review significant accounting, reporting and internal control matters. Both the internal and shareholders’ auditors have unrestricted access to the audit and finance committee. The audit and finance committee reviews the consolidated financial statements, the report of the shareholders’ auditors, and management’s discussion and analysis and submits its report to the board of directors for formal approval.

Original signed by Tim S. Gitzel	Original signed by Grant E. Isaac
President and Chief Executive Officer	Senior Vice-President and Chief Financial Officer
February 7, 2018	February 7, 2018

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 83

Independent auditors’ report

To the Shareholders and Board of Directors of Cameco Corporation:

We have audited the accompanying consolidated financial statements of Cameco Corporation, which comprise the consolidated statements of financial position as at December 31, 2017 and December 31, 2016, the consolidated statements of earnings, comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Cameco Corporation as at December 31, 2017 and December 31, 2016 and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Original signed by KPMG LLP

Chartered Professional Accountants

February 7, 2018

Saskatoon, Canada

84 CAMECO CORPORATION

Consolidated statements of earnings

For the years ended December 31 ($Cdn thousands, except per share amounts)	Note		2017			2016
Revenue from products and services			$	2,156,852		$	2,431,404
Cost of products and services sold				1,390,233			1,596,235
Depreciation and amortization				330,345			371,689
Cost of sales				1,720,578			1,967,924
Gross profit				436,274			463,480
Administration				163,095			206,652
Impairment charges		8, 9		358,330			361,989
Exploration				29,933			42,579
Research and development				5,660			4,952
Other operating expense (income)		14		43			(34,075	)
Loss on disposal of assets				6,947			23,168
Loss from operations				(127,734	)		(141,785	)
Finance costs		17		(110,608	)		(111,906	)
Gain on derivatives		24		56,250			34,407
Finance income				5,265			4,379
Other income (expense)		18		(30,410	)		60,671
Loss before income taxes				(207,237	)		(154,234	)
Income tax recovery		19		(2,519	)		(94,355	)
Net loss			$	(204,718	)	$	(59,879	)
Net earnings (loss) attributable to:
Equity holders				(204,942	)		(61,611	)
Non-controlling interest				224			1,732
Net loss			$	(204,718	)	$	(59,879	)
Loss per common share attributable to equity holders:
Basic		20	$	(0.52	)	$	(0.16	)
Diluted		20	$	(0.52	)	$	(0.16	)

See accompanying notes to consolidated financial statements.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 85

Consolidated statements of comprehensive income

For the years ended December 31 ($Cdn thousands)	Note		2017			2016
Net loss			$	(204,718	)	$	(59,879	)
Other comprehensive income (loss), net of taxes:
Items that will not be reclassified to net earnings:
Remeasurements of defined benefit liability1		23		(6,216	)		(2,109	)
Items that are or may be reclassified to net earnings:
Exchange differences on translation of foreign operations				(44,080	)		(77,341	)
Unrealized gains on available-for-sale assets2				5,837			3,790
Other comprehensive loss, net of taxes				(44,459	)		(75,660	)
Total comprehensive loss			$	(249,177	)	$	(135,539	)
Other comprehensive income (loss) attributable to:
Equity holders			$	(44,449	)	$	(75,826	)
Non-controlling interest				(10	)		166
Other comprehensive loss for the year			$	(44,459	)	$	(75,660	)
Total comprehensive income (loss) attributable to:
Equity holders			$	(249,391	)	$	(137,437	)
Non-controlling interest				214			1,898
Total comprehensive loss for the year			$	(249,177	)	$	(135,539	)

¹ Net of tax (2017 - $2,155; 2016 - $834)

² Net of tax (2017 - $(665); 2016 - $(399))

See accompanying notes to consolidated financial statements.

86 CAMECO CORPORATION

Consolidated statements of financial position

As at December 31 ($Cdn thousands)	Note		2017		2016
Assets
Current assets
Cash and cash equivalents			$	591,620	$	320,278
Accounts receivable		6		396,824		242,482
Current tax assets				11,408		11,552
Inventories		7		949,766		1,287,939
Supplies and prepaid expenses				149,872		169,084
Current portion of long-term receivables, investments and other		10		36,089		10,498
Total current assets				2,135,579		2,041,833
Property, plant and equipment		8		4,191,892		4,655,586
Goodwill and intangible assets		9		70,012		203,310
Long-term receivables, investments and other		10		520,073		512,484
Deferred tax assets		19		861,171		835,985
Total non-current assets				5,643,148		6,207,365
Total assets			$	7,778,727	$	8,249,198
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities		11	$	258,405	$	312,900
Current tax liabilities				20,133		36,413
Dividends payable				39,579		39,579
Current portion of other liabilities		13		54,370		60,744
Current portion of provisions		14		38,507		19,619
Total current liabilities				410,994		469,255
Long-term debt		12		1,494,471		1,493,327
Other liabilities		13		126,103		122,988
Provisions		14		875,033		889,163
Deferred tax liabilities		19		12,467		15,937
Total non-current liabilities				2,508,074		2,521,415
Shareholders’ equity
Share capital				1,862,652		1,862,646
Contributed surplus				224,812		216,213
Retained earnings				2,650,417		3,019,872
Other components of equity				121,407		159,640
Total shareholders’ equity attributable to equity holders				4,859,288		5,258,371
Non-controlling interest				371		157
Total shareholders’ equity				4,859,659		5,258,528
Total liabilities and shareholders’ equity			$	7,778,727	$	8,249,198

Commitments and contingencies [notes 8, 14, 19]

See accompanying notes to consolidated financial statements.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 87

Consolidated statements of changes in equity

	Attributable to equity holders
($Cdn thousands)	Share capital		Contributed surplus			Retained earnings			Foreign currency translation			Available for-sale assets			Total			Non- controlling interest			Total equity
Balance at January 1, 2017	$	1,862,646	$	216,213		$	3,019,872		$	156,411		$	3,229		$	5,258,371		$	157		$	5,258,528
Net earnings (loss)		-		-			(204,942	)		-			-			(204,942	)		224			(204,718	)
Other comprehensive income (loss)		-		-			(6,216	)		(44,070	)		5,837			(44,449	)		(10	)		(44,459	)
Total comprehensive income (loss)		-		-			(211,158	)		(44,070	)		5,837			(249,391	)		214			(249,177	)
Share-based compensation		-		13,960			-			-			-			13,960			-			13,960
Stock options exercised		6		(1	)		-			-			-			5			-			5
Restricted and performance share units released		-		(5,360	)		-			-			-			(5,360	)		-			(5,360	)
Dividends		-		-			(158,297	)		-			-			(158,297	)		-			(158,297	)
Balance at December 31, 2017	$	1,862,652	$	224,812		$	2,650,417		$	112,341		$	9,066		$	4,859,288		$	371		$	4,859,659
Balance at January 1, 2016	$	1,862,646	$	209,115		$	3,241,902		$	233,918		$	(561	)	$	5,547,020		$	(1,741	)	$	5,545,279
Net earnings (loss)		-		-			(61,611	)		-			-			(61,611	)		1,732			(59,879	)
Other comprehensive income (loss)		-		-			(2,109	)		(77,507	)		3,790			(75,826	)		166			(75,660	)
Total comprehensive income (loss)		-		-			(63,720	)		(77,507	)		3,790			(137,437	)		1,898			(135,539	)
Share-based compensation		-		14,101			-			-			-			14,101			-			14,101
Restricted and performance share units released		-		(7,003	)		-			-			-			(7,003	)		-			(7,003	)
Dividends		-		-			(158,310	)		-			-			(158,310	)		-			(158,310	)
Balance at December 31, 2016	$	1,862,646	$	216,213		$	3,019,872		$	156,411		$	3,229		$	5,258,371		$	157		$	5,258,528

See accompanying notes to consolidated financial statements.

88 CAMECO CORPORATION

Consolidated statements of cash flows

For the years ended December 31 ($Cdn thousands)	Note		2017			2016
Operating activities
Net loss			$	(204,718	)	$	(59,879	)
Adjustments for:
Depreciation and amortization				330,345			371,689
Deferred charges				(1,101	)		(95,873	)
Unrealized gain on derivatives				(62,569	)		(110,358	)
Share-based compensation		22		13,960			14,101
Loss on disposal of assets				6,947			23,168
Finance costs		17		110,608			111,906
Finance income				(5,265	)		(4,379	)
Impairment charges		8, 9		358,330			361,989
Other expense (income)		18		30,522			(1,630	)
Other operating expense (income)		14		43			(34,075	)
Income tax recovery		19		(2,519	)		(94,355	)
Interest received				11,592			1,838
Income taxes paid				(77,182	)		(102,628	)
Other operating items		21		87,057			(69,134	)
Net cash provided by operations				596,050			312,380
Investing activities
Additions to property, plant and equipment				(114,028	)		(216,908	)
Decrease (increase) in long-term receivables, investments and other				19,023			(3,080	)
Proceeds from sale of property, plant and equipment				1,951			2,168
Net cash used in investing				(93,054	)		(217,820	)
Financing activities
Interest paid				(69,498	)		(70,446	)
Proceeds from issuance of shares, stock option plan				4			-
Dividends paid				(158,297	)		(158,310	)
Net cash used in financing				(227,791	)		(228,756	)
Increase (decrease) in cash and cash equivalents, during the year				275,205			(134,196	)
Exchange rate changes on foreign currency cash balances				(3,863	)		(4,130	)
Cash and cash equivalents, beginning of year				320,278			458,604
Cash and cash equivalents, end of year			$	591,620		$	320,278
Cash and cash equivalents is comprised of:
Cash			$	190,174		$	79,730
Cash equivalents				401,446			240,548
Cash and cash equivalents			$	591,620		$	320,278

See accompanying notes to consolidated financial statements.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 89

Notes to consolidated financial statements

For the years ended December 31, 2017 and 2016

1. Cameco Corporation

Cameco Corporation is incorporated under the Canada Business Corporations Act. The address of its registered office is 2121 11th Street West, Saskatoon, Saskatchewan, S7M 1J3. The consolidated financial statements as at and for the year ended December 31, 2017 comprise Cameco Corporation and its subsidiaries (collectively, the Company or Cameco) and the Company’s interests in associates and joint arrangements. The Company is primarily engaged in the exploration for and the development, mining, refining, conversion, fabrication and trading of uranium for sale as fuel for generating electricity in nuclear power reactors in Canada and other countries.

2. Significant accounting policies

A. Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

These consolidated financial statements were authorized for issuance by the Company’s board of directors on February 7, 2018.

B. Basis of presentation

These consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency. All financial information is presented in Canadian dollars, unless otherwise noted. Amounts presented in tabular format have been rounded to the nearest thousand except per share amounts and where otherwise noted.

The consolidated financial statements have been prepared on the historical cost basis except for the following material items which are measured on an alternative basis at each reporting date:

Derivative financial instruments	Fair value
Available-for-sale financial assets	Fair value
Liabilities for cash-settled share-based payment arrangements	Fair value
Net defined benefit liability	Fair value of plan assets less the present value of the defined benefit obligation

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may vary from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 5.

This summary of significant accounting policies is a description of the accounting methods and practices that have been used in the preparation of these consolidated financial statements and is presented to assist the reader in interpreting the statements contained herein. These accounting policies have been applied consistently to all entities within the consolidated group.

90 CAMECO CORPORATION

C. Consolidation principles

i. Business combinations

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The Company measures goodwill at the acquisition date as the fair value of the consideration transferred, including the recognized amount of any non-controlling interests in the acquiree, less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognized immediately in earnings. In a business combination achieved in stages, the acquisition date fair value of the Company’s previously held equity interest in the acquiree is also considered in computing goodwill.

Consideration transferred includes the fair values of the assets transferred, liabilities incurred and equity interests issued by the Company. Consideration also includes the fair value of any contingent consideration and share-based compensation awards that are replaced mandatorily in a business combination.

The Company elects on a transaction-by-transaction basis whether to measure any non-controlling interest at fair value, or at their proportionate share of the recognized amount of the identifiable net assets of the acquiree, at the acquisition date.

Acquisition-related costs are expensed as incurred, except for those costs related to the issue of debt or equity instruments.

ii. Subsidiaries

The consolidated financial statements include the accounts of Cameco and its subsidiaries. Subsidiaries are entities over which the Company has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Company and are deconsolidated from the date that control ceases.

iii. Investments in equity-accounted investees

Cameco’s investments in equity-accounted investees include investments in associates.

Associates are those entities over which the Company has significant influence, but not control or joint control, over the financial and operating policies. Significant influence is presumed to exist when the Company holds between 20% and 50% of the voting power of another entity, but can also arise where the Company holds less than 20% if it has the power to be actively involved and influential in policy decisions affecting the entity.

Investments in associates are accounted for using the equity method. The equity method involves the recording of the initial investment at cost and the subsequent adjusting of the carrying value of the investment for Cameco’s proportionate share of the earnings or loss and any other changes in the associates’ net assets, such as dividends. The cost of the investment includes transaction costs.

Adjustments are made to align the accounting policies of the associate with those of the Company before applying the equity method. When the Company’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, Cameco resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized.

iv. Joint arrangements

A joint arrangement can take the form of a joint operation or joint venture. All joint arrangements involve a contractual arrangement that establishes joint control.

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A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint operation may or may not be structured through a separate vehicle. These arrangements involve joint control of one or more of the assets acquired or contributed for the purpose of the joint operation. The consolidated financial statements of the Company include its share of the assets in such joint operations, together with its share of the liabilities, revenues and expenses arising jointly or otherwise from those operations. All such amounts are measured in accordance with the terms of each arrangement.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. A joint venture is always structured through a separate vehicle. It operates in the same way as other entities, controlling the assets of the joint venture, earning its own revenue and incurring its own liabilities and expenses. Interests in joint ventures are accounted for using the equity method of accounting, whereby the Company’s proportionate interest in the assets, liabilities, revenues and expenses of jointly controlled entities are recognized on a single line in the consolidated statements of financial position and consolidated statements of earnings. The share of joint ventures results is recognized in the Company’s consolidated financial statements from the date that joint control commences until the date at which it ceases.

v. Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Company’s interest in the investee. Unrealized losses are eliminated in the same manner as unrealized gains, but only to the extent that there is no evidence of impairment.

