Form 6-K

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L1sUXvAyEzBHKnxD4jUYDMAIn8IOfEbUxRX8vYFlItgJpXjwmlWbX2dMDs9yz7Vt hIxIMC02/J+sL8V/jLmVhw== 0000950123-09-033919.txt : 20090812 0000950123-09-033919.hdr.sgml : 20090812 20090812130949 ACCESSION NUMBER: 0000950123-09-033919 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20090812 FILED AS OF DATE: 20090812 DATE AS OF CHANGE: 20090812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMECO CORP CENTRAL INDEX KEY: 0001009001 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS METAL ORES [1090] IRS NUMBER: 980113090 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14228 FILM NUMBER: 091006019 BUSINESS ADDRESS: STREET 1: 2121 11TH ST W CITY: SASKATOON STATE: A9 ZIP: S7M 1J3 BUSINESS PHONE: 3069566200 MAIL ADDRESS: STREET 1: 2121 11TH ST W. CITY: SASKATOON STATE: A9 ZIP: S7M 1J3 6-K 1 o56613e6vk.htm FORM 6-K Form 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 August, 2009

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 o Form 40-F þ

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 o No þ

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	Press Release dated August 11, 2009

99.2	Management’s Discussion & Analysis for the second quarter ending June 30, 2009

99.3	Interim Unaudited Financial Statements for the second quarter ending June 30, 2009

99.4	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated June 30, 2009

99.5	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated June 30, 2009

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: August 12, 2009		Cameco Corporation By:

		/s/ “Gary M. S. Chad”
		Gary M.S. Chad, Q.C.
		Senior Vice-President, Governance,
		Law and Corporate Secretary

EX-99.1 2 o56613exv99w1.htm EXHIBIT 99.1 Exhibit 99.1


TSX: CCO NYSE: CCJ				website: cameco.com currency: Cdn (unless noted)

2121 — 11^thStreet West, Saskatoon, Saskatchewan, S7M 1J3 Canada
Tel: (306) 956-6200 Fax: (306) 956-6201

Cameco Reports Second Quarter Earnings

Saskatoon, Saskatchewan, Canada, August 12, 2009

Cameco Corporation (TSX: CCO; NYSE: CCJ) today reported second quarter 2009 net earnings of $247 million ($0.63 per share diluted), $97 million higher than net earnings of $150 million ($0.42 per share diluted) recorded in the second quarter of 2008. For the six months ended June 30, 2009, net earnings were $329 million ($0.85 per share diluted), $45 million higher than net earnings of $284 million ($0.79 per share diluted) recorded in the first half of 2008.

Second quarter 2009 adjusted net earnings¹ of $140 million ($0.36 per share adjusted and diluted) were 1% higher than in the second quarter of 2008. This was due to higher earnings in the fuel services and electricity businesses, partially offset by lower results in our uranium and gold businesses.

Adjusted net earnings¹ for the first half of 2009 were 20% lower than in 2008 due to lower earnings in the uranium and gold businesses, partially offset by higher results in the fuel services and electricity businesses.

In our uranium business, higher costs of sales adversely affected uranium profits in the second quarter and for the first half of the year. However, these costs for the year, excluding costs for purchased uranium, are still expected to be within our prior guidance (increasing by between 5% and 10%). Overall costs of sales are forecast to rise by 20% to 25% as we expect to purchase additional uranium at prices substantially higher than our costs of production to support our sales activities, including higher trading volumes.

Our gold business was impacted by lower gold production and higher operating costs during the quarter and for the first six months of the year.

In our electricity business, an increase in the realized price led to stronger results in the quarter and for the first half of the year. The increase was due largely to revenue recognized by BPLP under its agreement with the Ontario Power Authority (OPA). In addition, an increase in generation contributed to the improved results for the first six months.


¹		Net earnings for the quarters and six months ended June 30, 2008 and 2009 have been adjusted to exclude a number of items. Adjusted net earnings is a non-GAAP measure. For a description see “Use of Non-GAAP Financial Measures” on page 10.

Results in our fuel services business were positively impacted by higher realized prices both during the quarter and for the first half of the year. In addition, during the quarter an increase in sales contributed to the stronger quarterly results.

“Cameco has delivered strong financial results complemented by good performance at the company’s operations during the first half of 2009,” said Jerry Grandey, Cameco’s president and CEO.

Note: All dollar amounts are expressed in Canadian dollars unless otherwise stated. Cameco’s unaudited second quarter financial statements and management’s discussion and analysis are available on our company’s website cameco.com, on SEDAR at sedar.com and on EDGAR at sec.gov/edgar.shtml.


	Three months ended				Six months ended				Yr/Yr
	June 30				June 30				Change
Financial Highlights	2009		2008		2009		2008		%
Revenue ($ millions)		774		620		1,389		1,213		15
Net earnings ($ millions)		247		150		329		284		16
Earnings per share (EPS) — basic ($)		0.63		0.44		0.86		0.82		5
EPS — diluted ($)		0.63		0.42		0.85		0.79		8
Adjusted net earnings ($ millions)¹		140		139		230		287		(20	)
EPS — adjusted and diluted ($)¹		0.36		0.39		0.60		0.79		(24	)
Cash provided by operations² ($ millions)		125		113		316		259		22


¹		Net earnings for the quarters and six months ended June 30, 2008 and 2009 have been adjusted to exclude a number of items. Adjusted net earnings is a non-GAAP measure. For a description see “Use of Non-GAAP Financial Measures” on page 10.

²		Including changes in working capital. For more information on working capital changes, refer to note 11 of the second quarter unaudited consolidated financial statements.

Cameco’s results come from four business segments:

URANIUM

Highlights

Three months ended

Six months ended

June 30

2009

2008

2009

2008

Revenue ($ millions)¹

443

329

779

667

Gross profit ($ millions)

171

183

287

352

Gross profit %

Average realized price

($US/lb)

40.64

47.35

38.86

43.84

($Cdn/lb)

51.45

51.12

49.31

47.64

Sales volume (million lbs)¹

8.5

6.3

15.6

13.8

Production volume (million lbs)

3.8

5.2

8.6

9.0


¹		Revenue in the amount of $85 million on 2.6 million pounds previously deferred due to a standby product loan was recognized in the first quarter of 2008 as a result of the cancellation of a product loan agreement.

-2-

Uranium Results

For the second quarter of 2009, revenue from our uranium business increased by $114 million to $443 million due to a 35% increase in reported sales volumes and a marginal increase in the realized selling price (in Canadian dollars). The increase in the average realized price (in Canadian dollars) was related to higher prices under fixed-price contracts and a more favourable foreign exchange rate being offset by lower realized prices under market-related contracts.

The timing of deliveries of uranium products within a calendar year is at the discretion of customers. Therefore, our quarterly delivery patterns can vary significantly. For the remainder of 2009, uranium revenue is more heavily weighted to the fourth quarter.

Our total cost of products and services sold, including depreciation, depletion and reclamation (DD&R), increased to $272 million in the second quarter of 2009 from $146 million in the second quarter of 2008 due to the 35% increase in sales volume and a 40% increase in the unit cost of product and services sold. Consistent with the first quarter of 2009, the average unit cost of sales continued to be negatively impacted by the carryover effect of lower production in 2008, recent purchases at near market prices, higher royalties and increased input costs.

For the first six months of 2009, revenue from our uranium business increased by $112 million to $779 million due to a 13% increase in reported sales volumes and a 4% increase in the realized selling price (in Canadian dollars).

Our total cost of products and services sold, including DD&R, increased to $492 million in the first half of 2009 from $315 million in the first half of 2008 due to the 13% increase in sales volume and a 39% increase in the unit cost of product and services sold. Average unit cost of sales were negatively impacted by the carryover effect of lower production in 2008, recent purchases at near market prices, higher royalties and increased input costs.

Uranium Production

Three months

Six months

Cameco’s share of production

ended June 30

2009 planned

(million lbs U₃O₈)

2009

2008

2009

2008

production¹

McArthur River/ Key Lake

2.0

3.2

5.6

6.4

13.1

Rabbit Lake

1.0

1.5

1.5

1.5

3.6

Smith Ranch/Highland

0.5

0.3

0.9

0.7

1.8

Crow Butte

0.2

0.1

0.4

0.3

0.7

Inkai

0.1

0.1

0.2

0.1

0.9

Total

3.8

5.2

8.6

9.0

20.1


¹		See the section titled “Cameco’s Uranium Supply Outlook” in the annual MD&A for more information about the assumptions and risk factors associated with this production forecast, which remains unchanged from the forecast presented in our annual MD&A.

-3-

FUEL SERVICES

Highlights


	Three months ended					Six months ended
	June 30					June 30
	2009		2008			2009		2008
Revenue ($ millions)		82		54			135		114
Gross profit ($ millions)		25		(6	)		33		(3	)
Gross profit %		31		(11	)		24		(3	)
Sales volume (million kgU)¹		4.1		3.1			6.0		6.5
Production volume (million kgU)²		2.2		1.8			4.4		3.9


¹		Kilograms of uranium (kgU).

²		Production volume includes UF₆, UO₂, fuel fabrication, and UF₆supply from Springfields Fuels Ltd. (SFL).

Fuel Services Results

Total cost of products and services sold, including DD&R, decreased to $57 million in the second quarter from $60 million for the same period in 2008. The cost of products sold in both 2009 and 2008 was impacted by the curtailment of production at the Port Hope UF₆conversion plant. In the first half of 2009, the plant was shutdown due to the unavailability of hydrofluoric acid (HF), while in 2008 operations were suspended to allow for the clean up of contaminated soil. All costs associated with the UF₆conversion plant were expensed as incurred in the second quarter of each year ($7 million in 2009; $14 million in 2008).

In the first six months of 2009, revenue from our fuel services business was $135 million, an increase of $21 million compared to the same period in 2008 due to a 29% increase in the average realized price for fuel services products, partially offset by an 8% decline in sales volumes. The increase in the realized price was largely attributable to prices realized under UF₆ conversion contracts. The timing of deliveries of fuel services within a calendar year is at the discretion of customers. Therefore, our quarterly delivery patterns can vary significantly.

Total cost of products and services sold, including DD&R, decreased to $102 million in the first half of 2009 from $117 million for the same period in 2008. The cost of products sold in both 2009 and 2008 was impacted by the curtailment of production at the Port Hope UF₆conversion plant. All costs associated with the UF₆conversion plant were expensed as incurred in the first half of each year ($18 million in 2009; $28 million in 2008).

Our Port Hope conversion services, fuel manufacturing production and SFL supply totalled 2.2 million kgU in the second quarter of 2009 compared to 1.8 million kgU in the second quarter of 2008. Port Hope conversion services, fuel manufacturing production and SFL supply was 4.4 million kgU for the first six months of 2009 compared to 3.9 million kgU for the same period in 2008.

-4-

At our Blind River refinery, we produced 3.6 million kgU in the second quarter of 2009 compared to 2.9 million kgU for the second quarter of 2008. Total UO₃ production for the first six months of 2009 was 7.2 million kgU compared to 6.0 million kgU in the first half of 2008.

NUCLEAR ELECTRICITY GENERATION

Cameco owns 31.6% of the Bruce Power Limited Partnership (BPLP). As a result of a significant deterioration in the Ontario electricity market and supported by an amendment to the agreement with the OPA that governs the Bruce B floor price, $172 million (Cameco’s share, $54 million) was recognized as revenue in the second quarter of 2009.

Under the terms of the agreement, all output from the B reactors is supported by a floor price. The floor price is adjusted annually for inflation and is currently $48.76/MWh. Payments under the agreement are received monthly, based on the positive difference between the floor price and the spot price and are not subject to repayment to the extent that the floor price exceeds the average spot price for the year. A recent amendment to the agreement limits to the current year (versus over the contract life) the period over which repayment is calculated.