D. Foreign currency translation

Items included in the financial statements of each of Cameco’s subsidiaries, associates and joint arrangements are measured using their functional currency, which is the currency of the primary economic environment in which the entity operates. The consolidated financial statements are presented in Canadian dollars, which is Cameco’s functional and presentation currency.

i. Foreign currency transactions

Foreign currency transactions are translated into the respective functional currency of the Company and its entities using the exchange rates prevailing at the dates of the transactions. At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. The applicable exchange gains and losses arising on these transactions are reflected in earnings with the exception of foreign exchange gains or losses on provisions for decommissioning and reclamation activities that are in a foreign currency, which are capitalized in property, plant and equipment.

ii. Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Canadian dollars at exchange rates at the reporting dates. The revenues and expenses of foreign operations are translated to Canadian dollars at exchange rates at the dates of the transactions.

Foreign currency differences are recognized in other comprehensive income. When a foreign operation is disposed of, in whole, the relevant amount in the foreign currency translation account is transferred to earnings as part of the gain or loss on disposal.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of the net investment in a foreign operation, and are recognized in other comprehensive income and presented within equity in the foreign currency translation account.

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E. Cash and cash equivalents

Cash and cash equivalents consists of balances with financial institutions and investments in money market instruments, which have a term to maturity of three months or less at the time of purchase.

F. Inventories

Inventories of broken ore, uranium concentrates, and refined and converted products are measured at the lower of cost and net realizable value.

Cost includes direct materials, direct labour, operational overhead expenses and depreciation. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Consumable supplies and spares are valued at the lower of cost or replacement value.

G. Property, plant and equipment

i. Buildings, plant and equipment and other

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment charges. The cost of self-constructed assets includes the cost of materials and direct labour, borrowing costs and any other costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by management, including the initial estimate of the cost of dismantling and removing the items and restoring the site on which they are located.

When components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment and depreciated separately.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized in earnings.

ii. Mineral properties and mine development costs

The decision to develop a mine property within a project area is based on an assessment of the commercial viability of the property, the availability of financing and the existence of markets for the product. Once the decision to proceed to development is made, development and other expenditures relating to the project area are deferred as part of assets under construction and disclosed as a component of property, plant and equipment with the intention that these will be depreciated by charges against earnings from future mining operations. No depreciation is charged against the property until the production stage commences. After a mine property has been brought into the production stage, costs of any additional work on that property are expensed as incurred, except for large development programs, which will be deferred and depreciated over the remaining life of the related assets.

The production stage is reached when a mine property is in the condition necessary for it to be capable of operating in the manner intended by management. The criteria used to assess the start date of the production stage are determined based on the nature of each mine construction project, including the complexity of a mine site. A range of factors is considered when determining whether the production stage has been reached, which includes, but is not limited to, the demonstration of sustainable production at or near the level intended (such as the demonstration of continuous throughput levels at or above a target percentage of the design capacity).

iii. Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of the asset less its residual value. Assets which are unrelated to production are depreciated according to the straight-line method based on estimated useful lives as follows:

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Land	Not depreciated
Buildings	15 - 25 years
Plant and equipment	3 - 15 years
Furniture and fixtures	3 - 10 years
Other	3 - 5 years

Mining properties and certain mining and conversion assets for which the economic benefits from the asset are consumed in a pattern which is linked to the production level are depreciated according to the unit-of-production method. For conversion assets, the amount of depreciation is measured by the portion of the facilities’ total estimated lifetime production that is produced in that period. For mining assets and properties, the amount of depreciation or depletion is measured by the portion of the mines’ proven and probable mineral reserves recovered during the period.

Depreciation methods, useful lives and residual values are reviewed at each reporting period and are adjusted if appropriate.

iv. Borrowing costs

Borrowing costs on funds directly attributable to finance the acquisition, production or construction of a qualifying asset are capitalized until such time as substantially all the activities necessary to prepare the qualifying asset for its intended use are complete. A qualifying asset is one that takes a substantial period of time to prepare for its intended use. Capitalization is discontinued when the asset enters the production stage or development ceases. Where the funds used to finance a project form part of general borrowings, interest is capitalized based on the weighted average interest rate applicable to the general borrowings outstanding during the period of construction.

v. Repairs and maintenance

The cost of replacing a component of property, plant and equipment is capitalized if it is probable that future economic benefits embodied within the component will flow to the Company. The carrying amount of the replaced component is derecognized. Costs of routine maintenance and repair are charged to products and services sold.

H. Goodwill and intangible assets

Goodwill arising from the acquisition of subsidiaries is initially recognized at cost, measured as the excess of the fair value of the consideration paid over the fair value of the identifiable net assets acquired. At the date of acquisition, goodwill is allocated to the cash generating unit (CGU), or group of CGUs that is expected to receive the economic benefits of the business combination. Goodwill is subsequently measured at cost, less accumulated impairment losses.

Intangible assets acquired individually or as part of a group of assets are initially recognized at cost and measured subsequently at cost less accumulated amortization and impairment losses. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. The cost of a group of intangible assets acquired in a transaction, including those acquired in a business combination that meet the specified criteria for recognition apart from goodwill, is allocated to the individual assets acquired based on their relative fair values.

Intangible assets that have finite useful lives are amortized over their estimated remaining useful lives. Amortization methods and useful lives are reviewed at each reporting period and are adjusted if appropriate.

I. Leased assets

Leases which result in the Company receiving substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between finance cost and the reduction of the outstanding liability. The finance cost is allocated to each period of the lease term to produce a constant periodic rate of interest on the remaining balance of the liability.

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Lease agreements that do not meet the recognition criteria of a finance lease are classified and recognized as operating leases and are not recognized in the Company’s consolidated statements of financial position. Payments made under operating leases are charged to income on a straight-line basis over the lease term.

J. Finance income and finance costs

Finance income comprises interest income on funds invested and gains on the disposal of available-for-sale financial assets. Interest income and interest expense are recognized in earnings as they accrue, using the effective interest method. Finance costs comprise interest and fees on borrowings, unwinding of the discount on provisions and costs incurred on redemption of debentures.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are expensed in the period incurred.

K. Research and development costs

Expenditures on research are charged against earnings when incurred. Development costs are recognized as assets when the Company can demonstrate technical feasibility and that the asset will generate probable future economic benefits.

L. Impairment

i. Non-derivative financial assets

Financial assets not classified as fair value through profit and loss are assessed at each reporting date to determine whether there is objective evidence of impairment. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

Impairment losses on available-for-sale financial assets are recognized by transferring the cumulative loss that has been recognized in other comprehensive income, and presented in equity, to earnings. The cumulative loss that is removed from other comprehensive income and recognized in earnings is the difference between the acquisition cost, net of any principal payment and amortization, and the current fair value, less any impairment loss previously recognized in earnings.

If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized in earnings, then the impairment loss is reversed through earnings, otherwise, it is reversed through other comprehensive income. Impairment losses on available-for-sale equity securities that are recognized in earnings are never reversed through earnings.

ii. Non-financial assets

The carrying amounts of Cameco’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into CGUs which are the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

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The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Fair value is determined as the amount that would be obtained from the sale of the asset or CGU in an arm’s-length transaction between knowledgeable and willing parties. For exploration properties, fair value is based on the implied fair value of the resources in place using comparable market transaction metrics.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment losses are recognized in earnings. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

Impairment losses recognized in prior periods are assessed at each reporting date whenever events or changes in circumstances indicate that the impairment may have reversed. If the impairment has reversed, the carrying amount of the asset is increased to its recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in earnings. An impairment loss in respect of goodwill is not reversed.

M. Exploration and evaluation expenditures

Exploration and evaluation expenditures are those expenditures incurred by the Company in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. These expenditures include researching and analyzing existing exploration data, conducting geological studies, exploratory drilling and sampling, and compiling prefeasibility and feasibility studies. Exploration and evaluation expenditures are charged against earnings as incurred, except when there is a high degree of confidence in the viability of the project and it is probable that these costs will be recovered through future development and exploitation.

The technical feasibility and commercial viability of extracting a resource is considered to be determinable based on several factors, including the existence of proven and probable reserves and the demonstration that future economic benefits are probable. When an area is determined to be technically feasible and commercially viable, the exploration and evaluation assets attributable to that area are first tested for impairment and then transferred to property, plant and equipment.

Exploration and evaluation costs that have been acquired in a business combination or asset acquisition are capitalized under the scope of IFRS 6, Exploration for and Evaluation of Mineral Resources, and are reported as part of property, plant and equipment.

N. Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the risk-adjusted expected future cash flows at a pre-tax risk-free rate that reflects current market assessments of the time value of money. The unwinding of the discount is recognized as a finance cost.

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i. Environmental restoration

The mining, extraction and processing activities of the Company normally give rise to obligations for site closure and environmental restoration. Closure and restoration can include facility decommissioning and dismantling, removal or treatment of waste materials, as well as site and land restoration. The Company provides for the closure, reclamation and decommissioning of its operating sites in the financial period when the related environmental disturbance occurs, based on the estimated future costs using information available at the reporting date. Costs included in the provision comprise all closure and restoration activity expected to occur gradually over the life of the operation and at the time of closure. Routine operating costs that may impact the ultimate closure and restoration activities, such as waste material handling conducted as a normal part of a mining or production process, are not included in the provision.

The timing of the actual closure and restoration expenditure is dependent upon a number of factors such as the life and nature of the asset, the operating licence conditions and the environment in which the mine operates. Closure and restoration provisions are measured at the expected value of future cash flows, discounted to their present value using a current pre-tax risk-free rate. Significant judgments and estimates are involved in deriving the expectations of future activities and the amount and timing of the associated cash flows.

At the time a provision is initially recognized, to the extent that it is probable that future economic benefits associated with the reclamation, decommissioning and restoration expenditure will flow to the Company, the corresponding cost is capitalized as an asset. The capitalized cost of closure and restoration activities is recognized in property, plant and equipment and depreciated on a unit-of-production basis. The value of the provision is gradually increased over time as the effect of discounting unwinds. The unwinding of the discount is an expense recognized in finance costs.

Closure and rehabilitation provisions are also adjusted for changes in estimates. The provision is reviewed at each reporting date for changes to obligations, legislation or discount rates that effect change in cost estimates or life of operations. The cost of the related asset is adjusted for changes in the provision resulting from changes in estimated cash flows or discount rates, and the adjusted cost of the asset is depreciated prospectively.

ii. Waste disposal

The refining, conversion and manufacturing processes generate certain uranium-contaminated waste. The Company has established strict procedures to ensure this waste is disposed of safely. A provision for waste disposal costs in respect of these materials is recognized when they are generated. Costs associated with the disposal, the timing of cash flows and discount rates are estimated both at initial recognition and subsequent measurement.

O. Employee future benefits

i. Pension obligations

The Company accrues its obligations under employee benefit plans. The Company has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan other than a defined contribution plan. Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 97

The liability recognized in the consolidated statements of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets. The defined benefit obligation is calculated annually, by qualified independent actuaries using the projected unit credit method prorated on service and management’s best estimate of expected plan investment performance, salary escalation, retirement ages of employees and expected health care costs. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

The Company recognizes all actuarial gains and losses arising from defined benefit plans in other comprehensive income, and reports them in retained earnings. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized immediately in earnings.

For defined contribution plans, the contributions are recognized as employee benefit expense in earnings in the periods during which services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

ii. Other post-retirement benefit plans

The Company provides certain post-retirement health care benefits to its retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. Actuarial gains and losses are recognized in other comprehensive income in the period in which they arise. These obligations are valued annually by independent qualified actuaries.

iii. Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be measured reliably.

iv. Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts an entity’s offer of benefits in exchange for termination of employment. Cameco recognizes termination benefits as an expense at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are payable more than 12 months after the reporting period, they are discounted to their present value.

v. Share-based compensation

For equity-settled plans, the grant date fair value of share-based compensation awards granted to employees is recognized as an employee benefit expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For cash-settled plans, the fair value of the amount payable to employees is recognized as an expense, with a corresponding increase in liabilities, over the period that the employees unconditionally become entitled to payment. The liability is re-measured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognized as employee benefit expense in earnings.

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Cameco’s contributions under the employee share ownership plan are expensed during the year of contribution. Shares purchased with Company contributions and with dividends paid on such shares become unrestricted on January 1 of the second plan year following the date on which such shares were purchased.

P. Revenue recognition

Cameco supplies uranium concentrates and uranium conversion services to utility customers.

Cameco recognizes revenue on the sale of its nuclear products when the risks and rewards of ownership pass to the customer and collection is reasonably assured. Cameco’s sales are pursuant to an enforceable contract that indicates the type of sales arrangement, pricing and delivery terms, as well as details related to the transfer of title.

Cameco has three types of sales arrangements with its customers in its uranium and fuel services businesses. These arrangements include uranium supply, toll conversion services and conversion supply (converted uranium), which is a combination of uranium supply and toll conversion services.

Uranium supply

In a uranium supply arrangement, Cameco is contractually obligated to provide uranium concentrates to its customers. Cameco-owned uranium is physically delivered to conversion facilities (Converters) where the Converter will credit Cameco’s account for the volume of accepted uranium. Based on delivery terms in a sales contract with its customer, Cameco instructs the Converter to transfer title of a contractually specified quantity of uranium to the customer’s account at the Converter’s facility. At this point, the risks and rewards of ownership have been transferred and Cameco invoices the customer and recognizes revenue for the uranium supply.

Toll conversion services

In a toll conversion arrangement, Cameco is contractually obligated to convert customer-owned uranium to a chemical state suitable for enrichment. Based on delivery terms in a sales contract with its customer, Cameco either (i) physically delivers converted uranium to enrichment facilities (Enrichers) where it instructs the Enricher to transfer title of a contractually specified quantity of converted uranium to the customer’s account at the Enricher’s facility, or (ii) transfers title of a contractually specified quantity of converted uranium to either an Enricher’s account or the customer’s account. At this point, the risks and rewards of ownership have been transferred and Cameco invoices the customer and recognizes revenue for the toll conversion services.

Conversion supply

In a conversion supply arrangement, Cameco is contractually obligated to provide converted uranium of acceptable origins to its customers. Based on delivery terms in a sales contract with its customer, Cameco either (i) physically delivers converted uranium to the Enricher where it instructs the Enricher to transfer title of a contractually specified quantity of converted uranium to the customer’s account at the Enricher’s facility, or (ii) transfers title of a contractually specified quantity of converted uranium to either an Enricher’s account or a customer’s account at Cameco’s Port Hope conversion facility. At this point, the risks and rewards of ownership have been transferred and Cameco invoices the customer and recognizes revenue for both the uranium supplied and the conversion service provided.