During the second quarter, Cameco’s pre-tax earnings from BPLP amounted to $40 million compared to $13 million for the same period in 2008. This increase in 2009 was due to the increased revenue, partially offset by the reduction in generation and higher operating costs.

BPLP achieved a capacity factor of 75% in the second quarter of 2009 compared to 81% in the same period of 2008. During the second quarter of 2009, the BPLP units generated 5.3 TWh of electricity compared to 5.7 TWh in 2008.

The realized price, which reflects contract revenue, spot sales and payments under BPLP’s agreement with the OPA, averaged $70 per MWh in the quarter, 25% higher than the realized price for the second quarter of 2008. The increase is largely the result of recording such payments as revenue. During the quarter, the Ontario electricity spot price averaged $23 per MWh compared to $47 per MWh in the second quarter of 2008. Electricity prices in the Ontario market have been trending lower due primarily to reduced industrial demand, increased generation and low fossil fuel prices. Pursuant to its agreement with the OPA, BPLP received $137 million during the quarter.

Cameco’s pre-tax earnings from BPLP for the first half of 2009 amounted to $84 million compared to $20 million in the same period of 2008. The increase is attributable to higher realized electricity prices, a higher capacity factor and lower operating costs.

For the first six months of the year, the BPLP units achieved a capacity factor of 86%, compared with 77% in the same period last year. These units produced 12.0 TWh during the first half of 2009, an increase of 1.2 TWh over the same period last year, due primarily to the extended planned outage of unit B5 and numerous forced outages in 2008.

BPLP’s realized price, which reflects contract revenue, spot sales and payments under its agreement with the OPA, averaged $63 per MWh for the first half of the year, 13% higher than the realized price in the same period last year. The increase is largely the result of recording such payments as revenue. During the first six months of 2009, the Ontario electricity spot price

-5-

averaged $33 per MWh, significantly lower than the average of $48 per MWh from the same period of 2008. Pursuant to its agreement with the OPA, BPLP has recognized $172 million as revenue year to date.

GOLD

Cameco owns approximately 49% of and has voting control over approximately 53% of Centerra’s shares. Centerra owns and operates two gold mines.

Highlights


	Three months ended					Six months ended
	June 30					June 30
	2009			2008		2009			2008
Revenue ($ millions)		129			143		250			256
Gross profit ($ millions)		(21	)		33		(19	)		77
Gross profit %		(17	)		23		(8	)		30
Realized price ($US/ounce)		905			889		906			898
Sales volume (ounces)		115,000			160,000		224,000			284,000
Gold production (ounces)¹		110,000			158,000		214,000			279,000


¹		Represents 100% of production from the Kumtor and Boroo gold mines.

For the three months ended June 30, 2009, revenue from our gold business decreased by $14 million to $129 million compared to the second quarter of 2008 due to lower sales volumes, partially offset by a 2% increase in the US dollar selling price.

For the six months ended June 30, 2009, revenue from our gold business decreased by $6 million to $250 million compared to the first six months of 2008 due to lower sales volumes, partially offset by a 1% increase in the US dollar selling price. Revenues were influenced by an improved $Cdn/$US exchange rate that averaged 1.22 in the first half of 2009 compared to 1.01 in 2008.

OUTLOOK FOR THE YEAR 2009

For the convenience of the reader, we have summarized Cameco’s 2009 consolidated outlook and 2009 outlook for each business segment in a table called “2009 Financial Outlook” provided in our second quarter MD&A.

Below we discuss the material changes made to the 2009 outlook contained in our annual MD&A, as updated by our first quarter MD&A.

Consolidated Outlook for 2009

For 2009, consolidated revenue is now expected to increase 5% to 10% over 2008 compared to our previous estimate indicating it would be similar to 2008. The increase in the estimate is related to the change in the outlook for uranium revenue and electricity revenue as discussed below.

-6-

2009 Outlook for Uranium

In 2009, reported uranium sales volumes are expected to total 34 million to 36 million pounds U₃O₈ compared to the 32 million to 34 million pounds previously reported due to new commitments entered into with deliveries in 2009. As a result, we now expect uranium revenue for 2009 to increase by 5% to 10% over 2008 compared to our previous estimate that revenue would decrease 2% to 5%.

Our unit cost of product sold for the full year is now expected to rise by 20% to 25% compared to 2008. In the first quarter report, we estimated an increase of 15% to 20%. The increase is related to additional purchases of uranium at prices substantially higher than our cost of production.

Cost of product sold represents the average cost of inventory, which includes both produced and purchased material. Consistent with prior disclosure, the estimated cost of produced material is expected to contribute a 5% to 10% increase in our average unit cost of product sold. The remainder of the year-over-year increase is attributable to the cost of purchased material.

Cameco purchases uranium to support its sales activities, including higher trading volumes. The supply interruption provisions in our sales contracts protect us from having to purchase uranium in the event of a shortfall in planned production or deliveries under the highly enriched uranium agreement.

BPLP’s Outlook for 2009

Electricity revenue in 2009 is expected to increase 10% to 15% over 2008 compared to the 5% to 10% decrease previously reported. This change in outlook is largely the result of payments expected under BPLP’s agreement with the OPA, as described earlier. We expect BPLP will receive these payments throughout the remainder of the year and that none of the amounts recorded as revenue will have to be repaid.

In addition, BPLP has in place financial contracts that correspond to about 43% of planned generation over the remainder of the year. These contracts were entered into during the 2006-2008 period, when the spot price exceeded the floor price and reflected the strong forward market. BPLP receives or pays the difference between the contract price and the spot price. Payments from the OPA recognized as revenue plus benefits under the financial contracts will contribute to higher realized electricity revenue for 2009.

Gold Outlook for 2009

Centerra now expects its 2009 production to total between 680,000 and 730,000 ounces compared to its previous estimate of 720,000 to 770,000 ounces. The reduction is due to lower than expected production at Boroo resulting from the operational shutdown caused by an illegal work stoppage and subsequent licence suspension. See section titled “Company Updates – Centerra” in this document for more information.

Uranium Price Sensitivity (2009 to 2013)

The uranium price sensitivity table for the period 2009 to 2013 has been updated in our second quarter MD&A to reflect our revised sales volume forecast, deliveries made and contracts entered into up to June 30, 2009.

-7-

For the complete table of expected realized uranium price sensitivity and accompanying assumptions please see our second quarter MD&A.

COMPANY UPDATES

Cigar Lake

Cameco continues to make progress in remediating the inflow that occurred August 12, 2008 during an initial attempt to dewater the underground workings. Remediation of the inflow is still expected to take most of 2009 with dewatering of shaft 1 planned thereafter.

The August 2008 inflow came from a fissure located in the top of a tunnel on the 420 metre level. Drilling of holes from surface to allow placement of concrete and grout is complete and approximately 1,000 cubic metres of concrete has been poured in the north end of the tunnel. Additional pumping capacity has been installed. Work required to install the bulkhead and final concrete plug on the 420 metre level is proceeding in line with our plans.

In parallel to the remediation program, work is underway on the revision of the Cigar Lake mine design and plan. This work builds on past work and incorporates new information and experience of the past several years.

Cigar Lake’s construction licence expires on December 31, 2009. Cameco has submitted an application to extend the term and amend the licence to allow for completion of mine dewatering, remediation and construction activities, completion of shaft 2 and continued surface construction. Given the uncertainty regarding the condition of the underground, we have requested a four-year licence term, which is expected to allow sufficient time for Cameco to complete these activities. Following dewatering and depending upon the condition of the underground, it may be necessary to update the mine plan. Regulatory approval of an updated mine plan would be required to undertake mine development activities.

We will provide new estimates of the planned production date and capital cost after the mine has been dewatered, the condition of the underground has been evaluated and the mine plan has been updated to reflect any resulting information.

McArthur River/Key Lake

During the quarter, a number of milestones were achieved:

	•		The freezewall for zone 2, panel 5 is sufficiently frozen to allow development of the raisebore chamber on the 510 metre level to commence. Despite challenging ground conditions, progress to date has been favourable and production from this area continues to be expected in the latter part of 2009.

	•		In lower zone 4, development of the raisebore/freeze chamber on the 530 metre level was completed in June. Drilling and installation of freezeholes commenced in early July. Production from lower zone 4 is expected in 2010.

	•		We recently received clarification from the regulators regarding the existing approval to operate the water inflow contingency treatment system if needed.

-8-

During the quarter, Cameco received regulatory approvals to begin construction of the replacement acid, steam and oxygen plants at Key Lake. Work to install foundations for the new plants is now in progress.

In June, the Canadian Nuclear Safety Commission approved an amendment to Key Lake’s operating licence, allowing flexibility in the annual licensed production limit. Under certain conditions, Cameco has approval to produce up to a maximum of 20.4 million pounds per year providing that the average annual production, calculated using 2003 as the base year, does not exceed 18.7 million pounds. Therefore, if production in a year falls below the target of 18.7 million pounds, Cameco may produce up to the annual maximum in subsequent years, until the shortfall is recovered. The amendment provides Cameco the opportunity to recover annual production shortfalls from 2003 onwards. A key benefit of this change is the ability to continue to operate the Key Lake mill even after the 18.7 million pound production target is achieved, avoiding the potential for restarts in cold winter temperatures. We continue to plan for annual production of 18.7 million pounds (100% basis) for the next few years primarily based on the transition to new mining areas under the McArthur River mine plan and demonstrated historic capacity of the Key Lake mill.

Inkai

A new tax code became law on January 1, 2009. Inkai has submitted to governmental authorities an amendment to its Resource Use Contract to adopt the new tax code. Cameco does not expect adopting the new tax code will have a material impact on Inkai at this time. However, the elimination of tax stabilization under the new tax code could be material to Inkai in the future.

Port Hope

UF₆ production in Port Hope was restarted on June 17, 2009 after being suspended since December 2008 due to the lack of availability of HF on acceptable terms. HF is a primary feed material for the production of UF₆. Cameco signed a new contract with its historic supplier of HF in May under terms that are mutually beneficial to both.

In late June, Cameco signed a contract with a second supplier of HF, broadening our sources of supply. Cameco expects to sign a contract with a third HF supplier in the near future.

Centerra

On June 11, 2009, Cameco announced the closing of an agreement with Centerra and the Kyrgyz government. As part of the closing, Centerra issued from treasury 18.2 million common shares to the government, which brings Centerra’s total issued and outstanding shares to 234.9 million. As well, we agreed to transfer to the government between 14.1 and 25.3 million common shares of Centerra, which are to be released to the government upon satisfaction of certain conditions. Until that time, we retain voting control over approximately 53% of the issued and outstanding shares of Centerra and will continue to fully consolidate the financial results of the company.

After satisfaction of all conditions to the transfer of shares by Cameco, the Kyrgyz government could own up to 33% of Centerra, Cameco no less than 38% and the balance, 29%, would be held by the remaining shareholders.

For more information on this agreement see our news releases dated April 24, 2009, April 30, 2009 and June 11, 2009, and note 12 of our second quarter unaudited consolidated financial statements.

-9-

On May 26, 2009, unionized employees initiated an illegal work stoppage at the Boroo mine resulting in a temporary suspension of mining and milling activities. The labour dispute was settled on June 16, 2009. Mining and milling activities remained suspended as a result of the Mongolian government’s June 12, 2009 suspension of the main operating licences for the Boroo mine. On July 27, 2009, the Mongolian government lifted the suspension and production has resumed. Centerra is continuing discussions with the Mongolian regulatory authorities regarding their concerns.

Other

Cameco intends to file a shelf prospectus in Canada for offerings of up to $1 billion in senior debt. We expect that initial issuances will be used to refinance all or a portion of the debt incurred to fund long-term investments made in 2008 with longer term maturities and for general corporate purposes.