Q. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another.

i. Non-derivative financial assets and financial liabilities

At initial recognition, Cameco classifies each of its financial assets and financial liabilities into one of the following categories:

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Fair value through profit or loss

A financial asset or liability is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition. Cameco classifies a financial instrument as held-for-trading if it was acquired principally for the purpose of selling or repurchasing in the near term, or if it is part of a portfolio with evidence of a recent pattern of short-term profit taking. Directly attributable transaction costs are recognized in earnings as incurred. These financial assets and financial liabilities are measured at fair value, with any gains or losses on revaluation being recognized in earnings.

Held-to-maturity

Held-to-maturity investments are financial assets that an entity has the intention and ability to hold until maturity, provide fixed or determinable payments and contain a fixed maturity date. Assets in this category are initially measured at fair value plus any directly attributable transaction costs and subsequently measured at amortized cost using the effective interest method.

Loans and receivables

Loans and receivables are financial assets that provide fixed or determinable payments and are not quoted in an active market. Assets in this category are initially measured at fair value plus any directly attributable transaction costs and subsequently measured at amortized cost using the effective interest method.

Available-for-sale assets

Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified into any of the other categories. These assets are measured at fair value plus any directly attributable transaction costs with any gains or losses on re-measurement recognized in other comprehensive income. Accumulated changes in fair value are recorded as a separate component of equity until the asset is derecognized or impaired, then the cumulative gain or loss in other comprehensive income is transferred to earnings.

Other financial liabilities

This category consists of all non-derivative financial liabilities that do not meet the definition of held-for-trading liabilities, and that have not been designated as liabilities at fair value through profit or loss. These liabilities are initially recognized at fair value less any directly attributable transaction costs and are subsequently measured at amortized cost using the effective interest method. Transaction costs arising on the issue of equity instruments are recognized directly in equity. Transaction costs that are directly related to the probable issuance of a security that is classified as a financial liability is deducted from the amount of the financial liability when it is initially recognized, or recognized in earnings when the issuance is no longer probable.

Cameco derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred.

A financial liability is derecognized when its contractual obligations are discharged or cancelled, or expire.

ii. Derivative financial instruments

The Company holds derivative financial instruments to reduce exposure to fluctuations in foreign currency exchange rates and interest rates. Except for those designated as hedging instruments, all derivative financial instruments are recorded at fair value in the consolidated statements of financial position, with any directly attributable transaction costs recognized in earnings as incurred. Subsequent to initial recognition, changes in fair value are recognized in earnings.

The purpose of hedging transactions is to modify the Company’s exposure to one or more risks by creating an offset between changes in the fair value of, or the cash flows attributable to, the hedged item and the hedging item. When hedge accounting is appropriate, the hedging relationship is designated as a fair value hedge, a cash flow hedge, or a foreign currency risk hedge related to a net investment in a foreign operation. The Company does not have any instruments that have been designated as hedge transactions at December 31, 2017 and 2016.

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Separable embedded derivatives

Derivatives may be embedded in other financial instruments or executory contracts (the “host instrument”). Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not clearly and closely related to those of the host instrument, the terms of the embedded derivative are the same as those of a stand-alone derivative, and the combined contract is not designated at fair value. These embedded derivatives are measured at fair value with subsequent changes recognized in earnings through gains or losses on derivatives.

R. Income tax

Income tax expense is comprised of current and deferred taxes. Current tax and deferred tax are recognized in earnings except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustments to tax payable in respect of previous years. Current tax assets and liabilities are measured at the amount expected to be paid or recovered from the taxation authorities.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

The Company’s exposure to uncertain tax positions is evaluated and a provision is made where it is probable that this exposure will materialize.

S. Share capital

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares are recognized as a reduction of equity, net of any tax effects.

T. Earnings per share

The Company presents basic and diluted earnings per share data for its common shares. Earnings per share is calculated by dividing the net earnings attributable to equity holders of the Company by the weighted average number of common shares outstanding.

Diluted earnings per share is determined by adjusting the net earnings attributable to equity holders of the Company and the weighted average number of common shares outstanding, for the effects of all dilutive potential common shares. The calculation of diluted earnings per share assumes that outstanding options which are dilutive to earnings per share are exercised and the proceeds are used to repurchase shares of the Company at the average market price of the shares for the period. The effect is to increase the number of shares used to calculate diluted earnings per share.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 101

U. Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other segments. To be classified as a segment, discrete financial information must be available and operating results must be regularly reviewed by the Company’s Chief Executive Officer.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

3. Accounting standards

A. New standards and interpretations not yet adopted

A number of new standards and amendments to existing standards are not yet effective for the year ended December 31, 2017, and have not been applied in preparing these consolidated financial statements. Cameco does not intend to early adopt any of the following standards or amendments to existing standards, unless otherwise noted.

i. Revenue

In May 2014, the International Accounting Standards Board (IASB) issued IFRS 15, Revenue from Contracts with Customers (IFRS 15). IFRS 15 is effective for periods beginning on or after January 1, 2018 and is to be applied retrospectively. IFRS 15 clarifies the principles for recognizing revenue from contracts with customers. Our assessment primarily involved reviewing our sales contracts to determine if any performance obligations exist that will need to be separately identified that may affect the timing of when revenue will be recognized under IFRS 15. Based on our assessment, Cameco has not identified any material impacts on the timing and measurement of revenue from our existing revenue recognition practices from the adoption of the new standard, however we do expect to have additional disclosures.

ii. Financial instruments

In July 2014, the IASB issued IFRS 9, Financial Instruments (IFRS 9). IFRS 9 replaces the existing guidance in IAS 39, Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 includes revised guidance on the classification and measurement of financial assets, a new expected credit loss model for calculating impairment on financial assets and new hedge accounting requirements. It also carries forward, from IAS 39, guidance on recognition and derecognition of financial instruments.

IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption of the new standard permitted. Cameco does not apply hedge accounting and does not currently intend to apply hedge accounting upon adoption of IFRS 9. Based on our assessment, we do not expect adoption of the standard to have a material impact on the financial statements, however we do expect to have additional disclosures.

iii. Leases

In January 2016, the IASB issued IFRS 16, Leases (IFRS 16). IFRS 16 is effective for periods beginning on or after January 1, 2019, with early adoption permitted. IFRS 16 eliminates the current dual model for lessees, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on-balance sheet accounting model that is similar to current finance lease accounting. The extent of the impact of adoption of IFRS 16 has not yet been determined.

102 CAMECO CORPORATION

iv. Income tax

In June 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (IFRIC 23). IFRIC 23 is effective for periods beginning on or after January 1, 2019 with early adoption permitted. IFRIC 23 provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. The extent of the impact of the adoption of IFRIC 23 has not yet been determined.

4. Determination of fair values

A number of the Company’s accounting policies and disclosures require the measurement of fair value, for both financial and non-financial assets and liabilities.

The fair value of an asset or liability is generally estimated as the amount that would be received on sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the reporting date. Fair values of assets and liabilities traded in an active market are determined by reference to last quoted prices, in the principal market for the asset or liability. In the absence of an active market for an asset or liability, fair values are determined based on market quotes for assets or liabilities with similar characteristics and risk profiles, or through other valuation techniques. Fair values determined using valuation techniques require the use of inputs, which are obtained from external, readily observable market data when available. In some circumstances, inputs that are not based on observable data must be used. In these cases, the estimated fair values may be adjusted in order to account for valuation uncertainty, or to reflect the assumptions that market participants would use in pricing the asset or liability.

All fair value measurements are categorized into one of three hierarchy levels, described below, for disclosure purposes. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities:

Level 1 – Values based on unadjusted quoted prices in active markets that are accessible at the reporting date for identical assets or liabilities.

Level 2 – Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 – Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

When the inputs used to measure fair value fall within more than one level of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety.

Transfers between levels of the fair value hierarchy are recognized at the end of the reporting period during which the transfer occurred. There were no transfers between level 1, level 2, or level 3 during the period. Cameco does not have any recurring fair value measurements that are categorized as level 3 as of the reporting date.

Further information about the techniques and assumptions used to measure fair values is included in the following notes:

Note 8 - Property, plant and equipment

Note 9 - Goodwill and intangible assets

Note 22 - Share-based compensation plans

Note 24 - Financial instruments and risk management

5. Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 103

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future period affected.

Information about critical judgments in applying the accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is discussed below. Further details of the nature of these judgments, estimates and assumptions may be found in the relevant notes to the consolidated financial statements.

A. Recoverability of long-lived and intangible assets

Cameco assesses the carrying values of property, plant and equipment, and intangible assets when there is an indication of possible impairment. Goodwill and intangible assets not yet available for use or with indefinite useful lives are tested for impairment annually. If it is determined that carrying values of assets or goodwill cannot be recovered, the unrecoverable amounts are charged against current earnings. Recoverability is dependent upon assumptions and judgments regarding market conditions, costs of production, sustaining capital requirements and mineral reserves. Other assumptions used in the calculation of recoverable amounts are discount rates, future cash flows and profit margins. A material change in assumptions may significantly impact the potential impairment of these assets.

B. Cash generating units

In performing impairment assessments of long-lived assets, assets that cannot be assessed individually are grouped together into the smallest group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Management is required to exercise judgment in identifying these CGUs.

C. Provisions for decommissioning and reclamation of assets

Significant decommissioning and reclamation activities are often not undertaken until near the end of the useful lives of the productive assets. Regulatory requirements and alternatives with respect to these activities are subject to change over time. A significant change to either the estimated costs or mineral reserves may result in a material change in the amount charged to earnings.

D. Income taxes

Cameco operates in a number of tax jurisdictions and is, therefore, required to estimate its income taxes in each of these tax jurisdictions in preparing its consolidated financial statements. In calculating income taxes, consideration is given to factors such as tax rates in the different jurisdictions, non-deductible expenses, changes in tax law and management’s expectations of future operating results. Cameco estimates deferred income taxes based on temporary differences between the income and losses reported in its consolidated financial statements and its taxable income and losses as determined under the applicable tax laws. The tax effect of these temporary differences is recorded as deferred tax assets or liabilities in the consolidated financial statements. The calculation of income taxes requires the use of judgment and estimates. The determination of the recoverability of deferred tax assets is dependent on assumptions and judgments regarding future market conditions, production rates and intercompany sales. If these judgments and estimates prove to be inaccurate, future earnings may be materially impacted.

E. Commencement of production stage

Until a mining property is declared as being in the production stage, all costs related to its development are capitalized. The determination of the date on which a mine enters the production stage is a matter of judgment that impacts when capitalization of development costs ceases and depreciation of the mining property commences and is charged to earnings. Refer to note 2 (g)(ii) for further information on the criteria used to make this assessment.

104 CAMECO CORPORATION

F. Mineral reserves

Depreciation on property, plant and equipment is primarily calculated using the unit-of-production method. This method allocates the cost of an asset to each period based on current period production as a portion of total lifetime production or a portion of estimated mineral reserves. Estimates of life-of-mine and amounts of mineral reserves are updated annually and are subject to judgment and significant change over time. If actual mineral reserves prove to be significantly different than the estimates, there could be a material impact on the amounts of depreciation charged to earnings.

G. Purchase price allocations

The purchase price related to a business combination or asset acquisition is allocated to the underlying acquired assets and liabilities based on their estimated fair values at the time of acquisition. The determination of fair value requires Cameco to make assumptions, estimates and judgments regarding future events. The allocation process is inherently subjective and impacts the amounts assigned to individually identifiable assets and liabilities. As a result, the purchase price allocation impacts Cameco’s reported assets and liabilities and future net earnings due to the impact on future depreciation and amortization expense and impairment tests.

H. Determination of joint control

Cameco conducts certain operations through joint ownership interests. Judgment is required in assessing whether Cameco has joint control over the investee, which involves determining the relevant activities of the arrangement and whether decisions around relevant activities require unanimous consent. Judgment is also required to determine whether a joint arrangement should be classified as a joint venture or joint operation. Classifying the arrangement requires us to assess our rights and obligations arising from the arrangement. Specifically, management considers the structure of the joint arrangement and whether it is structured through a separate vehicle and when the arrangement is structured through a separate vehicle, we also consider the rights and obligations arising from the legal form of the separate vehicle, the terms of the contractual arrangements and other facts and circumstances, when relevant. This judgment influences whether we equity account or proportionately consolidate our interest in the arrangement.

6. Accounts receivable

	2017		2016
Trade receivables	$	392,759	$	236,373
HST/VAT receivables		3,611		3,968
Other receivables		454		2,141
Total	$	396,824	$	242,482

The Company’s exposure to credit and currency risks as well as impairment loss related to trade and other receivables, excluding harmonized sales tax (HST)/value added tax (VAT) receivables is disclosed in note 24.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 105

7. Inventories

	2017		2016
Uranium
Concentrate	$	820,426	$	989,202
Broken ore		47,083		45,581
		867,509		1,034,783
NUKEM		13,801		141,040
Fuel services		68,456		112,116
Total	$	949,766	$	1,287,939

Cameco expensed $1,654,000,000 of inventory as cost of sales during 2017 (2016 - $1,752,000,000). Included in cost of sales is an $8,662,000 net write-down to reflect net realizable value (2016 - $18,054,000 net write-down).

In the past, NUKEM has entered into financing arrangements where future receivables arising from certain sales contracts were sold to financial institutions in exchange for cash. These arrangements required NUKEM to satisfy its delivery obligations under the sales contracts, which were recognized as deferred sales (note 13). In addition, NUKEM was required to pledge the underlying inventory as security against these performance obligations. There was no inventory pledged at December 31, 2017. As of December 31, 2016, NUKEM had $4,884,000 ($3,637,000 (US)) of inventory pledged as security under financing arrangements.