USE OF NON-GAAP FINANCIAL MEASURES

Adjusted net earnings, a non-GAAP measure, should be considered as supplemental in nature and not a substitute for related financial information prepared in accordance with GAAP. Consolidated net earnings are adjusted in order to provide a more meaningful basis for period-to-period comparisons of the financial results. The following table outlines the adjustments to net earnings.

Adjusted Net Earnings


	Three months ended						Six months ended
	June 30						June 30
($ millions)	2009			2008			2009			2008
Net earnings (per GAAP)		247			150			329			284
Adjustments (after tax)
Loss (gain) on restructuring of the gold business		1			(36	)		(16	)		(28	)
Stock option expense (recovery)¹		—			33			—			18
Losses (gains) on financial instruments		(108	)		(8	)		(83	)		13

Adjusted net earnings		140			139			230			287


¹		Late in 2008, we amended our stock option program and began accounting for our options using their fair value at the grant date. Under this method, our stock option expense is highly predictable. For this reason, we will not be adjusting our net earnings for stock option expense in 2009.

-10-

QUALIFIED PERSONS

The disclosure of scientific and technical information regarding the following Cameco properties in this news release was prepared by or under the supervision of the following qualified persons for the purpose of National Instrument 43-101:


Qualified Persons		Properties
•	David Bronkhorst, general manager, McArthur River operation, Cameco	McArthur River/
•	Les Yesnik, general manager, Key Lake operation, Cameco	Key Lake
•	Grant Goddard, general manager, Cigar Lake project, Cameco	Cigar Lake
•	Ian Atkinson, vice-president, exploration, Centerra Gold Inc.	Kumtor

CAUTION REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Statements contained in this news release which are not current statements or historical facts are “forward-looking information” (as defined under Canadian securities laws) and “forward-looking statements” (as defined in the U.S. Securities Exchange Act of 1934, as amended) which may be material and that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them. Sentences and phrases containing words such as “believe”, “estimate”, “anticipate”, “plan”, “outlook”, “predict”, “goals”, “targets”, “projects”, “may”, “hope”, “can”, “will”, “shall”, “should”, “expect”, “intend”, “is designed to”, “continues”, “with the intent”, “potential”, “strategy” and the negative of these words, or variations of them, or comparable terminology that does not relate strictly to current or historical facts, are all indicative of forward-looking information and statements. Examples of forward-looking information and statements include, but are not limited to: our forecast cost of uranium sales for 2009 and related discussion; our expected uranium production quantities for 2009; our consolidated outlook for 2009; 2009 outlook for uranium; BPLP’s outlook for 2009; Gold outlook for 2009; our expectation that adopting the new tax code will not have a material impact on Inkai at this time; and the expected date for completion of sealing the 2008 water inflow at Cigar Lake.

The material risk factors that could cause actual results to differ materially from the forward-looking information and statements contained in this new release and the material risk factors or assumptions that were used to develop them include, without limitation: our assumptions regarding production levels, sales volumes, purchases and prices, which are subject to the risk that our assumptions are incorrect; the risk of volatility and sensitivity to market prices for uranium, conversion services, electricity in Ontario and gold, which we have assumed will remain relatively constant; the risk of material adverse changes in US/Canadian currency exchange rates, interest rates and costs, which we have assumed will remain constant or improve in our favour; the risk of material litigation or arbitration proceedings and the adverse outcome of such proceedings, which we have assumed will not occur; unexpected or challenging geological, hydrological or mining conditions which deviate significantly from our assumptions regarding those conditions; political risks arising from operating in certain developing countries, which we have assumed will not occur; the risk of adverse changes in government legislation, regulations and policies, which we have assumed will not occur; failure to obtain or maintain necessary permits, licences, and approvals from government authorities, which we have assumed may be obtained and maintained; the risk of natural phenomena including inclement weather conditions, fire, flood, underground floods, earthquakes, pitwall and tailings dam failures, and cave-ins, which we have assumed will not occur; our assumptions regarding the ability of the company’s and customers’ facilities to operate without disruption, including as a result of strikes, lockouts, equipment failure or other causes, and the risk that such disruptions may occur; assumptions regarding the availability of reagents, equipment, operating parts, and supplies critical to production, and which are subject to the risk that our assumptions are incorrect; the successful transition to new mining areas at McArthur River commencing in 2009, which is subject to various expected and unanticipated risks; the dewatering and depressurization programs at Kumtor continue to produce the expected results and the water management systems work as planned, which is subject to various expected and unanticipated risks; the success and timely completion of planned development and remediation projects, including the remediation of and return to pre-flood construction at Cigar Lake, and the risk of delay or ultimate lack of success; the schedule for the development and rampup of

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production from Inkai is achieved, which is subject to the risk of delay; the risk of a significant decline in general economic conditions, which we have assumed will not occur; and other development, operating, environmental and safety risks.

The forward-looking information and statements included in this news release represent Cameco’s views as of the date of this news release and should not be relied upon as representing Cameco’s views as of any subsequent date. While Cameco anticipates that subsequent events and developments may cause its views to change, Cameco specifically disclaims any intention or obligation to update forward-looking information and statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws. Forward-looking information and statements contained in this news release about prospective results of operations, financial position or cash flows that are based upon assumptions about future economic conditions and courses of action is presented for the purpose of assisting Cameco’s shareholders in understanding management’s current views regarding those future outcomes, and may not be appropriate for other purposes.

There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. These factors are not intended to represent a complete list of the material risk factors that could affect Cameco. Additional risk factors are noted in Cameco’s current annual information form and current annual, first and second quarter MD&A.

There can be no assurance that forward-looking information and statements will prove to be accurate, as actual results and future events could vary, or differ materially, from those anticipated in them. Further, expected future production estimates are inherently uncertain, particularly in the latter years of the forecast, and could materially change over time. Accordingly, readers of this news release should not place undue reliance on forward-looking information and statements. Forward-looking information and statements for time periods subsequent to 2009 involve greater risks and require longer-term assumptions and estimates than those for 2009, and are consequently subject to greater uncertainty. Therefore, the reader is especially cautioned not to place undue reliance on such long-term forward-looking information and statements.

QUARTERLY DIVIDEND NOTICE

Cameco announced today that the company’s board of directors approved a quarterly dividend of $0.06 per share on the outstanding common shares of the corporation that is payable on October 15, 2009, to shareholders of record at the close of business on September 30, 2009.

CONFERENCE CALL

Cameco invites you to join its second quarter conference call on Wednesday, August 12, 2009 at 11:00 a.m. Eastern time.

The call will be open to all investors and the media. To join the conference on Wednesday, August 12, please dial (416) 340-8530 or (877) 240-9772 (Canada and US). A live audio feed of the call will be available on our website at cameco.com. See the link on the home page on the day of the call.

A recorded version of the proceedings will be available:

•		on our website, cameco.com, shortly after the call, and

•		on post view until midnight, Eastern time, Thursday, September 10, 2009 by calling (416) 695-5800 or (800) 408-3053 (passcode 5416454 #).

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ADDITIONAL INFORMATION

A full copy of Cameco’s 2009 second quarter management’s discussion and analysis and financial statements and notes (unaudited) can be obtained on SEDAR at sedar.com, the company’s website at cameco.com and on EDGAR at sec.gov/edgar.shtml.

Additional information on Cameco, including its annual information form, is available on SEDAR at sedar.com, the company’s website at cameco.com and on EDGAR at sec.gov/edgar.shtml.

PROFILE

Cameco, with its head office in Saskatoon, Saskatchewan, is one of the world’s largest uranium producers, a significant supplier of conversion services and one of two Candu fuel manufacturers in Canada. The company’s competitive position is based on its controlling ownership of the world’s largest high-grade reserves and low-cost operations. Cameco’s uranium products are used to generate clean electricity in nuclear power plants around the world, including Ontario where the company is a limited partner in North America’s largest nuclear electricity generating facility. The company also explores for uranium in North America and Australia, and holds a significant interest in a mid-tier gold company. Cameco’s shares trade on the Toronto and New York stock exchanges.

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Investor inquiries:	Bob Lillie	(306) 956-6639

Media inquiries:	Lyle Krahn	(306) 956-6316

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EX-99.2 3 o56613exv99w2.htm EXHIBIT 99.2 Exhibit 99.2

Cameco Corporation
Management’s Discussion and Analysis (MD&A)
For the period ended June 30, 2009

The following discussion of the financial condition and operating results of Cameco Corporation has been prepared as of August 11, 2009 and updates our first quarter and annual MD&A and should be read in conjunction with the unaudited consolidated financial statements and notes for the period ended June 30, 2009, as well as the audited consolidated financial statements for the company for the year ended December 31, 2008 and MD&A of the audited financial statements, both of which are included in the 2008 annual financial review. No update is provided where an item is not material or where there has been no material change from the discussion contained in our first quarter and annual MD&A. The financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). The 2008 annual financial review is available on the company’s website at cameco.com, on sedar.com and on EDGAR at sec.gov/edgar.shtml.

Statements contained in this MD&A, which are not historical facts or a description of present circumstances, are forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For more detail on these factors, see the section titled “Caution Regarding Forward-Looking Information” in this MD&A, the section titled “Risks and Risk Management” in the MD&A contained in the company’s 2008 annual financial review, and the section titled “Risk Factors” in the company’s 2008 annual information form.

Note: All dollar amounts are expressed in Canadian dollars unless otherwise stated.


	Three months ended				Six months ended
	June 30				June 30				Change
Financial Highlights	2009		2008		2009		2008		%
Revenue ($ millions)		774		620		1,389		1,213		15
Earnings from operations ($ millions)		283		120		360		283		27
Cash provided by operations¹ ($ millions)		125		113		316		259		22
Net earnings ($ millions)		247		150		329		284		16
Adjusted net earnings ($ millions)²		140		139		230		287		(20	)
Earnings per share (EPS) — basic ($)		0.63		0.44		0.86		0.82		5
EPS — diluted ($)		0.63		0.42		0.85		0.79		8
EPS — adjusted and diluted ($)²		0.36		0.39		0.60		0.79		(24	)
Average uranium (U₃O₈) spot price ($US/lb U₃O₈)		48.33		61.33		46.50		67.42		(31	)
Average realized uranium price
• $US/lb U₃O₈		40.64		47.35		38.86		43.84		(11	)
• $Cdn/lb U₃O₈		51.45		51.12		49.31		47.64		4
Average realized electricity price ($/MWh)		70		56		63		56		13
Average Ontario electricity spot price per megawatt hour ($/MWh)		23		47		33		48		(31	)

FINANCIAL RESULTS

Consolidated Earnings

Second Quarter

For the three months ended June 30, 2009, our net earnings were $247 million ($0.63 per share diluted), $97 million higher than net earnings of $150 million ($0.42 per share diluted) recorded in the second quarter of 2008.

For the three months ended June 30, 2009, our adjusted net earnings² were $140 million ($0.36 per share adjusted and diluted), $1 million higher than adjusted net earnings of $139 million ($0.39 per share adjusted and diluted) recorded in the second quarter of 2008. The increase was due to higher earnings in the fuel services and electricity businesses, partially offset by lower results in the gold and uranium businesses. Gross profit from our electricity business benefited from a higher realized price in the quarter. See section titled “BPLP’s Outlook for 2009” in this document for more information. Increased costs adversely affected uranium profits. See the


¹		Including changes in working capital. For more information on working capital changes, refer to note 11 of the second quarter unaudited consolidated financial statements.

²		Net earnings for the quarters and six months ended June 30, 2008 and 2009 have been adjusted to exclude a number of items. Adjusted net earnings is a non-GAAP measure. For a description see “Use of Non-GAAP Financial Measures” on page 30.