8. Property, plant and equipment

At December 31, 2017

	Land and buildings			Plant and equipment			Furniture and fixtures			Under construction			Exploration and evaluation			Total
Cost
Beginning of year	$	4,979,489		$	2,640,543		$	95,168		$	340,340		$	1,120,641		$	9,176,181
Additions		27,343			13,649			3,521			97,729			1,091			143,333
Transfers		104,134			106,669			(2,455	)		(208,359	)		11			-
Change in reclamation provision [note 14]		17,541			-			-			-			-			17,541
Disposals		(4,610	)		(4,803	)		(4,578	)		(74,482	)		-			(88,473	)
Pre-commercial production revenue(a)		(22,818	)		(6,487	)		-			-			-			(29,305	)
Effect of movements in exchange rates		(55,967	)		(19,936	)		(839	)		(497	)		(1,463	)		(78,702	)
End of year		5,045,112			2,729,635			90,817			154,731			1,120,280			9,140,575
Accumulated depreciation and impairment
Beginning of year		2,508,212			1,460,953			80,592			80,674			390,164			4,520,595
Depreciation charge		137,896			175,811			6,490			-			-			320,197
Transfers		48,209			(35,243	)		(2,451	)		(10,515	)		-			-
Disposals		(2,393	)		(4,130	)		(3,269	)		(70,159	)		-			(79,951	)
Impairment charges(b)(c)		67,535			25,359			-			55,841			91,046			239,781
Effect of movements in exchange rates		(42,210	)		(11,290	)		(610	)		(9	)		2,180			(51,939	)
End of year		2,717,249			1,611,460			80,752			55,832			483,390			4,948,683
Net book value at December 31, 2017	$	2,327,863		$	1,118,175		$	10,065		$	98,899		$	636,890		$	4,191,892

106 CAMECO CORPORATION

At December 31, 2016

	Land and buildings			Plant and equipment			Furniture and fixtures			Under construction			Exploration and evaluation			Total
Cost
Beginning of year	$	4,862,160		$	2,528,488		$	121,299		$	512,301		$	1,147,100		$	9,171,348
Additions		25,821			29,231			9,355			150,343			2,158			216,908
Transfers		168,784			126,871			3,410			(305,944	)		6,879			-
Change in reclamation provision		(23,124	)		-			-			-			-			(23,124	)
Disposals		(27,311	)		(34,611	)		(38,233	)		(15,490	)		-			(115,645	)
Effect of movements in exchange rates		(26,841	)		(9,436	)		(663	)		(870	)		(35,496	)		(73,306	)
End of year		4,979,489			2,640,543			95,168			340,340			1,120,641			9,176,181
Accumulated depreciation and impairment
Beginning of year		2,226,202			1,353,308			110,444			88,681			164,553			3,943,188
Depreciation charge		196,564			129,892			6,957			-			198			333,611
Transfers		27,101			(26,770	)		(331	)		-			-			-
Disposals		(21,736	)		(19,794	)		(37,981	)		(10,603	)		-			(90,114	)
Impairment charge(d)(e)		97,152			28,677			2,011			2,596			231,553			361,989
Effect of movements in exchange rates		(17,071	)		(4,360	)		(508	)		-			(6,140	)		(28,079	)
End of year		2,508,212			1,460,953			80,592			80,674			390,164			4,520,595
Net book value at December 31, 2016	$	2,471,277		$	1,179,590		$	14,576		$	259,666		$	730,477		$	4,655,586

Cameco has contractual capital commitments of approximately $23,000,000 at December 31, 2017. Certain of the contractual commitments may contain cancellation clauses, however the Company discloses the commitments based on management’s intent to fulfill the contract. The majority of this amount is expected to be incurred in 2018.

(a) During 2017, revenues of $29,305,000 from the sales of inventories before the commencement of commercial production of JV Inkai Block 3 are recorded as a reduction of the respective mining assets.

(b) In the fourth quarter of 2017, all remaining proven and probable reserves of our US operations were reclassified to resources, indicating that the mineable remaining pounds of U₃O₈ no longer have demonstrated economic viability, but have reasonable prospects for economic extraction. In accordance with the provisions of IAS 36, Impairment of Assets, Cameco considered this to be an indicator that the assets of the two cash generating units in the US could potentially be impaired and accordingly, we were required to estimate the recoverable amount of these assets.

An impairment charge of $184,448,000 ($144,450,000 (USD)) was recognized as part of the uranium segment. The amount of the charge was determined as the excess of the carrying value over the recoverable amount which was based on a fair value less costs to sell model and categorized as a non-recurring level 3 fair value measurement. The recoverable amount was determined to be $133,228,000 ($106,200,000 (USD)) based on the fair value of resources in place using comparable market metrics.

(c) Also in the fourth quarter of 2017, Cameco announced the planned temporary suspension of production at the McArthur River/Key Lake operation. Due to this announcement, the Key Lake calciner project, which is part of the uranium segment and was initially undertaken to allow for an increase in annual production, was re-evaluated. As a result, the Company wrote off $55,333,000 of assets under construction on this project.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 107

(d) In the fourth quarter of 2016, Cameco recognized a $237,621,000 impairment charge relating to Kintyre, its uranium exploration project in Australia. Due to the weakening of the uranium market and the budget decision not to commit further expenditures to the project, the Company concluded it was appropriate to recognize an impairment charge. The charge was for the full carrying value of the CGU.

(e) In the second quarter of 2016, production was suspended at our Rabbit Lake operation in northern Saskatchewan. In accordance with the provisions of IAS 36, Impairment of Assets, Cameco considered this to be an indicator that the assets of the cash generating unit could potentially be impaired and accordingly, we were required to estimate the recoverable amount of these assets.

An impairment charge of $124,368,000 was recognized as part of the uranium segment. The charge was for the full carrying value of this cash generating unit. The recoverable amount of the mine and mill was based on a fair value less costs to sell model, which incorporated the future cash flows, including care and maintenance costs, expected to be derived from the operation. It was categorized as a non-recurring level 3 fair value measurement.

The discount rate used in the fair value less costs to sell calculation was 8% and was determined based on a market participant’s incremental borrowing cost, adjusted for the marginal return that the participant would expect to use on an investment in the mine and mill. Other key assumptions included uranium price forecasts and operating and capital cost forecasts. Uranium prices applied in the calculation were based on approved internal price forecasts, which reflect management’s expectation of prices that a market participant would use. Operating and capital cost forecasts were determined based on management’s internal cost estimates.

9. Goodwill and intangible assets

A. Reconciliation of carrying amount

At December 31, 2017

	Goodwill			Contracts			Intellectual property		Patents			Total
Cost
Beginning of year	$	118,664		$	117,533		$	118,819	$	11,737		$	366,753
Effect of movements in exchange rates		(7,265	)		(7,721	)		-		(771	)		(15,757	)
End of year		111,399			109,812			118,819		10,966			350,996
Accumulated amortization
Beginning of year		-			110,284			49,589		3,570			163,443
Amortization charge		-			2,002			4,091		630			6,723
Impairment charge		111,399			-			-		7,150			118,549
Effect of movements in exchange rates		-			(7,347	)		-		(384	)		(7,731	)
End of year		111,399			104,939			53,680		10,966			280,984
Net book value at December 31, 2017	$	-		$	4,873		$	65,139	$	-		$	70,012

108 CAMECO CORPORATION

At December 31, 2016

	Goodwill			Contracts			Intellectual property		Patents			Total
Cost
Beginning of year	$	122,314		$	121,148		$	118,819	$	12,098		$	374,379
Effect of movements in exchange rates		(3,650	)		(3,615	)		-		(361	)		(7,626	)
End of year		118,664			117,533			118,819		11,737			366,753
Accumulated amortization
Beginning of year		-			108,809			45,430		3,010			157,249
Amortization charge		-			4,613			4,159		642			9,414
Effect of movements in exchange rates		-			(3,138	)		-		(82	)		(3,220	)
End of year		-			110,284			49,589		3,570			163,443
Net book value at December 31, 2016	$	118,664		$	7,249		$	69,230	$	8,167		$	203,310

B. Amortization

The intangible asset values relate to intellectual property acquired with Cameco Fuel Manufacturing Inc. (CFM) and purchase and sales contracts acquired with NUKEM. The CFM intellectual property is being amortized on a unit-of-production basis over its remaining life. Amortization is allocated to the cost of inventory and is recognized in cost of products and services sold as inventory is sold. The NUKEM purchase and sales contracts will be amortized to earnings over the remaining terms of the underlying contracts, which extend to 2022. Amortization of the purchase contracts is allocated to the cost of inventory and is included in cost of products and services sold as inventory is sold. Sales contracts are amortized to revenue. Approximately $998,000 of pre-tax earnings (in USD) relating to the amortization of the fair value allocated to the NUKEM contracts will be amortized in 2018 with the remaining balance being recognized fairly evenly each year through 2022.

Patents acquired with UFP Investments LLC (UFP) were being amortized to cost of products and services sold on a straight-line basis over their remaining life which expires in July 2029. In the fourth quarter of 2017, Cameco recorded an impairment charge of $7,150,000 on these assets due to continuing weakness in the uranium market and limited budget allocated to this project.

C. Impairment test

For the purpose of impairment testing, goodwill is attributable to NUKEM, which is considered to be a CGU.

In the third quarter of 2017, Cameco restructured its global marketing organization in response to the changing business environment. The restructuring significantly impacts the marketing activities historically performed by NUKEM. In accordance with the provisions of IAS 36, Impairment of Assets, Cameco considered this to be an indicator that the assets of the CGU could potentially be impaired and accordingly, we were required to estimate the recoverable amount of these assets.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 109

The recoverable amount of NUKEM was estimated based on a fair value less costs to sell calculation and was concluded to be equal to the carrying value of its inventory and existing contracts. A change in the previous assumption, that there would be cash flows generated beyond a five-year period, resulted in the elimination of the terminal value. Accordingly, an impairment charge of $111,399,000 ($88,377,000 (US)) was recorded, representing the full carrying value of NUKEM goodwill.

10. Long-term receivables, investments and other

	2017			2016
Investments in equity securities [note 24]	$	21,417		$	14,807
Derivatives [note 24]		40,804			10,612
Advances receivable from JV Inkai LLP [note 29]		58,820			90,095
Investment tax credits		92,846			93,920
Amounts receivable related to tax dispute [note 19]		303,222			264,042
Other		39,053			49,506
		556,162			522,982
Less current portion		(36,089	)		(10,498	)
Net	$	520,073		$	512,484

11. Accounts payable and accrued liabilities

	2017		2016
Trade payables	$	177,040	$	213,481
Non-trade payables		75,784		85,632
Payables due to related parties		5,581		13,787
Total	$	258,405	$	312,900

The Company’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 24.

12. Long-term debt

	2017		2016
Unsecured debentures
Series D - 5.67% debentures due September 2, 2019 [note 24]	$	499,020	$	498,472
Series E - 3.75% debentures due November 14, 2022		398,604		398,346
Series F - 5.09% debentures due November 14, 2042		99,271		99,256
Series G - 4.19% debentures due June 24, 2024		497,576		497,253
Total	$	1,494,471	$	1,493,327

Cameco has a $1,250,000,000 unsecured revolving credit facility that is available until November 1, 2021. Upon mutual agreement, the facility can be extended for an additional year on the anniversary date. In addition to direct borrowings under the facility, up to $100,000,000 can be used for the issuance of letters of credit and, to the extent necessary, it may be used to provide liquidity support for the Company’s commercial paper program. The agreement also provides the ability to increase the revolving credit facility above $1,250,000,000 by increments no less than $50,000,000, to a total of $1,750,000,000. The facility ranks equally with all of Cameco’s other senior debt. As of December 31, 2017 and 2016, there were no amounts outstanding under this facility.

110 CAMECO CORPORATION

Cameco has $1,667,932,000 (2016 - $1,658,727,000) in letter of credit facilities. Outstanding and committed letters of credit at December 31, 2017 amounted to $1,474,155,000 (2016 - $1,470,435,000), the majority of which relate to future decommissioning and reclamation liabilities (note 14).

Cameco is bound by a covenant in its revolving credit facility. The covenant requires a funded debt to tangible net worth ratio equal to or less than 1:1. Non-compliance with this covenant could result in accelerated payment and termination of the revolving credit facility. At December 31, 2017, Cameco was in compliance with the covenant and does not expect its operating and investing activities in 2018 to be constrained by it.

The table below represents currently scheduled maturities of long-term debt:

2018		2019		2020		2021		2022		Thereafter		Total
	$            -		499,020		-		-		398,604		596,847	$	1,494,471

13. Other liabilities

	2017			2016
Deferred sales	$	29,148		$	29,423
Derivatives [note 24]		23,414			58,885
Accrued pension and post-retirement benefit liability [note 23]		74,804			69,699
Other		53,107			25,725
		180,473			183,732
Less current portion		(54,370	)		(60,744	)
Net	$	126,103		$	122,988

There were no performance obligations relating to financing arrangements entered into by NUKEM included in deferred sales at the end of 2017 (2016 - $6,143,000 ($4,575,000 (US))) (note 7).

14. Provisions

	Reclamation			Waste disposal			Total
Beginning of year	$	899,261		$	9,521		$	908,782
Changes in estimates and discount rates
Capitalized in property, plant and equipment [note 8]		17,541			-			17,541
Recognized in earnings		43			(546	)		(503	)
Provisions used during the period		(13,343	)		(989	)		(14,332	)
Unwinding of discount [note 17]		21,866			154			22,020
Effect of movements in exchange rates		(19,968	)		-			(19,968	)
End of period	$	905,400		$	8,140		$	913,540
Current	$	36,617		$	1,890		$	38,507
Non-current		868,783			6,250			875,033
	$	905,400		$	8,140		$	913,540

A. Reclamation provision

Cameco’s estimates of future decommissioning obligations are based on reclamation standards that satisfy regulatory requirements. Elements of uncertainty in estimating these amounts include potential changes in regulatory requirements, decommissioning and reclamation alternatives and amounts to be recovered from other parties.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 111

Cameco estimates total future decommissioning and reclamation costs for its existing operating assets to be $1,051,746,000 (2016 - $1,037,302,000). The expected timing of these outflows is based on life-of-mine plans with the majority of expenditures expected to occur after 2022. These estimates are reviewed by Cameco technical personnel as required by regulatory agencies or more frequently as circumstances warrant. In connection with future decommissioning and reclamation costs, Cameco has provided financial assurances of $1,011,613,000 (2016 - $988,207,000) in the form of letters of credit to satisfy current regulatory requirements.