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section titled “Uranium Results – Second Quarter” in this document for more information. The gold business was impacted by lower gold production and higher operating costs.

Compared to the second quarter of 2008, exploration expenditures were $2 million lower, at $17 million, with uranium exploration expenditures declining by $2 million to $12 million. Gold exploration expenditures at Centerra Gold Inc. (Centerra) were unchanged at $5 million compared to the second quarter of 2008.

In the second quarter of 2009, our income tax expense, excluding adjustments, was $3 million compared to $10 million in the same period of 2008. Our effective income tax rate was 2% in the second quarter of 2009 compared to 6% in 2008.

In the second quarter of 2009, direct administration costs were $37 million, a decrease of $2 million compared to 2008 due mainly to reduced requirements for system technology enhancements and lower recruiting activity.

In the second quarter of 2009, stock-based compensation costs were $4 million compared to $47 million in the second quarter of 2008. Late in 2008, we amended our stock option program and began accounting for our options using their fair value at the grant date. Under this method, our stock option expense is highly predictable. For this reason, we will not be adjusting our net earnings for stock option expense in 2009.


	Three months ended
	June 30
Administration ($ millions)	2009		2008
Direct administration		37		39
Stock-based compensation¹		4		47

Total administration		41		86


¹		Stock-based compensation includes amounts charged to administration under the stock option, deferred share unit, performance share unit and phantom stock option plans.

Six Months Ended June 30, 2009

For the six months ended June 30, 2009, our net earnings were $329 million ($0.85 per share diluted), $45 million higher than net earnings of $284 million ($0.79 per share diluted) recorded in the first half of 2008.

For the six months ended June 30, 2009, our adjusted net earnings³ were $230 million ($0.60 per share adjusted and diluted), $57 million lower than adjusted net earnings of $287 million ($0.79 per share adjusted and diluted) recorded for the same period in 2008. The decrease was due to lower earnings in the gold and uranium businesses, partially offset by higher results in the fuel services and electricity businesses. Increased costs adversely affected uranium profits. See the section titled “Uranium Results – Six Months Ended June 30, 2009” in this document for more information. The gold business was impacted by lower gold production and higher operating


³		Net earnings for the quarters and six months ended June 30, 2008 and 2009 have been adjusted to exclude a number of items. Adjusted net earnings is a non-GAAP measure. For a description see “Use of Non-GAAP Financial Measures” on page 30.

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costs. Gross profit from our electricity business benefited from increased generation and an increase in the realized price, while realized selling prices for fuel services were higher in the first six months of 2009.

Compared to the first half of 2008, exploration expenditures were $2 million higher, at $34 million, with uranium exploration expenditures unchanged at $22 million. Gold exploration expenditures at Centerra were $2 million higher at $12 million compared to the first six months of 2008.

In the first six months of 2009, our income tax expense, excluding adjustments, was $5 million compared to $24 million in the same period of 2008. Our effective income tax rate was 3% in the first half of 2009 compared to 7% in 2008.

In the first six months of 2009, direct administration costs were $68 million, a decrease of $1 million compared to 2008 due mainly to reduced requirements for system technology enhancements and lower recruiting activity. The rate of growth in the workforce has slowed since the third quarter of 2008.

In the first half of 2009, stock-based compensation costs were $10 million compared to $25 million in 2008. As noted previously, we will not be adjusting our net earnings for stock option expense in 2009.


	Six months ended
	June 30
Administration ($ millions)	2009		2008
Direct administration		68		69
Stock-based compensation¹		10		25

Total administration		78		94

Stock-based compensation includes amounts charged to administration under the stock option, deferred share unit, performance share unit and phantom stock option plans.

Quarterly Financial Results ($ millions except per share amounts)


	2009				2008								2007
Highlights	Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3
Revenue		774		615		918		729		620		593		494		681
Net earnings		247		82		31		136		150		134		61		91
EPS — basic ($)		0.63		0.23		0.08		0.39		0.44		0.38		0.18		0.26
EPS — diluted ($)		0.63		0.22		0.08		0.39		0.42		0.37		0.17		0.25
Cash from operations¹		125		191		340		109		113		146		57		450


¹		Including changes in working capital. For more information on working capital changes, refer to note 11 of the second quarter unaudited consolidated financial statements.

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Revenue of $774 million in the second quarter of 2009 was 26% higher than in the first quarter due to increased volumes and realized selling prices (in Canadian dollars) in the uranium and fuel services businesses. Revenue from the electricity and gold businesses were comparable to that of the first quarter of 2009.

Net earnings in the second quarter of 2009 were significantly higher than in the first quarter of 2009 primarily due to unrealized mark-to-market gains on our foreign exchange contracts. These gains related to the increase in the Canadian dollar relative to the US dollar in the first quarter of 2009. Results in the uranium and fuel services businesses were stronger due to the increases in sales volumes and realized prices (in Canadian dollars).

Our financial results tend to fluctuate largely due to the timing of deliveries and product purchases in the uranium and fuel services businesses. For the remainder of 2009, uranium revenue is more heavily weighted to the fourth quarter.

Cash Flow

In the second quarter of 2009, we generated $125 million in cash from operations compared to $113 million in the same period of 2008. The increase of $12 million was related to the benefit of higher sales being offset by working capital requirements.

In the first half of 2009, we generated $316 million in cash from operations compared to $259 million in the same period of 2008. The increase of $57 million was related to higher sales and a decrease in working capital requirements compared to the prior year. The change in working capital is primarily related to lower accounts receivables in 2009 compared to 2008.

Balance Sheet

At June 30, 2009, our total debt was $907 million, representing a decrease of $406 million compared to December 31, 2008. During the quarter, we determined the best short-term use of available cash, including a portion of the proceeds from the first quarter 2009 equity issuance, was to temporarily reduce debt thereby reducing our borrowing costs. However, we maintain the ability to fully draw the funds available under our lines of credit. Included in our June 30, 2009 total debt was $177 million, which represents our proportionate share of BPLP’s capital lease obligation. At June 30, 2009, our consolidated net debt to capitalization ratio was 12%, down from 23% at the end of 2008. The decrease was due largely to the issue of equity in the first quarter of 2009 when we issued 26.7 million common shares for gross proceeds of approximately $460 million.

Our product inventories increased by $40 million compared to the end of 2008 due to increased inventories of conversion services products and higher average carrying values for uranium.

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At June 30, 2009, our consolidated cash balance totalled $349 million, with cash held by Centerra accounting for $140 million of this amount.

Foreign Exchange Update

During the quarter, the Canadian dollar strengthened against the US dollar from $1.00 (US) for $1.26 (Cdn) at March 31, 2009 to $1.00 (US) for $1.16 (Cdn) at June 30, 2009.

At June 30, 2009, we had foreign currency contracts of $1,490 million (US) and EUR 34 million.

The US currency contracts had an average rate of $1.00 (US) for $1.16 (Cdn) at June 30, 2009, which reflects the original foreign exchange spot prices at the time the contracts were entered into and includes net deferred gains.

At June 30, 2009, the net mark-to-market gain on all foreign exchange contracts was $2 million compared to a $95 million loss at March 31, 2009.

Timing differences between the maturity dates and designation dates on previously closed hedge contracts may result in deferred revenue or deferred charges. At June 30, 2009, net deferred gains totalled $54 million. The schedule for net deferred gains to be released to earnings, by year, is as follows:

Deferred Gains (Charges)

2009

2010

2011

$ millions (Cdn)

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OUTLOOK FOR THE YEAR 2009

Below is a table summarizing Cameco’s 2009 consolidated outlook as well as the outlook for each of our business segments. Updates from the outlook contained in the table disclosed in Cameco’s first quarter MD&A were made to the following items (in bold): consolidated revenue, tax rate, uranium revenue, uranium sales volume, uranium unit cost of product sold, nuclear electricity revenue, gold production, and gold capital expenditures.

2009 Financial Outlook¹


				Nuclear
2009 Outlook	Consolidated	Uranium	Fuel Services	Electricity	Gold
Revenue	Increase 5% to 10%^{2, 3}	Increase 5% to 10%^{4, 5}	Increase 5% to 10%	Increase 10% to 15%⁶	—
Administration costs	Decrease 5% to 10%	—	—	—	—
Tax rate	Less than 5%⁷	—	—	—	—
Sales volume	—	34 to 36 million lbs⁸	Decline slightly	—	—
Unit cost of product sold	—	Increase 20% to 25%⁹	—	Decrease slightly	—
Capacity factor	—	—	—	About 90%	—
Production	—	20 million lbs	8 to 12 million kgU	—	680,000 to 730,000 oz¹⁰
Capital expenditures	$367 million¹¹	—	—	$38 million	$107 million (US)¹²


¹		Cameco only provides outlook for the select items shown in the table. For all other items listed in the table, no outlook is provided.

²		This is the revenue outlook for the uranium, fuel services and nuclear electricity businesses and does not include gold.

³		Outlook contained in the first quarter MD&A table – revenue expected to be similar to 2008.

⁴		Based on a uranium spot price of $48.00 (US) per pound, reflecting the UxC spot price as of August 10, 2009.

⁵		Outlook contained in the first quarter MD&A table – revenue expected to decrease 2% to 5% over 2008.

⁶		Outlook contained in the first quarter MD&A table – revenue expected to decrease by 5% to 10% over 2008.

⁷		Outlook contained in the first quarter MD&A table – tax rate expected to be 5% to 10%.

⁸		Outlook contained in the first quarter MD&A table – sales volume expected to be 32 million to 34 million pounds.

⁹		Outlook contained in the first quarter MD&A table – unit cost of product sold to increase by 15% to 20% over 2008. The unit cost of product sold, excluding purchases, is expected to rise by 5% to 10%, in line with our previous estimate. See section titled “2009 Outlook for Uranium” for more information.

¹⁰		Outlook contained in the first quarter MD&A table – production to be 720,000 to 770,000 ounces.

¹¹		Cameco’s consolidated outlook for capital expenditures does not include Bruce Power or Centerra capital expenditures.

¹²		Outlook contained in the first quarter MD&A table – capital expenditures to be $100 million (US).

Material changes, from those contained in our annual MD&A, as updated by the information contained in our first quarter MD&A, have been made to the 2009 outlook for consolidated revenue, uranium revenue, uranium sales volumes, uranium unit cost of product sold, nuclear electricity revenue and gold production. These changes are discussed below. In addition, we are including our updated expected realized uranium price sensitivity table for 2009 to 2013 and an analysis of the sensitivity of Cameco’s results to changes in the US to Canadian dollar and the spot prices for uranium, electricity and gold.

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Consolidated Outlook for 2009

For 2009, consolidated revenue is now expected to increase 5% to 10% over 2008 compared to our previous estimate indicating it would be similar to 2008. The increase in the estimate is related to the change in outlook for uranium revenue and electricity revenue discussed in the sections titled “2009 Outlook for Uranium” and “BPLP’s Outlook for 2009” contained in this document.

2009 Outlook for Uranium

Our unit cost of product sold for the full year is now expected to rise by 20% to 25% compared to 2008. In the first quarter report, we estimated an increase of 15% to 20%. The increase in the estimate is related to additional purchases of uranium at prices substantially higher than our cost of production.

Uranium Price Sensitivity (2009 to 2013)

The prices shown in our expected realized uranium price sensitivity table are intended to provide the reader with a general indication of how Cameco’s expected realized prices for uranium may vary with changes in market prices over the period 2009 to 2013.