The reclamation provision relates to the following segments:

	2017		2016
Uranium	$	669,835	$	645,219
Fuel services		235,565		254,042
Total	$	905,400	$	899,261

B. Waste disposal

The fuel services segment consists of the Blind River refinery, Port Hope conversion facility and Cameco Fuel Manufacturing Inc.. The refining, conversion and manufacturing processes generate certain uranium contaminated waste. These include contaminated combustible material (paper, rags, gloves, etc.) and contaminated non-combustible material (metal parts, soil from excavations, building and roofing materials, spent uranium concentrate drums, etc.). These materials can in some instances be recycled or reprocessed. A provision for waste disposal costs in respect of these materials is recognized when they are generated.

Cameco estimates total future costs related to existing waste disposal to be $8,239,000 (2016 - $14,930,000). The majority of these expenditures are expected to occur within the next four years.

15. Share capital

Authorized share capital:

· Unlimited number of first preferred shares

· Unlimited number of second preferred shares

· Unlimited number of voting common shares, no stated par value, and

· One Class B share

A. Common Shares

Number issued (number of shares)	2017		2016
Beginning of year		395,792,522		395,792,522
Issued:
Stock option plan [note 22]		210		-
Total		395,792,732		395,792,522

All issued shares are fully paid.

B. Class B share

One Class B share issued during 1988 and assigned $1 of share capital entitles the shareholder to vote separately as a class in respect of any proposal to locate the head office of Cameco to a place not in the province of Saskatchewan.

C. Dividends

Dividends on Cameco Corporation common shares are declared in Canadian dollars. For the year ended December 31, 2017, the dividend declared per share was $0.40 (December 31, 2016 - $0.40).

112 CAMECO CORPORATION

16. Employee benefit expense

The following employee benefit expenses are included in cost of products and services sold, administration, exploration, research and development and property, plant and equipment:

	2017		2016
Wages and salaries	$	331,521	$	379,620
Statutory and company benefits		60,334		66,402
Expenses related to defined benefit plans [note 23]		5,208		5,128
Expenses related to defined contribution plans [note 23]		15,929		17,716
Equity-settled share-based compensation [note 22]		18,433		19,305
Cash-settled share-based compensation [note 22]		134		(822	)
Total	$	431,559	$	487,349

17. Finance costs

	2017		2016
Interest on long-term debt	$	73,211	$	73,434
Unwinding of discount on provisions [note 14]		22,020		20,733
Other charges		15,377		16,860
Interest on short-term debt		-		879
Total	$	110,608	$	111,906

No borrowing costs were determined to be eligible for capitalization during the year.

18. Other income (expense)

	2017			2016
Foreign exchange losses	$	(23,168	)	$	(5,935	)
Contract settlements		-			59,027
Gain on change in investment accounting		-			7,032
Write-off of long-term receivables		(5,926	)		-
Other		(1,316	)		547
Total	$	(30,410	)	$	60,671

In 2016, Cameco agreed to terminate two long-term supply contracts with two of its utility customers that were effective for the years 2016 through 2020 and 2016 through 2021. The resulting gain on contract settlements was $59,027,000.

Also in 2016, Cameco’s share in one of its associates decreased such that equity accounting was no longer appropriate. As a result, the difference between its carrying value and fair value was recognized in other income. As an available-for-sale investment, future changes in fair value are being recognized in other comprehensive income.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 113

19. Income taxes

A. Significant components of deferred tax assets and liabilities

	Recognized in earnings				As at December 31
	2017		2016		2017		2016
Assets
Property, plant and equipment	$	(4,325)	$	118,853	$	115,193	$	118,853
Provision for reclamation		(16,760)		(11,001)		227,785		244,012
Inventories		1,027		-		1,027		-
Foreign exploration and development		16		(43)		5,295		5,279
Income tax losses (gains)		57,203		(22,093)		459,885		402,550
Defined benefit plan actuarial losses		-		-		7,845		5,691
Long-term investments and other		(27,166)		(25,589)		31,674		56,093
Deferred tax assets		9,995		60,127		848,704		832,478
Liabilities
Property, plant and equipment		-		(68,385)		-		-
Inventories		(12,430)		(10,144)		-		12,430
Deferred tax liabilities		(12,430)		(78,529)		-		12,430
Net deferred tax asset	$	22,425	$	138,656	$	848,704	$	820,048
Deferred tax allocated as					2017		2016
Deferred tax assets					$	861,171	$	835,985
Deferred tax liabilities						(12,467)		(15,937)
Net deferred tax asset					$	848,704	$	820,048

Cameco has recorded a net deferred tax asset of $861,171,000 (December 31, 2016 - $835,985,000). The realization of this deferred tax asset is dependent upon the generation of future taxable income in certain jurisdictions during the periods in which the Company’s deferred tax assets are available. The Company considers whether it is probable that all or a portion of the deferred tax assets will not be realized. In making this assessment, management considers all available evidence, including recent financial operations, projected future taxable income and tax planning strategies. Based on projections of future taxable income over the periods in which the deferred tax assets are available, realization of these deferred tax assets is probable and consequently the deferred tax assets have been recorded.

114 CAMECO CORPORATION

B. Movement in net deferred tax assets and liabilities

	2017		2016
Net deferred tax asset at beginning of year	$	820,048	$	678,495
Recovery for the year in net earnings		22,425		138,656
Recovery for the year in other comprehensive income		1,490		435
Effect of movements in exchange rates		4,741		2,462
End of year	$	848,704	$	820,048

C. Significant components of unrecognized deferred tax assets

	2017		2016
Income tax losses	$	259,770	$	284,338
Property, plant and equipment		2,076		3,789
Provision for reclamation		71,463		40,749
Long-term investments and other		68,544		107,096
Total	$	401,853	$	435,972

During December 2017, United States (US) tax reform legislation was enacted. This new legislation will not result in a significant impact on our financial statements as we derecognized the amounts related to our US deferred tax asset in 2015. At that time, it was determined that it was no longer probable that there would be sufficient taxable profit in the future against which the US operating losses and other tax deductions could be used. The change in legislation does however, significantly reduce the value of our unrecognized US deferred tax assets due to the US tax rate decrease. In addition, we have alternative minimum tax credits of $4,073,000 US that will be refunded between 2018 and 2021.

D. Tax rate reconciliation

The provision for income taxes differs from the amount computed by applying the combined expected federal and provincial income tax rate to earnings before income taxes. The reasons for these differences are as follows:

	2017		2016
Loss before income taxes and non-controlling interest	$	(207,237)	$	(154,234)
Combined federal and provincial tax rate		26.7%		26.9%
Computed income tax recovery		(55,332)		(41,489)
Increase (decrease) in taxes resulting from:
Difference between Canadian rates and rates applicable to subsidiaries in other countries		(51,526)		(175,092)
Change in unrecognized deferred tax assets		70,353		106,766
Other taxes		-		(2,278)
Share-based compensation plans		1,349		1,221
Change in tax provision related to transfer pricing		3,000		8,000
Non-deductible (non-taxable) capital amounts		3,034		-
Change in legislation		(12,199)		-
Non-deductible goodwill impairment		35,520		-
Other permanent differences		3,282		8,517
Income tax recovery	$	(2,519)	$	(94,355)

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 115

E. Earnings and income taxes by jurisdiction

	2017		2016
Earnings (loss) before income taxes
Canada	$	(53,521)	$	(463,946)
Foreign		(153,716)		309,712
	$	(207,237)	$	(154,234)
Current income taxes
Canada	$	5,221	$	3,454
Foreign		14,685		40,847
	$	19,906	$	44,301
Deferred income tax recovery
Canada	$	(18,272)	$	(120,519)
Foreign		(4,153)		(18,137)
	$	(22,425)	$	(138,656)
Income tax recovery	$	(2,519)	$	(94,355)

F. Reassessments

Canada

In 2008, as part of the ongoing annual audits of Cameco’s Canadian tax returns, Canada Revenue Agency (CRA) disputed the transfer pricing structure and methodology used by Cameco and its wholly owned Swiss subsidiary, Cameco Europe Ltd., in respect of sale and purchase agreements for uranium products. From December 2008 to date, CRA issued notices of reassessment for the taxation years 2003 through 2011, which in aggregate have increased Cameco’s income for Canadian tax purposes by approximately $4,100,000,000. CRA has also issued notices of reassessment for transfer pricing penalties for the years 2007 through 2011 in the amount of $371,000,000. Cameco believes it is likely that CRA will reassess Cameco’s tax returns for subsequent years on a similar basis and that these will require Cameco to make future remittances or provide security on receipt of the reassessments.

Using the methodology we believe that CRA will continue to apply and including the $4,100,000,000 already reassessed, we expect to receive notices of reassessment for a total of approximately $8,400,000,000 for the years 2003 through 2017, which would increase Cameco’s income for Canadian tax purposes and result in a related tax expense of approximately $2,500,000,000. In addition to penalties already imposed, CRA may continue to apply penalties to taxation years subsequent to 2011. As a result, we estimate that cash taxes and transfer pricing penalties would be between $1,950,000,000 and $2,150,000,000. In addition, we estimate there would be interest and instalment penalties applied that would be material to Cameco. While in dispute, we would be responsible for remitting or otherwise securing 50% of the cash taxes and transfer pricing penalties (between $970,000,000 and $1,070,000,000), plus related interest and instalment penalties assessed, which would be material to Cameco.

Under Canadian federal and provincial tax rules, the amount required to be remitted each year will depend on the amount of income reassessed in that year and the availability of elective deductions. Recently, the CRA disallowed the use of any loss carry-backs to be applied to any transfer pricing adjustment, starting with the 2008 tax year. In light of our view of the likely outcome of the case, we expect to recover the amounts remitted to CRA, including cash taxes, interest and penalties totalling $303,222,000 already paid as at December 31, 2017 (December 31, 2016 - $264,042,000) (note 10). In addition to the cash remitted, we have provided $421,000,000 in letters of credit to secure 50% of the cash taxes and related interest.

116 CAMECO CORPORATION

The trial for the 2003, 2005 and 2006 reassessments concluded on September 13, 2017. We expect to have a Tax Court decision within six to 18 months of that date. Once the Tax Court has delivered a decision for the 2003, 2005 and 2006 tax years we will consider how the decision relates to other years in issue (being 2004 and years subsequent to 2006). While the decision would not be legally binding for any year other than the trial years, we expect the ultimate decision for the trial years to be an important factor in resolving the dispute for the other years in issue.

Having regard to advice from its external advisors, Cameco’s opinion is that CRA’s position is incorrect and Cameco is contesting CRA’s position and expects to recover any amounts remitted or secured as a result of the reassessments. However, to reflect the uncertainties of CRA’s appeals process and litigation, Cameco has recorded a cumulative tax provision related to this matter for the years 2003 through the current period in the amount of $61,000,000. While the resolution of this matter may result in liabilities that are higher or lower than the reserve, management believes that the ultimate resolution will not be material to Cameco’s financial position, results of operations or liquidity in the year(s) of resolution. Resolution of this matter as stipulated by CRA would be material to Cameco’s financial position, results of operations or liquidity in the year(s) of resolution and other unfavourable outcomes for the years 2003 to date could be material to Cameco’s financial position, results of operations and cash flows in the year(s) of resolution.

Further to Cameco’s decision to contest CRA’s reassessments, Cameco is pursuing its appeal rights under Canadian federal and provincial tax rules.

G. Income tax losses

At December 31, 2017, income tax losses carried forward of $2,609,070,000 (2016 - $2,432,772,000) are available to reduce taxable income. These losses expire as follows:

Date of expiry	Canada		US		Other		Total
2030	$	47	$	-	$	-	$	47
2031		-		20,147		-		20,147
2032		171,687		21,698		-		193,385
2033		284,592		36,989		-		321,581
2034		302,121		20,404		-		322,525
2035		334,769		14,198		-		348,967
2036		168,218		43,150		-		211,368
2037		18		53,724		-		53,742
2038		-		-		-		-
2039		-		-		-		-
2040		-		-		-		-
No expiry		-		-		1,137,308		1,137,308
	$	1,261,452	$	210,310	$	1,137,308	$	2,609,070

Included in the table above is $958,417,000 (2016 - $912,916,000) of temporary differences related to loss carry forwards where no future benefit has been recognized.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 117

20. Per share amounts

Per share amounts have been calculated based on the weighted average number of common shares outstanding during the period. The weighted average number of paid shares outstanding in 2017 was 395,792,686 (2016 - 395,792,522).

	2017		2016
Basic loss per share computation
Net loss attributable to equity holders	$	(204,942)	$	(61,611)
Weighted average common shares outstanding		395,793		395,793
Basic loss per common share	$	(0.52)	$	(0.16)
Diluted loss per share computation
Net loss attributable to equity holders	$	(204,942)	$	(61,611)
Weighted average common shares outstanding		395,793		395,793
Dilutive effect of stock options		-		-
Weighted average common shares outstanding, assuming dilution		395,793		395,793
Diluted loss per common share	$	(0.52)	$	(0.16)

21. Supplemental cash flow information

Other operating items included in the statements of cash flows are as follows:

	2017		2016
Changes in non-cash working capital:
Accounts receivable	$	(174,613)	$	1,529
Inventories		299,980		(73,833)
Supplies and prepaid expenses		15,436		10,867
Accounts payable and accrued liabilities		(64,689)		(17,989)
Reclamation payments		(14,334)		(13,507)
Amortization of purchase price allocation		(2,996)		27,848
Other		28,273		(4,049)
Other operating items	$	87,057	$	(69,134)

118 CAMECO CORPORATION

The changes in liabilities arising from financing activities were as follows:

	Long-term debt		Interest payable			Dividends payable			Share capital		Total
Balance at January 1, 2017	$	1,493,327	$	12,401		$	39,579		$	1,862,646	$	3,407,953
Changes from financing cash flows:
Dividends paid		-		-			(158,297	)		-		(158,297	)
Interest paid		-		(69,498	)		-			-		(69,498	)
Shares issued, stock option plan		-		-			-			4		4
Total cash changes		-		(69,498	)		(158,297	)		4		(227,791	)
Non-cash changes:
Amorization of issue costs		1,144		-			-			-		1,144
Dividends declared		-		-			158,297			-		158,297
Interest expense		-		72,067			-			-		72,067
Shares issued, stock option plan		-		-			-			2		2
Total non-cash changes		1,144		72,067			158,297			2		231,510
Balance at December 31, 2017	$	1,494,471	$	14,970		$	39,579		$	1,862,652	$	3,411,672

22. Share-based compensation plans

The Company has the following equity-settled plans:

A. Stock option plan

The Company has established a stock option plan under which options to purchase common shares may be granted to employees of Cameco. Options granted under the stock option plan have an exercise price of not less than the closing price quoted on the Toronto Stock Exchange (TSX) for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options carry vesting periods of one to three years, and expire eight years from the date granted.