The expected realized prices reported in this table may change from quarter to quarter based on changes in a number of variables, including:

•

new contracts entered into during the quarter,

•

variations in the actual spot price or long-term price during the most recent quarter from the price assumptions in the table published in the previous quarter,

•

changes in inflation assumptions,

•

changes in delivery plans from those assumed in the table published in the previous quarter as a result of requirements contracts or volume flexibility terms contained in some contracts, and

•

changes in the volume of uncommitted material.

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Due to the number of variables affecting Cameco’s realized prices, we have made a simplifying assumption by setting the spot price at the levels noted, and calculating our expected realized prices accordingly. For example, under the $60.00 (US) spot price scenario, the calculation of realized prices assumes the spot price reaches $60.00 (US) at June 30, 2009, and remains at that level through 2013. Each column in the table should be read assuming the column header spot price remains constant for the entire five-year period. Actual realized prices in any given year will differ from what is shown in the table due to the fact that we are continually signing new contracts, with first deliveries generally beginning on average two to four years after contract signing.

Many of the contracts we are delivering into during the period 2009 to 2013 were finalized in 2003 to 2005 when industry market prices were in the range of about $11 to $31 (US) (see the table below for industry average uranium market prices from 2003 to 2008). To the extent these contracts have pricing fixed at these historic uranium prices or have low ceiling prices, they will yield lower prices than current market prices. As these older contracts expire over the next few years and we begin delivering into more contracts signed since 2006, our average realized price will benefit.

The table below outlines the industry average uranium market prices over the past few years which may help put our average realized prices into perspective.

Industry Average Uranium Market Prices ($US/lb U₃O₈)


	2003		2004		2005		2006		2007		2008
Spot price indicator		11.55		18.60		28.67		49.60		99.29		61.58
Long-term price indicator		12.10		21.00		30.66		49.90		90.83		82.50

The uranium price sensitivity table for the period 2009 to 2013 below has been updated to reflect our revised sales volume forecast, deliveries made and contracts entered into up to June 30, 2009.

Expected Realized Uranium Price Sensitivity Under Various Spot Price Assumptions
(Rounded to the nearest $1)
Current $US/lb U₃O₈


Spot
Price	$20		$40		$60		$80		$100		$120		$140
2009		36		37		39		42		44		46		48
2010		33		38		46		52		59		65		72
2011		34		39		48		55		63		71		79
2012		37		40		49		57		66		75		83
2013		44		47		56		67		77		88		96

This price table is forward-looking information and is based upon the material assumptions, and subject to the material risks, discussed under the heading “Caution Regarding Forward-Looking Information and Statements”, as well as the following key assumptions, and material risks which could cause actual prices to vary:

•

sales volume of 36 million pounds for 2009 (which has been adjusted for the accounting requirements of the product loan agreement) and a sales volume of about 30 million pounds for each year thereafter. Variations in our actual sales volume could lead to materially different results,

•

utilities take the maximum quantities allowed under their contracts, unless a delivery notice has been provided, which is subject to the risk that they take lower quantities or defer quantities resulting in materially different realized prices,

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•

Cameco defers a portion of deliveries under contract for 2010 and 2011 as a result of exercising its rights under supply interruption provisions,

•

all volumes for which there are no existing sales commitments are assumed to be delivered at the spot price assumed for each scenario, which is subject to the risk that sales are at prices other than spot prices which could result in materially different realized prices,

•

the average long-term price indicator in a given year is assumed to be equal to the average spot price for that entire year. Fluctuations in the spot price or the long-term price during the course of a year could lead to materially different results, and

•

an inflation rate of 2.5%, but variations in the inflation rate could have a material impact on actual results.

The assumptions stated above, including our annual sales volumes and the price realized from them, are made solely for the purpose of the foregoing price table and do not necessarily reflect our views of anticipated results.

BPLP’s Outlook for 2009

Electricity revenue in 2009 is expected to increase 10% to 15% over 2008 compared to the 5% to 10% decrease previously reported. This change in outlook is largely the result of a significant deterioration in the Ontario electricity market in the second quarter and BPLP recognizing as revenue, payments received under its agreement with the Ontario Power Authority (OPA).

Under the terms of the agreement with the OPA, all output from the B reactors is supported by a floor price. The floor price is adjusted annually for inflation and is currently $48.76/MWh. Payments under the agreement are received monthly, based on the positive difference between the floor price and the spot price and are not subject to repayment to the extent that the floor price exceeds the average spot price for the year. A recent amendment to the agreement limits to the current year (versus over the contract life) the period over which repayment is calculated. We expect BPLP will receive such payments throughout the remainder of the year and that none of the amounts recorded as revenue will have to be repaid.

In addition, BPLP has in place financial contracts that correspond to about 43% of planned generation over the remainder of the year. These contracts were entered into during the 2006-2008 period, when the spot price exceeded the floor price and reflected the strong forward market. BPLP receives or pays the difference between the contract price and the spot price. Payments recognized as revenue under the agreement with the OPA plus benefits under the financial contracts will contribute to higher realized electricity revenue for 2009.

Gold Outlook for 2009

Centerra now expects its 2009 production to total between 680,000 and 730,000 ounces compared to its previous estimate of 720,000 to 770,000 ounces. The reduction is due to lower than expected production at Boroo resulting from the operational shutdown caused by an illegal work stoppage and subsequent licence suspension. See section titled “Gold – Mongolia – Boroo Political and Operations Update” in this document for more information.

Foreign Exchange Sensitivity

At June 30, 2009, every one-cent increase/decrease in the value of the Canadian dollar versus the US dollar would result in a corresponding decrease/increase in net earnings for the balance of the year of about $8 million (Cdn).

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Uranium Price Sensitivity (2009)

For 2009, a $10.00 (US) per pound change in the uranium spot price from $48.00 (US) per pound (reflecting the UxC spot price at August 10, 2009) would change revenue by $60 million (Cdn) and net earnings by $39 million (Cdn). This sensitivity is based on an expected effective exchange rate of $1.00 (US) being equivalent to about $1.08 (Cdn), which was the rate on August 10, 2009.

Electricity Price Sensitivity Analysis

At June 30, 2009, BPLP had about 6.0 TWh under contract for the balance of 2009, which is equivalent to about 43% of Bruce B generation at its planned capacity factor. Based on the assumption that for the remainder of 2009 the spot price will remain below the floor price provided for under the agreement with the OPA, a $10 change in the electricity spot price from its current level will not be material to Cameco’s earnings.

Gold Price Sensitivity Analysis

For 2009, a $25.00 (US) per ounce change in the gold spot price would change Cameco’s net earnings by about $4 million (Cdn). This sensitivity is based on an expected effective exchange rate of $1.00 (US) being equivalent to about $1.08 (Cdn), which was the rate on August 10, 2009.

The foregoing update to the outlook for the year 2009 contained in our annual MD&A for the year ended 2008, as updated by the information contained in our first quarter MD&A for 2009, is forward-looking information and, except as stated in the footnotes above, is based upon the same key assumptions and subject to the same material risk factors that could cause results to differ materially which were discussed under the heading “Caution Regarding Forward-looking Information and Statements” in our annual MD&A. These include assumptions regarding production levels, purchases, sales volumes, costs and market prices, and the risk of variations in them; assumptions regarding competition levels, and the risk of significant increases in them; the risk of material adverse changes in foreign currency exchange rates and interest rates, and the assumption that they will remain constant or improve in our favour; the risk of unexpected or challenging geological, hydrological or mining conditions which deviate significantly from our assumptions regarding those conditions; political risks and the risk of adverse changes in government legislation, regulations and policies, which we have assumed will not occur; and the success and timely completion of planned development and remediation projects, and the risks associated with those projects.

-11-

BUSINESS SEGMENT RESULTS

Cameco’s results come from four business segments:

•

Uranium

•

Fuel services

•

Nuclear electricity generation

•

Gold

URANIUM

Highlights

Three months ended

Six months ended

June 30

2009

2008

2009

2008

Revenue ($ millions)¹

443

329

779

667

Gross profit ($ millions)

171

183

287

352

Gross profit %

Average realized price

($US/lb)

40.64

47.35

38.86

43.84

($Cdn/lb)

51.45

51.12

49.31

47.64

Sales volume (million lbs)¹

8.5

6.3

15.6

13.8

Production volume (million lbs)

3.8

5.2

8.6

9.0


¹		Revenue in the amount of $85 million on 2.6 million pounds previously deferred due to a standby product loan was recognized in the first quarter of 2008 as a result of the cancellation of a product loan agreement.

Uranium Results

Second Quarter

Compared to the second quarter of 2008, revenue from our uranium business increased by $114 million to $443 million due to a 35% increase in reported sales volumes and a marginal increase in the realized selling price (in Canadian dollars). The timing of deliveries of uranium products within a calendar year is at the discretion of customers. Therefore, our quarterly delivery patterns can vary significantly. The increase in the average realized price (in Canadian dollars) was related to higher prices under fixed-price contracts and a more favourable foreign exchange rate being offset by lower realized prices under market-related contracts.

Our total cost of products and services sold, including depreciation, depletion and reclamation (DD&R), increased to $272 million in the second quarter of 2009 from $146 million in the second quarter of 2008 due to the 35% increase in sales volume and a 40% increase in the unit cost of product and services sold. Consistent with the first quarter of 2009 disclosure, the average unit cost of sales continued to be negatively impacted by the carryover effect of lower production in 2008, recent purchases at near market prices, higher royalties and increased input costs.

Six Months Ended June 30, 2009

Compared to the first six months of 2008, revenue from our uranium business increased by $112 million to $779 million due to a 13% increase in reported sales volumes and a 4% increase in the realized selling price (in Canadian dollars). The timing of deliveries of uranium products within

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a calendar year is at the discretion of customers. Therefore, our quarterly delivery patterns can vary significantly. The increase in the average realized price (in Canadian dollars) was related to higher prices under fixed-price contracts and a more favourable foreign exchange rate, partially offset by lower realized prices under market-related contracts.

Uranium Market Update

Uranium Spot Market

Outlined below are the industry average spot market prices (TradeTech and UxC) as at the dates specified.


	June 30/09		March 31/09		June 30/08		March 31/08

Average spot market price ($US/lb U₃O₈)	$	51.50	$	42.00	$	59.00	$	71.00

In the spot market, where purchases call for delivery within one year, the volume reported for the second quarter of 2009 was about 21 million pounds U₃O₈, setting a new record in a single quarter. For the first half of 2009, the volume was about 28 million pounds. This compares to about 7 million pounds in the second quarter of 2008 and about 17 million pounds in the first half of 2008.

The UxC spot U₃O₈ price started the second quarter at its lowest point in the year of $40.00 (US) per pound. During the quarter, the spot price reached $54.00 (US) on June 22, 2009, its highest level for the year. The spot price ended the quarter at $52.00 (US) per pound. Since then the UxC spot U₃O₈ price has varied and is currently at $48.00 (US) per pound as at August 10, 2009.

Uranium Long-Term Market

Outlined below are the industry average long-term market price indicators (TradeTech and UxC) as at the dates specified.


	June 30/09		March 31/09		June 30/08		March 31/08

Average long-term market price ($US/lb U₃O₈)	$	65.00	$	69.50	$	82.50	$	95.00

Long-term contracts usually provide for deliveries to begin two to four years after contracts are finalized and use a number of pricing formulas including fixed prices adjusted by inflation indices and market referenced prices (spot and long-term indicators).

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Uranium Operations Update

Uranium Production

Three months

Six months

Cameco’s share of production

ended June 30

2009 planned

(million lbs U₃O₈)

2009

2008

2009

2008

production¹

McArthur River/Key Lake

2.0

3.2

5.6

6.4

13.1

Rabbit Lake

1.0

1.5

1.5

1.5

3.6

Smith Ranch/Highland

0.5

0.3

0.9

0.7

1.8

Crow Butte

0.2

0.1

0.4

0.3

0.7

Inkai

0.1

0.1

0.2

0.1

0.9

Total

3.8

5.2

8.6

9.0

20.1


¹		See the section titled “Cameco’s Uranium Supply Outlook” in the annual MD&A for more information about the assumptions and risk factors associated with this production forecast, which remains unchanged from the forecast presented in our annual MD&A.

McArthur River/Key Lake

Cameco’s share of production of U₃O₈ at McArthur River/Key Lake during the second quarter was 2.0 million pounds compared to 3.2 million pounds produced in the same period of 2008. A scheduled mill maintenance shutdown during the month of May resulted in lower production for the quarter. Production varies from quarter to quarter depending on the timing of mill shutdowns. No further shutdowns are planned this year. Production for the first half of 2009 was 5.6 million pounds U₃O₈ compared to 6.4 million pounds over the same period in 2008. We continue to expect Cameco’s share of 2009 production to be 13.1 million pounds.

At McArthur River, a number of milestones were achieved in the second quarter:

	•		The freezewall for zone 2, panel 5 is sufficiently frozen to allow development of the raisebore chamber on the 510 metre level to commence. Despite challenging ground conditions, progress to date has been favourable and production from this area continues to be expected in the latter part of 2009.

	•		In lower zone 4, development of the raisebore/freeze chamber on the 530 metre level was completed in June. Drilling and installation of freezeholes commenced in early July. Production from lower zone 4 is expected in 2010.

	•		We recently received clarification from the regulators regarding the existing approval to operate the water inflow contingency treatment system if needed.

Over the past number of years we have made significant investments to increase contingency water management capacity at McArthur River. Currently we have 1,725 cubic metres per hour (m³/hr) of installed pumping capacity in the mine. Installation of a further pump system is in progress that will increase total pumping capacity to more than 1,850 m³/hr. On surface we have regulatory approval to treat and release 1,500 m³/hr of water in the event of an inflow. In

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addition there is storage capacity of approximately 50,000 cubic metres (m³) in surface collection ponds. These capacities are expected to exceed what is required to handle an estimated maximum inflow.

During the quarter, Cameco received regulatory approvals to construct the replacement acid, steam and oxygen plants at Key Lake. Work to install foundations for the new plants is now in progress.

In June, the Canadian Nuclear Safety Commission approved an amendment to Key Lake’s operating licence, allowing flexibility in the annual licensed production limit. Under certain conditions, Cameco has approval to produce up to a maximum of 20.4 million pounds U₃O₈per year providing that the average annual production, calculated using 2003 as the base year, does not exceed 18.7 million pounds. Therefore, if production in a given year falls below the target of 18.7 million pounds, Cameco may produce up to the annual maximum in subsequent years, until the shortfall is recovered. The amendment provides Cameco the opportunity to recover annual production shortfalls from 2003 onwards. A key benefit of this change is the ability to continue to operate the Key Lake mill even after the 18.7 million pound production target is achieved, avoiding the potential for restarts in cold winter temperatures. We continue to plan for annual production of 18.7 million pounds (100% basis) for the next few years primarily based on the transition to new mining areas under the McArthur River mine plan and demonstrated historic capacity of the Key Lake mill.

Rabbit Lake

Rabbit Lake produced 1.0 million pounds U₃O₈ in the second quarter of 2009 compared to 1.5 million pounds in the second quarter of 2008. In the first half of the year, production was equal to the first six months of 2008. A planned summer shutdown in June and July impacted production in the second quarter. We expect to continue to see large variations in mill production from quarter to quarter as we manage ore supply to ensure efficient operation of the mill.

At the Rabbit Lake mill, construction work on the circuit to reduce molybdenum and selenium in the mill effluent was completed. Commissioning this circuit continued through the second quarter, with startup anticipated in the second half of 2009.

At the Eagle Point mine, construction of a new exhaust air raise to service a new mining area continued throughout the quarter. Development of this additional mine infrastructure is needed to enable production from this new mining area in future years.

Construction of a new tailings pipeline for the expanded Rabbit Lake in-pit tailings management facility was completed in the second quarter. Commissioning of the expanded facility is planned to commence in the third quarter of 2009.

Smith Ranch-Highland and Crow Butte

Smith Ranch-Highland and Crow Butte in situ recovery (ISR) mines, located in Wyoming and Nebraska, produced 0.7 million pounds U₃O₈ in the second quarter 2009, an increase from 0.4 million pounds in the second quarter of 2008. For the first six months of 2009, these operations produced 1.3 million pounds U₃O₈,an increase from 1.0 million pounds produced during the same period in 2008.

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Cameco is preparing an environmental assessment for the Reynolds Ranch satellite operation to Smith Ranch-Highland for submission to the Wyoming Office of the US Bureau of Land Management in the fourth quarter.

The Nuclear Regulatory Commission (NRC) and Nebraska Department of Environmental Quality continue the review process for the expansion and relicensing of the Crow Butte operation in Nebraska. A hearing will be held following completion of the NRC review of the applications.

Cigar Lake

The August 2008 inflow came from a fissure located in the top of a tunnel on the 420 metre level. Drilling of holes from surface to allow placement of concrete and grout is complete and approximately 1,000 m³ of concrete has been poured in the north end of the tunnel to date. Additional pumping capacity has been installed. Work required to install the bulkhead and final concrete plug on the 420 metre level is proceeding in line with our plans.

Currently, Cigar Lake has pumping capacity of 1,000 m³/hr and is in the process of increasing it to 1,250 m³/hr. During dewatering we plan to install additional pumping capacity in shaft 1 targetting a total installed pumping capacity of 2,500 m³/hr once the mine has been dewatered, secured and remediated. We will continue to examine the pumping capacity and adjust as required.

We have the ability to treat a total of 2,550 m³/hr and have regulatory approval for the release of 550 m³/hr of treated water. Supplementing this is approximately 100,000 m³ of surface storage. We are in the process of seeking regulatory approval to increase treated water release limits.

In parallel to the remediation program, work is underway on the revision of the Cigar Lake mine design and plan. This work builds on past work and incorporates the new information and experience of the past several years.

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Inkai

During the second quarter of 2009, the wellfields at blocks 1 and 2 produced about 0.1 million pounds U₃O₈for Cameco’s account. Wellfield performance continues to improve. Cameco’s share of production for the first half of the year was 0.2 million pounds U₃O₈ compared to 0.1 million pounds in the first half of 2008.

Achieving our forecast production in 2009 is subject to the availability of sulphuric acid, which has been an issue for Inkai over the past two years. To reduce the risk, Inkai has increased the number of suppliers from two to four. Despite this, supply of sulphuric acid remains a concern and Inkai may be impacted by shortages resulting in lower than anticipated production.

Uranium Exploration Update

Saskatchewan Exploration

During June, diamond drilling resumed on six Cameco operated projects in the Athabasca Basin. Drill holes completed on the Virgin River, Dawn Lake, and Rabbit Lake projects intersected significant mineralization.

All assay results were received from the winter drilling programs. The Centennial deposit, Virgin River project, returned the highest grade intersection on the project to date. Brownfield exploration near Rabbit Lake returned promising results. Follow-up drilling will be undertaken in early 2010.

Canadian Exploration

Diamond drilling was initiated in Nunavut on the Aberdeen and Turqavik projects. Several holes display encouraging results which will require follow-up. Drilling on the Otish project in Quebec will commence in the third quarter.

Global Exploration

Australia

Exploration activities commenced on the Angela joint venture project located south of Alice Springs, Northern Territory on May 5, 2009. At the end of the quarter, a total of 29 holes had been completed, with an additional 18 holes in progress. Drilling activities will continue until the end of the third quarter.

Diamond drilling commenced on the Wellington Range and Beatrice projects in Arnhem Land, in the Northern Territory and will continue in the fourth quarter.

On the Kintyre project in Western Australia, final permitting and planning activities were completed in the second quarter. During the third quarter, we expect to begin the 50,000 metre drilling program.

-17-

Niger

In August 2008, Cameco formed a strategic alliance, focused on uranium exploration in Niger, with GoviEx Uranium Inc. (GoviEx), formerly Govi High Power Exploration Inc. We hold an approximate 11% interest in the company. Cameco obtained certain rights to make additional investments under the terms of the strategic alliance agreement, which rights have now expired. However, as a partner in the alliance, we continue to assess the value and potential of our investment.

FUEL SERVICES

Highlights


	Three months ended					Six months ended
	June 30					June 30
	2009		2008			2009		2008
Revenue ($ millions)		82		54			135		114
Gross profit ($ millions)		25		(6	)		33		(3	)
Gross profit %		31		(11	)		24		(3	)
Sales volume (million kgU)¹		4.1		3.1			6.0		6.5
Production volume (million kgU)²		2.2		1.8			4.4		3.9


¹		Kilograms of uranium (kgU).

²		Production volume includes UF₆, UO₂, fuel fabrication, and UF₆supply from Springfields Fuels Ltd. (SFL).

Fuel Services Results

Second Quarter

In the second quarter of 2009, revenue from our fuel services business was $82 million, an increase of $28 million compared to the same period in 2008 due to a 32% increase in reported sales volumes and a 16% increase in the average realized price for fuel services products. The timing of deliveries of fuel services within a calendar year is at the discretion of customers. Therefore, our quarterly delivery patterns can vary significantly.

Total cost of products and services sold, including DD&R, decreased to $57 million in the second quarter from $60 million for the same period in 2008. The cost of products sold in both 2009 and 2008 was impacted by the curtailment of production from the Port Hope UF₆conversion plant. In the first half of 2009, the plant was shutdown due to the unavailability of hydrofluoric acid (HF), while in 2008 operations were suspended to allow for the clean up of contaminated soil. All costs associated with the UF₆conversion plant were expensed as incurred in the second quarter of each year ($7 million in 2009; $14 million in 2008).

Six Months Ended June 30, 2009

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Total cost of products and services sold, including DD&R, decreased to $102 million in the first half of 2009 from $117 million for the same period in 2008. The cost of products sold in both 2009 and 2008 was impacted by the curtailment of production from the Port Hope UF₆conversion plant. In the first half of 2009, the plant was shutdown due to the unavailability of HF, while in 2008 operations were suspended to allow for the clean up of contaminated soil. All costs associated with the UF₆conversion plant were expensed as incurred in the first half of each year ($18 million in 2009; $28 million in 2008).

UF₆ Conversion Market Update

Spot market UF₆ conversion prices declined over the quarter. Outlined below are the industry average spot market prices (TradeTech and UxC) for North American and European conversion services as at the dates specified.


	June 30/09		March 31/09		June 30/08		March 31/08
Average spot market price ($US/kgU)
• North America		7.00		8.50		9.50		9.00
• Europe		8.50		9.75		10.75		10.00

Long-term market UF₆ conversion prices remained steady over the quarter. Outlined below are the industry average long-term prices (TradeTech and UxC) for North American and European conversion services as at the dates specified.


	June 30/09		March 31/09		June 30/08		March 31/08
Average long-term price ($US/kgU)
• North America		12.25		12.25		12.25		12.25
• Europe		13.38		13.38		13.25		13.00

Fuel Services Operations Update

Production

Refining

Conversion Services and Fuel Manufacturing

-19-

UF₆ production in Port Hope restarted on June 17, 2009 after being suspended since December 2008 due to the lack of availability of HF on acceptable terms. HF is a primary feed material for the production of UF₆. Cameco signed a new contract with its historic supplier of HF in May under terms that are mutually beneficial to both.

In late June, Cameco signed a contract with a second supplier of HF, broadening our sources of supply. Cameco expects to sign a contract with a third HF supplier in the near future.

At Cameco Fuel Manufacturing, the collective agreement with unionized employees expired on June 1, 2009. Negotiations continue, assisted by a conciliator, towards the goal of reaching a new collective agreement.