The aggregate number of common shares that may be issued pursuant to the Cameco stock option plan shall not exceed 43,017,198 of which 27,870,289 shares have been issued.

Stock option transactions for the respective years were as follows:

(Number of options)	2017			2016
Beginning of year		8,020,311			8,503,238
Options granted		1,373,040			1,273,340
Options forfeited		(564,423	)		(1,156,737	)
Options expired		(504,052	)		(599,530	)
Options exercised [note 15]		(210	)		-
End of year		8,324,666			8,020,311
Exercisable		5,809,077			5,929,550

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 119

Weighted average exercise prices were as follows:

	2017		2016
Beginning of year		$23.61		$26.04
Options granted		14.70		16.38
Options forfeited		26.49		25.70
Options expired		19.50		38.81
Options exercised		19.37		-
End of year		$22.19		$23.61
Exercisable		$24.95		$25.46

Total options outstanding and exercisable at December 31, 2017 were as follows:

			Options outstanding				Options exercisable
Option price per share	Number		Weighted average                 remaining life		Weighted average exercisable price		Number		Weighted  average  exercisable  price
$14.70 - 20.22		3,527,303		5.7		$16.46		1,011,714	$18.08
$20.23 - 39.53		4,797,363		2.2		$26.41		4,797,363	$26.41
		8,324,666						5,809,077

The foregoing options have expiry dates ranging from February 28, 2018 to February 28, 2025.

B. Executive performance share unit (PSU)

The Company has established a PSU plan whereby it provides each plan participant an annual grant of PSUs in an amount determined by the board. Each PSU represents one phantom common share that entitles the participant to a payment of one Cameco common share purchased on the open market, or cash with an equivalent market value, at the board’s discretion, at the end of each three-year period if certain performance and vesting criteria have been met. The final value of the PSUs will be based on the value of Cameco common shares at the end of the three-year period and the number of PSUs that ultimately vest. Vesting of PSUs at the end of the three-year period will be based on total shareholder return over the three years, Cameco’s ability to meet its annual operating targets and whether the participating executive remains employed by Cameco at the end of the three-year vesting period. As of December 31, 2017, the total number of PSUs held by the participants, after adjusting for forfeitures on retirement, was 1,070,997 (2016 - 892,895).

C. Restricted share unit (RSU)

The Company has established an RSU plan whereby it provides each plan participant an annual grant of RSUs in an amount determined by the board. Each RSU represents one phantom common share that entitles the participant to a payment of one Cameco common share purchased on the open market, or cash with an equivalent market value, at the board’s discretion. The RSUs carry vesting periods of one to three years, and the final value of the units will be based on the value of Cameco common shares at the end of the vesting periods. As of December 31, 2017, the total number of RSUs held by the participants was 463,151 (2016 - 557,957).

120 CAMECO CORPORATION

D. Employee share ownership plan

Cameco also has an employee share ownership plan, whereby both employee and Company contributions are used to purchase shares on the open market for employees. The Company’s contributions are expensed during the year of contribution. Under the plan, employees have the opportunity to participate in the program to a maximum of 6% of eligible earnings each year with Cameco matching the first 3% of employee-paid shares by 50%. Cameco contributes $1,000 of shares annually to each employee that is enrolled in the plan. Shares purchased with Company contributions and with dividends paid on such shares become unrestricted 12 months from the date on which such shares were purchased. At December 31, 2017, there were 2,979 participants in the plan (2016 - 3,356). The total number of shares purchased in 2017 with Company contributions was 370,381 (2016 - 404,550). In 2017, the Company’s contributions totalled $4,473,000 (2016 - $5,204,000).

Cameco records compensation expense under its equity-settled plans with an offsetting credit to contributed surplus, to reflect the estimated fair value of units granted to employees. During the year, the Company recognized the following expenses under these plans:

	2017		2016
Stock option plan	$	4,941	$	4,588
Performance share unit plan		6,186		5,572
Restricted share unit plan		2,833		3,941
Employee share ownership plan		4,473		5,204
End of year	$	18,433	$	19,305

Fair value measurement of equity-settled plans

The fair value of the units granted through the PSU plan was determined based on Monte Carlo simulation and the fair value of options granted under the stock option plan was measured based on the Black-Scholes option-pricing model. The fair value of RSUs granted was determined based on their intrinsic value on the date of grant. Expected volatility was estimated by considering historic average share price volatility.

The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment plans were as follows:

	Stock option plan		PSU		RSU
Number of options granted		1,373,040		470,120		279,892
Average strike price		$14.70		-		$14.71
Expected dividend		$0.40		-		-
Expected volatility		34%		36%		-
Risk-free interest rate		1.1%		0.9%		-
Expected life of option		4.7 years		3 years		-
Expected forfeitures		7%		9%		13%
Weighted average grant date fair values		$3.34		$14.72		$14.71

In addition to these inputs, other features of the PSU grant were incorporated into the measurement of fair value. The market condition based on total shareholder return was incorporated by utilizing a Monte Carlo simulation. The non-market criteria relating to realized selling prices and operating targets have been incorporated into the valuation at grant date by reviewing prior history and corporate budgets.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 121

The Company has the following cash-settled plans:

A. Deferred share unit (DSU)

Cameco offers a DSU plan to non-employee directors. A DSU is a notional unit that reflects the market value of a single common share of Cameco. 60% of each director’s annual retainer is paid in DSUs. In addition, on an annual basis, directors can elect to receive 25%, 50%, 75% or 100% of the remaining 40% of their annual retainer and any additional fees in the form of DSUs. If a director meets their ownership requirements, the director may elect to take 25%, 50%, 75% or 100% of their annual retainer and any fees in cash, with the balance, if any, to be paid in DSUs. Each DSU fully vests upon award. The DSUs will be redeemed for cash upon a director leaving the board. The redemption amount will be based upon the weighted average of the closing prices of the common shares of Cameco on the TSX for the last 20 trading days prior to the redemption date multiplied by the number of DSUs held by the director. As of December 31, 2017, the total number of DSUs held by participating directors was 452,981 (2016 - 514,352).

B. Phantom stock option

Cameco makes annual grants of bonuses to eligible non-North American employees in the form of phantom stock options. Employees receive the equivalent value of shares in cash when exercised. Options granted under the phantom stock option plan have an award value equal to the closing price quoted on the TSX for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options vest over three years and expire eight years from the date granted. As of December 31, 2017, the number of options held by participating employees was 391,714 (2016 - 347,858) with exercise prices ranging from $14.70 to $39.53 per share (2016 - $16.38 to $39.53) and a weighted average exercise price of $22.13 (2016 - $24.13).

Cameco has recognized the following expenses (recoveries) under its cash-settled plans:

	2017			2016
Deferred share unit plan	$	(42	)	$	(739	)
Phantom stock option plan		176			(83	)
	$	134		$	(822	)

At December 31, 2017, a liability of $5,771,000 (2016 - $7,558,000) was included in the consolidated statements of financial position to recognize accrued but unpaid expenses for cash-settled plans.

Fair value measurement of cash-settled plans

The fair value of the phantom stock option plan was measured based on the Black-Scholes option-pricing model. Expected volatility is estimated by considering historic average share price volatility. The inputs used in the measurement of the fair values of the phantom stock option plan at the grant and reporting dates were as follows:

	Grant date       March 1, 2017		Reporting date December 31, 2017
Number of units		127,595	391,714
Average strike price		$14.70	$22.13
Expected dividend		$0.40	$0.08
Expected volatility		33%	38%
Risk-free interest rate		1.1%	1.7%
Expected life of option		4.5 years	3.3 years
Expected forfeitures		7%	7%
Weighted average measurement date fair values		$3.28	$1.35

122 CAMECO CORPORATION

23. Pension and other post-retirement benefits

Cameco maintains both defined benefit and defined contribution plans providing pension benefits to substantially all of its employees. All regular and temporary employees participate in a registered defined contribution plan. This plan is registered under the Pension Benefits Standard Act, 1985. In addition, all Canadian-based executives participate in a non-registered supplemental executive pension plan which is a defined benefit plan.

Under the supplemental executive pension plan (SEPP), Cameco provides a lump sum benefit equal to the present value of a lifetime pension benefit based on the executive’s length of service and final average earnings. The plan provides for unreduced benefits to be paid at the normal retirement age of 65, however unreduced benefits could be paid if the executive was at least 60 years of age and had 20 years of service at retirement. This program provides for a benefit determined by a formula based on earnings and service, reduced by the benefits payable under the registered base plan. Security is provided for the SEPP benefits through a letter of credit held by the plan’s trustee. The face amount of the letter of credit is determined each year based on the wind-up liabilities of the supplemental plan, less any plan assets currently held with the trustee. A valuation is required annually to determine the letter of credit amount. Benefits will continue to be paid from plan assets until the fund is exhausted, at which time Cameco will begin paying benefits from corporate assets.

Cameco also maintains non-pension post-retirement plans (“other benefit plans”) which are defined benefit plans that cover such benefits as group life insurance and supplemental health and dental coverage to eligible employees and their dependents. The costs related to these plans are charged to earnings in the period during which the employment services are rendered. These plans are funded by Cameco as benefit claims are made.

The board of directors of Cameco has final responsibility and accountability for the Cameco retirement programs. The board is ultimately responsible for managing the programs to comply with applicable legislation, providing oversight over the general functions and setting certain policies.

Cameco expects to pay $1,713,000 in contributions and letter of credit fees to its defined benefit plans in 2018.

The post-retirement plans expose Cameco to actuarial risks, such as longevity risk, market risk, interest rate risk, liquidity risk and foreign currency risk. The other benefit plans expose Cameco to risks of higher supplemental health and dental utilization than expected. However, the other benefit plans have limits on Cameco’s annual benefits payable.

The effective date of the most recent valuation for funding purposes on the registered defined benefit pension plans is January 1, 2015. The next planned effective date for valuations is January 1, 2018.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 123

Cameco has more than one defined benefit plan and has generally provided aggregated disclosures in respect of these plans, on the basis that these plans are not exposed to materially different risks. Information relating to Cameco’s defined benefit plans is shown in the following table:

	Pension benefit plans				Other benefit plans
	2017		2016		2017		2016
Fair value of plan assets, beginning of year	$	8,652	$	10,632	$	-	$	-
Interest income on plan assets		320		403		-		-
Return on assets excluding interest income		(2)		(127)		-		-
Benefits paid		(907)		(2,254)		-		-
Administrative costs paid		(2)		(2)		-		-
Fair value of plan assets, end of year	$	8,061	$	8,652	$	-	$	-
Defined benefit obligation, beginning of year	$	54,930	$	52,996	$	23,421	$	21,771
Current service cost		1,544		1,634		1,227		1,153
Interest cost		1,810		1,842		945		900
Actuarial loss arising from:
- financial assumptions		3,840		677		2,076		373
- experience adjustment		2,403		1,605		50		161
Benefits paid		(9,095)		(2,970)		(826)		(937)
Foreign exchange		540		(854)		-		-
Defined benefit obligation, end of year	$	55,972	$	54,930	$	26,893	$	23,421
Defined benefit liability [note 13]	$	(47,911)	$	(46,278)	$	(26,893)	$	(23,421)
The percentages of the total fair value of assets in the pension plans for each asset category at December 31 were as follows:
					Pension benefit plans
					2017		2016
Asset category(a)
Canadian equity securities						8%		8%
Global equity securities						16%		15%
Canadian fixed income						27%		26%
Other(b)						49%		51%
Total						100%		100%

(a) The defined benefit plan assets contain no material amounts of related party assets at December 31, 2017 and 2016 respectively.

(b) Relates to the value of the refundable tax account held by the Canada Revenue Agency. The refundable total is approximately equal to half of the sum of the realized investment income plus employer contributions less half of the benefits paid by the plan.

124 CAMECO CORPORATION

The following represents the components of net pension and other benefit expense included primarily as part of administration:

	Pension benefit plans						Other benefit plans
	2017			2016			2017		2016
Current service cost	$	1,544		$	1,634		$	1,227	$	1,153
Net interest cost		1,490			1,439			945		900
Administration cost		2			2			-		-
Defined benefit expense [note 16]		3,036			3,075			2,172		2,053
Defined contribution pension expense [note 16]		15,929			17,716			-		-
Net pension and other benefit expense	$	18,965		$	20,791		$	2,172	$	2,053
The total amount of actuarial losses recognized in other comprehensive income is:
	Pension benefit plans						Other benefit plans
	2017			2016			2017		2016
Actuarial loss	$	6,243		$	2,282		$	2,126	$	534
Return on plan assets excluding interest income		2			127			-		-
	$	6,245		$	2,409		$	2,126	$	534
The assumptions used to determine the Company’s defined benefit obligation and net pension and other benefit expense were as follows at December 31 (expressed as weighted averages):
	Pension benefit plans						Other benefit plans
	2017			2016			2017		2016
Discount rate - obligation		3.4%			3.9%			3.4%		3.9%
Discount rate - expense		3.9%			3.9%			3.9%		4.0%
Rate of compensation increase		3.0%			3.0%			-		-
Initial health care cost trend rate		-			-			7.0%		7.0%
Cost trend rate declines to		-			-			5.0%		5.0%
Year the rate reaches its final level		-			-			2021		2021
Dental care cost trend rate		-			-			5.0%		5.0%
At December 31, 2017, the weighted average duration of the defined benefit obligation for the pension plans was 20.3 years (2016 - 19.6 years) and for the other benefit plans was 15.7 years (2016 - 15.2 years). A 1% change at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the following:
	Pension benefit plans						Other benefit plans
	Increase			Decrease			Increase		Decrease
Discount rate	$	(7,103	)	$	9,296		$	(3,693)	$	4,689
Rate of compensation increase		2,841			(2,598	)		n/a		n/a

A 1% change in any of the other assumptions would not have a significant impact on the defined benefit obligation.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 125

The methods and assumptions used in preparing the sensitivity analyses are the same as the methods and assumptions used in determining the financial position of Cameco’s plans as at December 31, 2017. The sensitivity analyses are determined by varying the sensitivity assumption and leaving all other assumptions unchanged. Therefore, the sensitivity analyses do not recognize any interdependence in the assumptions. The methods and assumptions used in determining the above sensitivity are consistent with the methods and assumptions used in the previous year.

In addition, an increase of one year in the expected lifetime of plan participants in the pension benefit plans would increase the defined benefit obligation by $1,329,000.

To measure the longevity risk for these plans, the mortality rates were reduced such that the average life expectancy for all members increased by one year. The reduced mortality rates were subsequently used to re-measure the defined benefit obligation of the entire plan.

24. Financial instruments and related risk management

Cameco is exposed in varying degrees to a variety of risks from its use of financial instruments. Management and the board of directors, both separately and together, discuss the principal risks of our businesses. The board sets policies for the implementation of systems to manage, monitor and mitigate identifiable risks. Cameco’s risk management objective in relation to these instruments is to protect and minimize volatility in cash flow. The types of risks Cameco is exposed to, the source of risk exposure and how each is managed is outlined below.

Market risk

Market risk is the risk that changes in market prices, such as commodity prices, foreign currency exchange rates and interest rates, will affect the Company’s earnings or the fair value of its financial instruments. Cameco engages in various business activities which expose the Company to market risk. As part of its overall risk management strategy, Cameco uses derivatives to manage some of its exposures to market risk that result from these activities.

Derivative instruments may include financial and physical forward contracts. Such contracts may be used to establish a fixed price for a commodity, an interest-bearing obligation or a cash flow denominated in a foreign currency. Market risks are monitored regularly against defined risk limits and tolerances.

Cameco’s actual exposure to these market risks is constantly changing as the Company’s portfolios of foreign currency, interest rate and commodity contracts change.

The types of market risk exposure and the way in which such exposure is managed are as follows:

A. Commodity price risk

As a significant producer and supplier of uranium and nuclear fuel processing services, Cameco bears significant exposure to changes in prices for these products. A substantial change in prices will affect the Company’s net earnings and operating cash flows. Prices for Cameco’s products are volatile and are influenced by numerous factors beyond the Company’s control, such as supply and demand fundamentals and geopolitical events.

Cameco’s sales contracting strategy focuses on reducing the volatility in future earnings and cash flow, while providing both protection against decreases in market price and retention of exposure to future market price increases. To mitigate the risks associated with the fluctuations in the market price for uranium products, Cameco seeks to maintain a portfolio of uranium product sales contracts with a variety of delivery dates and pricing mechanisms that provide a degree of protection from pricing volatility.

Cameco is exposed to commodity price risk through its use of a uranium contract derivative. As of the reporting date, a 30% decrease in the price of uranium based on the Numerco forward uranium price curve, would result in a loss on this derivative of $7,516,000 ($5,770,000 (US)). A 30% increase would have an equal but opposite impact.

126 CAMECO CORPORATION

B. Foreign exchange risk

The relationship between the Canadian and US dollar affects financial results of the uranium business as well as the fuel services business. Sales of uranium product, conversion and fuel manufacturing services are routinely denominated in US dollars while production costs are largely denominated in Canadian dollars.

Cameco attempts to provide some protection against exchange rate fluctuations by planned hedging activity designed to smooth volatility. To mitigate risks associated with foreign currency, Cameco enters into forward sales and option contracts to establish a price for future delivery of the foreign currency. These foreign currency contracts are not designated as hedges and are recorded at fair value with changes in fair value recognized in earnings. Cameco also has a natural hedge against US currency fluctuations because a portion of its annual cash outlays, including purchases of uranium and conversion services, is denominated in US dollars.

Cameco holds a number of financial instruments denominated in foreign currencies that expose the Company to foreign exchange risk. Cameco measures its exposure to foreign exchange risk on financial instruments as the change in carrying values that would occur as a result of reasonably possible changes in foreign exchange rates, holding all other variables constant. As of the reporting date, the Company has determined its pre-tax exposure to foreign currency exchange risk on financial instruments to be as follows based on a 5% weakening of the Canadian dollar:

			Carrying value
	Currency		(Cdn)			Gain (loss)
Cash and cash equivalents		EUR	$	23,495		$	1,175
Cash and cash equivalents		USD		149,655			7,483
Accounts receivable		USD		333,240			16,662
Accounts receivable		KZT		42,032			2,212
Long-term receivables, investments and other		USD		58,820			2,941
Accounts payable and accrued liabilities		USD		(88,281	)		(4,414	)
Net foreign currency derivatives		USD		34,360			(59,965	)

A 5% strengthening of the Canadian dollar against the currencies above at December 31, 2017 would have had an equal but opposite effect on the amounts shown above, assuming all other variables remained constant.

C. Interest rate risk

The Company has a strategy of minimizing its exposure to interest rate risk by maintaining target levels of fixed and variable rate borrowings. The proportions of outstanding debt carrying fixed and variable interest rates are reviewed by senior management to ensure that these levels are within approved policy limits. At December 31, 2017, the proportion of Cameco’s outstanding debt that carries fixed interest rates is 80% (2016 - 80%).

Cameco is exposed to interest rate risk through its interest rate swap contracts whereby fixed rate payments on a notional amount of $300,000,000 of the Series D senior unsecured debentures were swapped for variable rate payments. The swaps terminate on September 2, 2019. Under the terms of the swaps, Cameco makes interest payments based on the three-month Canada Dealer Offered Rate plus an average margin of 3.7% and receives fixed interest payments of 5.67%. At December 31, 2017, the fair value of Cameco’s interest rate swap net liability was $150,000 (2016 - asset of $6,547,000).

Cameco is also exposed to interest rate risk on its loan facility with Inkai due to the variable nature of the interest rate contained in the terms therein (note 29).

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 127

Cameco measures its exposure to interest rate risk as the change in cash flows that would occur as a result of reasonably possible changes in interest rates, holding all other variables constant. As of the reporting date, the Company has determined the impact on earnings of a 1% increase in interest rate on variable rate financial instruments to be as follows:

	Gain (loss)
Interest rate contracts	$	(3,009)
Advances receivable from Inkai		611

Counterparty credit risk

Counterparty credit risk is associated with the ability of counterparties to satisfy their contractual obligations to Cameco, including both payment and performance. Cameco’s sales of uranium product, conversion and fuel manufacturing services expose the Company to the risk of non-payment.

Cameco manages the risk of non-payment by monitoring the credit worthiness of its customers and seeking pre-payment or other forms of payment security from customers with an unacceptable level of credit risk. To mitigate risks associated with certain financial assets, Cameco will hold positions with a variety of large creditworthy institutions.

The maximum exposure to credit risk, as represented by the carrying amount of the financial assets, at December 31 was:

	2017		2016
Cash and cash equivalents	$	591,620	$	320,278
Accounts receivable [note 6]		393,213		238,514
Advances receivable from Inkai [note 29]		58,820		90,095
Derivative assets [note 10]		40,804		10,612
Other		-		4,966

At December 31, 2017, there were no significant concentrations of credit risk and no amounts were held as collateral. Historically, Cameco has experienced minimal customer defaults and, as a result, considers the credit quality of its accounts receivable to be high. All accounts receivable at the reporting date are neither past due nor impaired.

Cameco has established programs for sales without recourse of trade accounts receivable to financial institutions. Through these programs, the Company surrenders the control, risks and benefits associated with the accounts receivable sold. The amount of receivables sold is recorded as a sale of financial assets and the balances are removed from the consolidated statement of financial position at the time of sale. The total amount of receivables sold under these programs and derecognized in accordance with IAS 39 during 2017 was $120,470,000 ($92,805,000 (USD)) (2016 - $214,428,000 ($159,551,000 (USD))).

Liquidity risk

Financial liquidity represents Cameco’s ability to fund future operating activities and investments. Cameco ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the Company’s holdings of cash and cash equivalents. The Company believes that these sources will be sufficient to cover the likely short-term and long-term cash requirements.

128 CAMECO CORPORATION

The table below outlines the Company’s available debt facilities at December 31, 2017:

	Total amount		Outstanding and committed		Amount available
Unsecured revolving credit facility	$	1,250,000	$	-	$	1,250,000
Letter of credit facilities		1,667,932		1,474,155		193,777

The tables below present a maturity analysis of Cameco’s financial liabilities, including principal and interest, based on the expected cash flows from the reporting date to the contractual maturity date:

	Carrying amount		Contractual cash flows		Due in less than 1 year		Due in 1-3 years		Due in 3-5 years		Due after 5 years
Accounts payable and accrued liabilities	$	258,405	$	258,405	$	258,405	$	-	$	-	$	-
Dividends payable		39,579		39,579		39,579		-		-		-
Long-term debt		1,494,471		1,500,000		-		500,000		400,000		600,000
Foreign currency contracts		5,624		5,624		1,747		3,877		-		-
Other derivative liabilities		17,790		17,790		9,502		8,288		-		-
Total contractual repayments	$	1,815,869	$	1,821,398	$	309,233	$	512,165	$	400,000	$	600,000
			Total		Due in less than 1 year		Due in 1-3 years		Due in 3-5 years		Due after 5 years
Total interest payments on long-term debt			$	405,600	$	69,390	$	110,430	$	82,080	$	143,700

Measurement of fair values

A. Accounting classifications and fair values

The following tables summarize the carrying amounts and accounting classifications of Cameco’s financial instruments at the reporting date:

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 129

At December 31, 2017

	Fair value through profit or loss			Loans and receivables		Available for sale		Other financial liabilities			Total
Financial assets
Cash and cash equivalents	$	-		$	591,620	$	-	$	-		$	591,620
Accounts receivable [note 6]		-			396,824		-		-			396,824
Derivative assets [note 10]
Foreign currency contracts		39,984			-		-		-			39,984
Interest rate contracts		820			-		-		-			820
Investments in equity securities [note 10]		-			-		21,417		-			21,417
Advances receivable from Inkai [note 29]		-			58,820		-		-			58,820
	$	40,804		$	1,047,264	$	21,417	$	-		$	1,109,485
Financial liabilities
Accounts payable and accrued liabilities [note 11]	$	-		$	-	$	-	$	258,405		$	258,405
Dividends payable		-			-		-		39,579			39,579
Derivative liabilities [note 13]
Foreign currency contracts		5,624			-		-		-			5,624
Uranium contracts		16,820			-		-		-			16,820
Interest rate contracts		970			-		-		-			970
Long-term debt [note 12]		-			-		-		1,494,471			1,494,471
		23,414			-		-		1,792,455			1,815,869
Net	$	17,390		$	1,047,264	$	21,417	$	(1,792,455	)	$	(706,384	)
At December 31, 2016
	Fair value through profit or loss			Loans and receivables		Available for sale		Other financial liabilities			Total
Financial assets
Cash and cash equivalents	$	-		$	320,278	$	-	$	-		$	320,278
Accounts receivable [note 6]		-			242,482		-		-			242,482
Derivative assets [note 10]
Foreign currency contracts		4,065			-		-		-			4,065
Interest rate contracts		6,547			-		-		-			6,547
Investments in equity securities [note 10]		-			-		14,807		-			14,807
Advances receivable from Inkai [note 29]		-			90,095		-		-			90,095
Other		-			4,966		-		-			4,966
	$	10,612		$	657,821	$	14,807	$	-		$	683,240
Financial liabilities
Accounts payable and accrued liabilities [note 11]	$	-		$	-	$	-	$	312,900		$	312,900
Dividends payable		-			-		-		39,579			39,579
Derivative liabilities [note 13]
Foreign currency contracts		29,231			-		-		-			29,231
Uranium contracts		29,654			-		-		-			29,654
Long-term debt [note 12]		-			-		-		1,493,327			1,493,327
		58,885			-		-		1,845,806			1,904,691
Net	$	(48,273	)	$	657,821	$	14,807	$	(1,845,806	)	$	(1,221,451	)

130 CAMECO CORPORATION

Cameco does not have any financial instruments classified as held-for-trading, or held-to-maturity as of the reporting date.

The following tables summarize the carrying amounts and fair values of Cameco’s financial instruments, including their levels in the fair value hierarchy:

As at December 31, 2017

				Fair value
	Carrying value			Level 1		Level 2			Total
Derivative assets [note 10]
Foreign currency contracts	$	39,984		$	-	$	39,984		$	39,984
Interest rate contracts		820			-		820			820
Investments in equity securities [note 10]		21,417			21,417		-			21,417
Derivative liabilities [note 13]
Foreign currency contracts		(5,624	)		-		(5,624	)		(5,624	)
Uranium contracts		(16,820	)		-		(16,820	)		(16,820	)
Interest rate contracts		(970	)		-		(970	)		(970	)
Long-term debt [note 12]		(1,494,471	)		-		(1,652,230	)		(1,652,230	)
Net	$	(1,455,664	)	$	21,417	$	(1,634,840	)	$	(1,613,423	)
As at December 31, 2016
				Fair value
	Carrying value			Level 1		Level 2			Total
Derivative assets [note 10]
Foreign currency contracts	$	4,065		$	-	$	4,065		$	4,065
Interest rate contracts		6,547			-		6,547			6,547
Investments in equity securities [note 10]		14,807			14,807		-			14,807
Derivative liabilities [note 13]
Foreign currency contracts		(29,231	)		-		(29,231	)		(29,231	)
Share purchase options		(29,654	)		-		(29,654	)		(29,654	)
Long-term debt [note 12]		(1,493,327	)		-		(1,721,805	)		(1,721,805	)
Net	$	(1,526,793	)	$	14,807	$	(1,770,078	)	$	(1,755,271	)

The preceding tables exclude fair value information for financial instruments whose carrying amounts are a reasonable approximation of fair value. The carrying value of Cameco’s cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximates its fair value as a result of the short-term nature of the instruments.

There were no transfers between level 1 and level 2 during the period. Cameco does not have any financial instruments that are classified as level 3 as of the reporting date.

B. Financial instruments measured at fair value

Cameco measures its derivative financial instruments, material investments in equity securities and long-term debt at fair value. Investments in publicly held equity securities are classified as a recurring level 1 fair value measurement while derivative financial instruments and long-term debt are classified as a recurring level 2 fair value measurement.