Enrichment

Cameco has a 24% interest in Global Laser Enrichment LLC (GLE), a uranium enrichment development company based in Wilmington, North Carolina.

On July 30, 2009, GLE announced the startup of the test loop to evaluate a next-generation uranium enrichment technology that GLE is developing to increase the United States’ supply of enriched uranium for nuclear power plants worldwide.

The test loop is designed to validate the commercial feasibility of the technology and advance the design of the equipment, facility and processes for the planned commercial production facility. The results from the test loop will be used to determine whether to commercialize laser-based enrichment technology in the first full-scale commercial production facility in the world.

GLE anticipates it will have sufficient data from the test loop by the end of 2009 to decide whether to proceed with plans for a full-scale commercial enrichment facility. At that time, GLE expects to refine its projected schedule for bringing the plant online.

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NUCLEAR ELECTRICITY GENERATION

Highlights

Bruce Power Limited Partnership (100% basis)


	Three months ended				Six months ended
	June 30				June 30
	2009		2008		2009		2008
Output — terawatt hours (TWh)		5.3		5.7		12.0		10.8
Capacity factor (%)¹		75		81		86		77
Realized price ($/MWh)²		70		56		63		56
Average Ontario electricity spot price ($/MWh)		23		47		33		48
($ millions)
Electricity revenue		405		320		760		606
Operating costs³		270		255		477		496
Cash costs
— operating & maintenance		185		176		308		343
— fuel		22		20		44		36
— supplemental rent⁴		29		29		59		58
Non cash costs (amortization)		34		30		66		59
Income before interest and finance charges		135		66		283		110
Interest and finance charges		6		18		7		38
Earnings before taxes		129		48		276		72
Cash from operations		217		100		319		190
Capital expenditures		37		25		49		43
Operating costs ($/MWh)		51		45		40		46
Distributions		165		35		270		140


¹		Capacity factor for a given period represents the amount of electricity actually produced for sale as a percentage of the amount of electricity the plants are capable of producing for sale.

²		The calculation of the realized price for the second quarter of 2009 does not include the $35 million received in the first quarter under the agreement with the OPA and booked as revenue in the second quarter. See the section titled “BPLP’s Outlook for 2009” in this document for more information.

³		Net of cost recoveries.

⁴		Supplemental rent is about $28.3 million per operating reactor for 2009.

In the second quarter of 2009, BPLP generated cash from operations of $217 million compared to $100 million in the second quarter of 2008. The increase reflects a higher average realized electricity price and lower net working capital balances, partially offset by lower generation and higher operating costs.

Second quarter revenue includes payments received by BPLP under its agreement with the OPA. As a result of significant deterioration in the Ontario electricity market and supported by an amendment to the agreement with the OPA that governs the Bruce B floor price, $172 million (Cameco’s share, $54 million) was recognized as revenue in the second quarter. These payments include $35 million received in the first quarter. See section titled “BPLP’s Outlook for 2009” in this document for more information.

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BPLP distributed $165 million to the partners in the second quarter, with Cameco’s share being $52 million. The partners have agreed that excess cash is to be distributed on a monthly basis and that separate cash calls will be made for major capital projects.

Through Bruce Power, Cameco and its partners will be working with the province of Ontario to investigate the feasibility of refurbishing units 5 through 8, when they reach the end of their useful lives.

Cameco’s Earnings from BPLP


	Three months ended June 30						Six months ended June 30
($ millions)	2009			2008			2009			2008
BPLP’s earnings before taxes (100%)		129			48			276			72
Cameco’s share of pre-tax earnings before adjustments		41			15			87			23
Proprietary adjustments		(1	)		(2	)		(3	)		(3	)
Pre-tax earnings from BPLP		40			13			84			20

Second Quarter

Earnings Before Taxes

Cameco’s pre-tax earnings from BPLP amounted to $40 million during the second quarter compared to $13 million for the same period in 2008. This increase in 2009 was due to the increased revenue, partially offset by the reduction in generation and higher operating costs.

Output

BPLP achieved a capacity factor of 75% in the second quarter of 2009 compared to 81% in the same period of 2008. During the second quarter of 2009, BPLP’s units generated 5.3 TWh of electricity compared to 5.7 TWh in 2008.

Revenue and Realized Price

For the second quarter of 2009, BPLP’s electricity revenue increased to $405 million from $320 million over the same period in 2008 due to a higher realized price, partially offset by lower generation.

During the second quarter of 2009, about 60% of BPLP output was covered by financial contracts, down from the 67% level during the same period in 2008.

-22-

Costs

Operating costs (including amortization) were $270 million in the second quarter of 2009, up 6% compared to the same period of 2008 due to the extension of a planned outage to conduct additional maintenance work. About 95% of BPLP’s operating costs are fixed. As such, most of the costs are incurred whether the plant is operating or not. On a per MWh basis, the operating cost in the second quarter of 2009 was $51 compared to $45 in the second quarter of 2008.

Six Months Ended June 30, 2009

Earnings Before Taxes

Output

For the first six months of the year, BPLP’s units achieved a capacity factor of 86%, compared with 77% in the same period last year. These units produced 12.0 TWh during the first half of 2009, an increase of 1.2 TWh over the same period last year, due primarily to the extended planned outage of unit B5 and numerous forced outages in 2008.

Revenue and Realized Price

For the first six months of the year, BPLP’s electricity revenue increased to $760 million from $606 million over the same period in 2008 as a result of increased generation and higher realized prices.

The realized price, which reflects contract revenue, spot sales and payments under BPLP’s agreement with the OPA, averaged $63 per MWh for the first half of the year, 13% higher than the realized price in the same period last year. The increase is largely the result of recording such payments as revenue. During the first six months of 2009, the Ontario electricity spot price averaged $33 per MWh, significantly lower than the average of $48 per MWh from the same period of 2008. Pursuant to its agreement with the OPA, BPLP has recognized $172 million as revenue year to date.

Costs

For the first six months of 2009, operating costs were $477 million, compared with $496 million in the same period in 2008. This decrease primarily reflects lower staff costs and fewer forced outages. On a per MWh basis, the operating cost for the first six months of 2009 was $40 compared to $46 in the same period last year.

GOLD

Cameco owns approximately 49% of and has voting control over approximately 53% of Centerra’s shares. Centerra is listed on the Toronto Stock Exchange under the symbol CG. Centerra owns and operates two gold mines: Kumtor, which is located in the Kyrgyz Republic and Boroo located in Mongolia.

-23-

Financial Highlights


	Three months ended					Six months ended
	June 30					June 30
	2009			2008		2009			2008
Revenue ($ millions)		129			143		250			256
Gross profit ($ millions)		(21	)		33		(19	)		77
Gross profit %		(17	)		23		(8	)		30
Realized price ($US/ounce)		905			889		906			898
Sales volume (ounces)		115,000			160,000		224,000			284,000
Gold production (ounces)¹		110,000			158,000		214,000			279,000


¹		Represents 100% of production from the Kumtor and Boroo mines.

Gold Results

Second Quarter

Centerra’s operating costs increased during the quarter compared to the second quarter of 2008 mainly as a result of higher labour costs and an increase in the cost of supplies.

Centerra produced 110,000 ounces of gold in the second quarter of 2009, which was 48,000 ounces less than the 158,000 ounces of gold reported in 2008. The Kumtor mine saw production decrease to 81,000 ounces from 111,000 ounces in 2008 as the result of a lower ore grade, averaging 2.6 grams per tonne (g/t) in the second quarter of 2009 compared to the 3.4 g/t milled in the same quarter of 2008. Production was also lower at the Boroo mine, amounting to 29,000 ounces compared to 47,000 a year earlier, due mainly to the operational shutdown caused by a labour strike at the mine and the subsequent suspension of Boroo’s main operating licences. See section titled “Mongolia – Boroo Political and Operations Update” in this document for more information.

The average spot market gold price during the second quarter of 2009 was $922 (US) per ounce, an increase of 3% compared to $896 (US) per ounce in the second quarter of 2008.

Six Months Ended June 30, 2009

For the six months ended June 30, 2009, revenue from our gold business decreased by $6 million to $250 million compared to the first six months of 2008 due to lower sales volumes, partially offset by a 1% increase in the US dollar selling price. Revenues were influenced by an improved Cdn/US exchange rate that averaged $1.22 in the first half of 2009 compared to $1.01 in 2008.

Centerra produced 214,000 ounces of gold in the first half of 2009, which was 65,000 ounces less than the 279,000 ounces of gold reported for the same period in 2008. The Kumtor mine saw production decrease to 145,000 ounces from 186,000 ounces in 2008 as the result of a lower ore grade, averaging 2.3 g/t in the first half of 2009 compared to the 3.0 g/t milled in 2008.

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Production was also lower at the Boroo mine, amounting to 69,000 ounces compared to 93,000 a year earlier, due mainly to the operational shutdown caused by a labour strike at the mine and the subsequent suspension of Boroo’s main operating licences. See section titled “Mongolia – Boroo Political and Operations Update” in this document for more information.

Kyrgyz Republic

Kumtor Political and Operations Update

On June 11, 2009, Cameco announced the closing of an agreement with Centerra and the Kyrgyz government that resolves all of the existing disputes between the parties with respect to the Kumtor project. As part of the closing, Centerra issued from treasury 18.2 million common shares to the government, which brings Centerra’s total issued and outstanding shares to 234.9 million. As well, we agreed to transfer to the government between 14.1 and 25.3 million common shares of Centerra, which are to be released to the government upon satisfaction of certain conditions. Until that time, we retain voting control over approximately 53% of the issued and outstanding shares of Centerra and will continue to fully consolidate the financial results of the company.

For more information on this agreement see our news releases dated April 24, 2009, April 30, 2009 and June 11, 2009, and note 12 of our second quarter unaudited consolidated financial statements.

During the second quarter of 2009, mining at Kumtor exposed the unfrozen glacial till. The till layer responded positively to the on-going depressurization and dewatering programs, which are fully operational and extracting water from the pit area. The pitwall angles in most sectors of the pit have improved and have been steepened as a result of the depressurization and dewatering programs. One sector in the south wall requires further work and improved dewatering, however, Centerra believes this is manageable with the present mobile fleet of equipment.

Continued movement of the southeast icewall into the Kumtor open pit required the mining of ice and waste, which reduced the production of ore in the second quarter. Work is being done to neutralize and further stabilize this advanced creep. By the end of the quarter, the advancement had been significantly mitigated. While work is planned over the balance of the year to address this issue, there is no guarantee that these efforts will prevent further negative impact on expected production at Kumtor.

In March 2008, an unplanned shutdown of the ball mill at Kumtor was required to repair the ring gear that had failed. A temporary repair was completed in late March 2008 and the ball mill returned to full operation. Full replacement of the ring gear had originally been planned for the third quarter of 2009. However, replacement has been postponed until early 2010 to enable uninterrupted processing of higher grade material in the third quarter.

The maintenance and changeout of the Kumtor SAG mill liner has also been postponed until early 2010.

-25-

If in either of the above cases, earlier replacement is required, an unplanned shutdown of the mill would be required and would have an adverse impact on Centerra’s production, costs and earnings in 2009.

Mongolia

Boroo Political and Operations Update

At the end of April 2009, the mine stopped adding cyanide to the heap leach pad due to the expiry of Boroo’s temporary heap leach permit. Centerra had been awaiting the authorization of the final heap leach operating permit when the mine’s main operating licences were suspended. Centerra continues to work with the Mongolian authorities to obtain the final operating permits.

LIQUIDITY AND CAPITAL RESOURCES

Credit Ratings

There has been no change to Cameco’s credit ratings as discussed in our annual MD&A.