The fair value of investments in equity securities is determined using quoted share prices observed in the principal market for the securities as of the reporting date. The fair value of Cameco’s long-term debt is determined using quoted market yields as of the reporting date, which ranged from 1.6% to 2.3% (2016 - 0.8% to 2.3%).

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 131

Foreign currency derivatives consist of foreign currency forward contracts, options and swaps. The fair value of foreign currency options is measured based on the Black Scholes option-pricing model. The fair value of foreign currency forward contracts and swaps is measured using a market approach, based on the difference between contracted foreign exchange rates and quoted forward exchange rates as of the reporting date.

Interest rate derivatives consist of interest rate swap contracts. The fair value of interest rate swaps is determined by discounting expected future cash flows from the contracts. The future cash flows are determined by measuring the difference between fixed interest payments to be received and floating interest payments to be made to the counterparty based on Canada Dealer Offer Rate forward interest rate curves.

Uranium contract derivatives consist of written options and price swaps. The fair value of uranium options is measured based on the Black Scholes option-pricing model. The fair value of uranium price swaps is determined by discounting expected future cash flows from the contracts. The future cash flows are determined by measuring the difference between fixed purchases or sales under contracted prices, and floating purchases or sales based on Numerco forward uranium price curves.

Where applicable, the fair value of the derivatives reflects the credit risk of the instrument and includes adjustments to take into account the credit risk of the Company and counterparty. These adjustments are based on credit ratings and yield curves observed in active markets at the reporting date.

Derivatives

The following table summarizes the fair value of derivatives and classification on the consolidated statements of financial position:

	2017			2016
Non-hedge derivatives:
Foreign currency contracts	$	34,360		$	(25,166	)
Interest rate contracts		(150	)		6,547
Contract derivatives		(16,820	)		(29,654	)
Net	$	17,390		$	(48,273	)
Classification:
Current portion of long-term receivables, investments and other [note 10]	$	25,948		$	4,119
Long-term receivables, investments and other [note 10]		14,856			6,493
Current portion of other liabilities [note 13]		(11,249	)		(24,966	)
Other liabilities [note 13]		(12,165	)		(33,919	)
Net	$	17,390		$	(48,273	)

132 CAMECO CORPORATION

The following table summarizes the different components of the gains (losses) on derivatives included in net earnings:

	2017			2016
Non-hedge derivatives:
Foreign currency contracts	$	58,983		$	59,398
Interest rate contracts		(4,014	)		(1,016	)
Uranium contracts		1,281			(23,975	)
Net	$	56,250		$	34,407

25. Capital management

Cameco’s management considers its capital structure to consist of bank overdrafts, long-term debt, short-term debt (net of cash and cash equivalents and short-term investments), non-controlling interest and shareholders’ equity.

Cameco’s capital structure reflects its strategy and the environment in which it operates. Delivering returns to long-term shareholders is a top priority. The Company’s objective is to maximize cash flow while maintaining its investment grade rating through close capital management of our balance sheet metrics. Capital resources are managed to allow it to support achievement of its goals while managing financial risks such as the continued weakness in the market, litigation risk and refinancing risk. The overall objectives for managing capital in 2017 reflect the environment that the Company is operating in, similar to the prior comparative period.

The capital structure at December 31 was as follows:

	2017			2016
Long-term debt [note 12]	$	1,494,471		$	1,493,327
Cash and cash equivalents		(591,620	)		(320,278	)
Net debt		902,851			1,173,049
Non-controlling interest		371			157
Shareholders’ equity		4,859,288			5,258,371
Total equity		4,859,659			5,258,528
Total capital	$	5,762,510		$	6,431,577

Cameco is bound by certain covenants in its general credit facilities. These covenants place restrictions on total debt, including guarantees and set minimum levels for net worth. As of December 31, 2017, Cameco met these requirements.

26. Segmented information

Cameco has three reportable segments: uranium, fuel services and NUKEM. Cameco’s reportable segments are strategic business units with different products, processes and marketing strategies. The uranium segment involves the exploration for, mining, milling, purchase and sale of uranium concentrate. The fuel services segment involves the refining, conversion and fabrication of uranium concentrate and the purchase and sale of conversion services. The NUKEM segment acts as a market intermediary between uranium producers and nuclear-electric utilities.

In the third quarter of 2017, Cameco announced that the way its global marketing activities are organized would be changed. To better co-ordinate marketing activities and reduce costs, all future Canadian and international marketing activities will be consolidated in Saskatoon. These changes will have a significant impact on the activities historically performed by NUKEM and may change the factors that are considered in assessing the Company’s reportable segments in the future.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 133

Accounting policies used in each segment are consistent with the policies outlined in the summary of significant accounting policies. Segment revenues, expenses and results include transactions between segments incurred in the ordinary course of business. These transactions are priced on an arm’s length basis, are eliminated on consolidation and are reflected in the “other” column.

A. Business segments - 2017

For the year ended December 31, 2017

	Uranium		Fuel services		NUKEM			Other			Total
Revenue	$	1,574,068	$	312,888	$	321,188		$	(51,292	)	$	2,156,852
Expenses
Cost of products and services sold		910,685		212,035		321,362			(53,849	)		1,390,233
Depreciation and amortization		267,931		37,093		14,193			11,128			330,345
Cost of sales		1,178,616		249,128		335,555			(42,721	)		1,720,578
Gross profit (loss)		395,452		63,760		(14,367	)		(8,571	)		436,274
Administration		-		-		12,439			150,656			163,095
Impairment charges		246,931		-		111,399			-			358,330
Exploration		29,933		-		-			-			29,933
Research and development		-		-		-			5,660			5,660
Other operating loss		43		-		-			-			43
Loss on disposal of assets		5,901		247		799			-			6,947
Finance costs		-		-		1,479			109,129			110,608
Loss (gain) on derivatives		-		-		1,945			(58,195	)		(56,250	)
Finance income		-		-		(23	)		(5,242	)		(5,265	)
Other expense		7,193		-		1,263			21,954			30,410
Earnings (loss) before income taxes		105,451		63,513		(143,668	)		(232,533	)		(207,237	)
Income tax recovery												(2,519	)
Net loss												(204,718	)
Capital expenditures for the year	$	132,073	$	11,237	$	23		$	-		$	143,333

134 CAMECO CORPORATION

For the year ended December 31, 2016

	Uranium			Fuel services			NUKEM			Other			Total
Revenue	$	1,717,896		$	321,374		$	391,402		$	732		$	2,431,404
Expenses
Cost of products and services sold		993,012			223,991			380,695			(1,463	)		1,596,235
Depreciation and amortization		281,159			33,951			38,273			18,306			371,689
Cost of sales		1,274,171			257,942			418,968			16,843			1,967,924
Gross profit (loss)		443,725			63,432			(27,566	)		(16,111	)		463,480
Administration		-			-			20,088			186,564			206,652
Impairment charges		361,989			-			-			-			361,989
Exploration		42,579			-			-			-			42,579
Research and development		-			-			-			4,952			4,952
Other operating income		(34,075	)		-			-			-			(34,075	)
Loss on disposal of assets		22,787			221			160			-			23,168
Finance costs		-			-			4,056			107,850			111,906
Gain on derivatives		-			-			(6,530	)		(27,877	)		(34,407	)
Finance income		-			-			(396	)		(3,983	)		(4,379	)
Share of earnings from
Other expense (income)		(56,219	)		(10,372	)		329			5,591			(60,671	)
Earnings (loss) before income taxes		106,664			73,583			(45,273	)		(289,208	)		(154,234	)
Income tax recovery														(94,355	)
Net loss														(59,879	)
Capital expenditures for the year	$	201,722		$	13,983		$	1,203		$	-		$	216,908

B. Geographic segments

Revenue is attributed to the geographic location based on the location of the entity providing the services. The Company’s revenue from external customers is as follows:

	2017		2016
United States	$	1,692,936	$	1,902,679
Canada		316,611		347,536
Germany		147,305		181,189
	$	2,156,852	$	2,431,404

The Company’s non-current assets, excluding deferred tax assets and financial instruments, by geographic location are as follows:

	2017		2016
Canada	$	3,417,254	$	3,665,558
Australia		422,400		420,448
United States		138,455		327,266
Kazakhstan		283,562		318,006
Germany		233		127,618
	$	4,261,904	$	4,858,896

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 135

27. Group entities

The following are the principal subsidiaries and associates of the Company:

	Principal place		Ownership interest
	of business		2017		2016
Subsidiaries:
Cameco Fuel Manufacturing Inc.		Canada		100%		100%
Cameco Marketing Inc.		Canada		100%		-
Cameco Inc.		US		100%		100%
Power Resources, Inc.		US		100%		100%
Crow Butte Resources, Inc.		US		100%		100%
NUKEM, Inc.		US		100%		-
NUKEM Investments GmbH		Germany		100%		100%
Cameco Australia Pty. Ltd.		Australia		100%		100%
Cameco Europe Ltd.		Switzerland		100%		100%

28. Joint operations

Cameco conducts a portion of its exploration, development, mining and milling activities through joint operations located around the world. Operations are governed by agreements that provide for joint control of the strategic operating, investing and financing activities among the partners. These agreements were considered in the determination of joint control. Cameco’s significant Canadian uranium joint operation interests are McArthur River, Key Lake and Cigar Lake. The Canadian uranium joint operations allocate uranium production to each joint operation participant and the joint operation participant derives revenue directly from the sale of such product. The participants in the Inkai joint operation purchase uranium from Inkai and, in turn, derive revenue directly from the sale of such product to third-party customers. Mining and milling expenses incurred by joint operations are included in the cost of inventory.

Cameco reflects its proportionate interest in these assets and liabilities as follows:

	Principal place of business		Ownership			2017		2016
Total assets
McArthur River		Canada		69.81	%	$	1,121,509	$	1,093,254
Key Lake		Canada		83.33	%		482,879		571,183
Cigar Lake		Canada		50.03	%		1,531,150		1,591,489
Inkai		Kazakhstan		60.00	%		230,280		290,122
						$	3,365,818	$	3,546,048
Total liabilities
McArthur River				69.81	%	$	38,896	$	43,189
Key Lake				83.33	%		140,214		150,847
Cigar Lake				50.03	%		40,687		37,888
Inkai				60.00	%		119,998		181,145
						$	339,795	$	413,069

Through unsecured shareholder loans, Cameco has agreed to fund the development of the Inkai project. Cameco eliminates the loan balances recorded by Inkai and records advances receivable (notes 10 and 29) representing its 40% share.

136 CAMECO CORPORATION

29. Related parties

The shares of Cameco are widely held and no shareholder, resident in Canada, is allowed to own more than 25% of the Company’s outstanding common shares, either individually or together with associates. A non-resident of Canada is not allowed to own more than 15%.

Transactions with key management personnel

Key management personnel are those persons that have the authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel of the Company include executive officers, vice-presidents, other senior managers and members of the board of directors.

In addition to their salaries, Cameco also provides non-cash benefits to executive officers and vice-presidents and contributes to pension plans on their behalf (note 23). Senior management and directors also participate in the Company’s share-based compensation plans (note 22).

Executive officers are subject to terms of notice ranging from three to six months. Upon resignation at the Company’s request, they are entitled to termination benefits of up to the lesser of 18 to 24 months or the period remaining until age 65. The termination benefits include gross salary plus the target short-term incentive bonus for the year in which termination occurs.

Compensation for key management personnel was comprised of:

	2017		2016
Short-term employee benefits	$	26,569	$	17,673
Share-based compensation		11,525		10,464
Post-employment benefits		5,914		5,910
Termination benefits		916		608
	$	44,924	$	34,655

(a) Excludes deferred share units held by directors (see note 22).

Other related party transactions

Through unsecured shareholder loans, Cameco has agreed to fund Inkai’s project development costs as well as further evaluation on block 3. The limits of the loan facilities are $175,000,000 (US) and advances under these facilities bear interest at a rate of LIBOR plus 2%. At December 31, 2017, $117,218,000 (US) of principal and interest was outstanding (2016 - $167,750,000 (US)).

Cameco’s share of outstanding principal and interest, representing the 40% owed to it, was $58,820,000 at December 31, 2017 (2016 - $90,095,000) (notes 10 and 28). For the year ended December 31, 2017, Cameco recorded interest income of $2,182,000 relating to this balance (2016 - $2,155,000).

30. Subsequent event

On December 11, 2017, Cameco announced that the restructuring of JV Inkai outlined in the implementation agreement dated May 27, 2016 with Joint Stock Company National Atomic Company Kazatomprom (Kazatomprom) and JV Inkai closed and would take effect on January 1, 2018. Under the implementation agreement, Cameco’s ownership interest in JV Inkai will be adjusted to 40% and Kazatomprom’s ownership interest in JV Inkai will be adjusted to 60%. As a result, Cameco will account for JV Inkai on an equity basis commencing on January 1, 2018.

In addition, Cameco will recognize a gain on the change in ownership interests of approximately $66,000,000. The resulting gain on restructuring will be reflected in our financial results for the first quarter of 2018.

2017 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 137

Investor Information

Common Shares

Toronto (CCO)  |  New York (CCJ)

Transfer Agents and Registrars

The registrar and transfer agent for Cameco’s common shares is AST Trust Company. For information on common shareholdings, dividend cheques, lost share certificates and address changes, contact:

Canada	USA
AST Trust Company (Canada)	American Stock Transfer &
P.O. Box 700, Station B	Trust Company, LLC
Montreal, Quebec H3B 3K3	6201 15th Avenue
	Brooklyn, NY 11219
Telephone
1-800-387-0825 or 1-416-682-3860 (outside of North America) www.astfinancial.com/ca-en

Inquiries Cameco Corporation 2121 - 11th Street West Saskatoon, Saskatchewan S7M 1J3 Phone:     306-956-6200 Fax:          306-956-6201	For comprehensive financial information, visit: cameco.com
Annual Meeting	Dividends
The annual meeting of shareholders of Cameco Corporation is scheduled to be held on May 16, 2018 at Cameco’s head office in Saskatoon, Saskatchewan.	In 2017, our board of directors reduced the planned dividend to $0.08 per common share to be paid annually. The decision to declare a dividend by our board will be based on our cash flow, financial position, strategy and other relevant factors including appropriate alignment with the cyclical nature of our earnings.