Debt

In addition to cash from operations, debt is used to provide liquidity. Cameco has sufficient borrowing capacity with unsecured lines of credit totalling about $1,725 million, which include the following:

Cameco may borrow directly from investors by issuing up to $400 million in commercial paper. At June 30, 2009, there was $348 million outstanding under the commercial paper program.

Cameco has in place a $500 million, unsecured revolving credit facility that matures November 30, 2012. 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 million can be used for the issuance of letters of credit and, to the extent necessary, up to $400 million is kept available to provide liquidity support for the company’s commercial paper program referred to above. The facility ranks equally with all of Cameco’s other senior debt. At June 30, 2009, there was no amount outstanding under this credit facility.

Cameco has in place a $500 million, unsecured revolving credit facility, maturing June 16, 2010, and extendable for an additional 364-day term upon mutual agreement with the lenders. The facility ranks equally with all of Cameco’s other senior debt. During the quarter, we determined the best short-term use of available cash, including a portion of the proceeds from the first

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quarter 2009 equity issuance, was to temporarily repay the balance outstanding under this facility, thereby reducing our borrowing costs. However, we maintain the ability to fully draw the facility. At June 30, 2009, there was no amount outstanding under this credit facility.

Cameco also has a $100 million, unsecured revolving credit facility, maturing February 5, 2010, and extendable for two additional 364-day terms upon mutual agreement with the lender. At June 30, 2009, there was no amount outstanding under this credit agreement.

Various financial institutions have entered into agreements to provide Cameco up to approximately $625 million in short-term borrowing and letters of credit. These facilities are predominantly used to fulfill regulatory requirements to provide financial assurance for future decommissioning and reclamation of our operating sites and as overdraft protection. At June 30, 2009, outstanding letters of credit amounted to $516 million.

Cameco has $300 million outstanding in senior unsecured debentures. These debentures bear interest at a rate of 4.7% per annum and mature September 16, 2015.

Cameco has issued a promissory note payable to GE-Hitachi Global Enrichment, LLC in the amount of $73 million (US) to support future development of this business.

Debt Covenants

Cameco is bound by certain covenants in its general credit facilities. The financially related covenants place restrictions on total debt, including guarantees, and set minimum levels of net worth. As at June 30, 2009, Cameco met these financial covenants and does not expect its operating and investment activities in 2009 to be constrained by them.

Contractual Cash Obligations

There have been no material changes to Cameco’s contractual cash obligations since December 31, 2008, including payments due for the next five years and thereafter. For further information on these contractual obligations, refer to our annual MD&A.

For further information regarding commitments and contingencies, refer to notes 8, 12 and 13 for the period ended June 30, 2009 of our unaudited consolidated financial statements.

Commercial Commitments

There have been no material changes to Cameco’s commercial commitments since December 31, 2008. For further information on these commercial commitments, refer to our annual MD&A.

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OUTSTANDING SHARE DATA

At June 30, 2009, there were 392,565,683 common shares and one Class B share outstanding. In addition, there were 8,255,610 stock options outstanding with exercise prices ranging from $5.88 to $54.50 per share.

CONTROLS AND PROCEDURES

As of June 30, 2009, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon that evaluation and as of June 30, 2009, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports the company files and submits under applicable securities laws is recorded, processed, summarized and reported as and when required, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CHANGES IN ACCOUNTING POLICY

NEW ACCOUNTING PRONOUNCEMENTS

Goodwill and Intangible Assets

Effective January 1, 2009, Cameco adopted the new Canadian standard, Handbook Section 3064, Goodwill and Intangible Assets, which replaces Handbook Section 3062, Goodwill and Other Intangible Assets and Section 3450, Research and Development Costs. The standard introduces guidance for the recognition, measurement and disclosure of goodwill and intangible assets, including internally generated intangible assets. The standard harmonizes Canadian standards with International Financial Reporting Standards and applies to annual and interim financial statements for fiscal years beginning on or after October 1, 2008. The new standard had no significant impact on our consolidated financial statements.

International Financial Reporting Standards (IFRS)

The Accounting Standards Board has announced that Canadian publicly accountable enterprises will be required to adopt IFRS effective January 1, 2011. Although IFRS employs a conceptual framework that is similar to Canadian GAAP, there are significant differences in recognition, measurement and disclosure. Cameco has undertaken a project to assess the potential impacts of the transition to IFRS and has established a project team led by management to plan for and achieve a smooth transition to IFRS. The team has developed a detailed project plan to ensure

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compliance with the new standards. Regular progress reports on the status of Cameco’s IFRS implementation project are provided to senior management and to the audit committee of the board. A major public accounting firm has been engaged to provide technical accounting advice and project management guidance in the conversion to IFRS.

Cameco’s implementation project consists of three principal phases:

Phase 1: Preliminary Study and Diagnostic – This phase included performing a high-level impact assessment to identify key areas that may be impacted by the adoption of IFRS. This analysis is complete and resulted in prioritization of areas to be evaluated in the next phase of the project plan. The information obtained from the assessment was also used to develop a detailed plan for convergence and implementation. During phase 1, an analysis was also performed to assess whether information technology systems used to collect and report financial data required modification in order to meet new reporting requirements under IFRS. The necessary systems modifications have been tested and implemented as of June 30, 2009.

Phase 2: Detailed Component Evaluation – In this phase, further evaluation of the financial statement areas impacted by IFRS will be completed. This will involve a more detailed, systematic gap analysis of accounting and disclosure differences between Canadian GAAP and IFRS. This detailed assessment will facilitate final decisions around accounting policies and overall conversion strategy. This phase also involves specification of changes required to existing business processes.

Phase 3: Embedding – This phase includes execution of changes to business processes impacted by Cameco’s transition to IFRS and formal approval of recommended accounting policy changes. Also included in this phase is the delivery of necessary IFRS training to Cameco’s audit committee of the board, board of directors and staff. This phase will culminate with the collection of financial information necessary to compile IFRS compliant financial statements and audit committee approval of IFRS financial statements commencing in 2011.

Cameco completed phase 1 in June 2008 and is now in the detailed component evaluation phase. Cameco’s analysis of the areas that may be impacted by the adoption of IFRS has identified a number of differences. We are currently assessing the impact of the adoption of IFRS on our results of operations, financial position and financial statement disclosures. In addition, we continue to assess the impact of the conversion on internal controls over financial reporting and disclosure controls and procedures. Cameco has and will continue to invest in training and resources throughout the transition period.

Financial Instruments – Disclosures

In June 2009, the CICA issued amendments to Handbook Section 3862, Financial Instruments – Disclosures requiring enhanced disclosures related to liquidity risk and new disclosures on fair value measurement of financial instruments. These requirements harmonize Canadian standards with IFRS and apply to annual financial statements for fiscal years ending after September 30, 2009. Cameco is assessing the impact the new standard on its consolidated financial statements.

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USE OF NON-GAAP FINANCIAL MEASURES

Adjusted Net Earnings


	Three months ended						Six months ended
	June 30						June 30
($ millions)	2009			2008			2009			2008
Net earnings (per GAAP)		247			150			329			284
Adjustments (after tax)
Loss (gain) on restructuring of the gold business		1			(36	)		(16	)		(28	)
Stock option expense (recovery)¹		—			33			—			18
Losses (gains) on financial instruments		(108	)		(8	)		(83	)		13

Adjusted net earnings		140			139			230			287


¹		Late in 2008, we amended our stock option program and began accounting for our options using their fair value at the grant date. Under this method, our stock option expense is highly predictable. For this reason, we will not be adjusting our net earnings for stock option expense in 2009.

QUALIFIED PERSONS

The disclosure of scientific and technical information regarding the following Cameco properties in this MD&A was prepared by or under the supervision of the following qualified persons for the purpose of National Instrument 43-101:


Qualified Persons		Properties
• David Bronkhorst, general manager, McArthur River operation, Cameco		McArthur River/
• Les Yesnik, general manager, Key Lake operation, Cameco		Key Lake
• Grant Goddard, general manager, Cigar Lake project, Cameco		Cigar Lake
• Ian Atkinson, vice-president, exploration, Centerra Gold		Kumtor

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CAUTION REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Statements contained in this MD&A which are not current statements or historical facts are “forward-looking information” (as defined under Canadian securities laws) and “forward-looking statements” (as defined in the US Securities Exchange Act of 1934, as amended) which may be material and that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them. Sentences and phrases containing words such as “believe”, “estimate”, “anticipate”, “plan”, “outlook”, “predict”, “goals”, “targets”, “projects”, “may”, “hope”, “can”, “will”, “shall”, “should”, “expect”, “intend”, “is designed to”, “continues”, “with the intent”, “potential”, “strategy” and the negative of these words, or variations of them, or comparable terminology that does not relate strictly to current or historical facts, are all indicative of forward-looking information and statements. Examples of forward-looking information and statements include, but are not limited to: our consolidated outlook for the year 2009 and related discussion; future earnings sensitivity to changes in the exchange rate; price sensitivity analysis for uranium, electricity and gold; uranium price sensitivity table for 2009 to 2013 and related discussion; our expected uranium production quantities for 2009; the expected date for completion of sealing the 2008 water inflow at Cigar Lake; our expectation that adopting the new tax code will not have a material impact on Inkai at this time; and our expectation that Cameco’s operating and investing activities in 2009 will not be constrained by the financial covenants in our general credit facilities.

The material risk factors that could cause actual results to differ materially from the forward-looking information and statements contained in this MD&A and the material risk factors or assumptions that were used to develop them include, without limitation: our assumptions regarding production levels, sales volumes, purchases and prices, which are subject to the risk that our assumptions are incorrect; the risk of volatility and sensitivity to market prices for uranium, conversion services, electricity in Ontario and gold, which we have assumed will remain relatively constant; the assumption regarding the B units of BPLP reaching their targeted capacity factor and that there will be no significant changes in current estimates for costs and prices, and the risk that those assumptions vary adversely; the risk of significant increases in competition levels, which we have assumed will remain constant or decline; the risk of material adverse changes in foreign currency exchange rates, interest rates and costs, including capital costs, which we have assumed will remain constant or improve in our favour; we assume capital is available and that is subject to the risk that our assumption is incorrect; our assumptions regarding production, cost, remediation, decommissioning, reclamation, mineral reserve and tax estimates, and the risk that our assumptions are incorrect; the risk of material litigation or arbitration proceedings (including as the result of disputes with governments (including tax authorities), suppliers, customers or joint venture partners) and the adverse outcome of such proceedings, which we have assumed will not occur; the risk we may not be able to enforce legal rights which we have assumed to be enforceable; our assumption that there are no material defects in title to properties, and the risk that such defects occur; environmental and safety risks including increased regulatory burdens, long-term waste disposal and the risk of uranium and production associated chemicals affecting the soil at the Port Hope and other sites which we have assumed will not adversely affect us; unexpected or challenging geological, hydrological or mining conditions which deviate significantly from our assumptions regarding those conditions; political risks arising from operating in certain developing countries, including the risks of nationalization, terrorism and sabotage, which we have assumed will not occur; the risk of adverse changes in government legislation, regulations and policies (including new legislation in Kazakhstan allowing the government to renegotiate previously signed agreements and the new tax code), which we have assumed will not occur; the assumed demand level for nuclear power and the risk that the actual demand level will be significantly lower; the risk of uranium and conversion service providers failure to fulfill delivery commitments or to require material amendments to agreements relating thereto, which we have assumed will not occur; failure to obtain or maintain necessary permits, licences, and approvals from government authorities, which we have assumed may be obtained and maintained; the risk of natural phenomena including inclement weather conditions, fire, flood, underground floods, earthquakes, pitwall and tailings dam failures, and cave-ins, which we have assumed will not occur; our assumptions regarding the ability of the company’s and customers’ facilities to operate without disruption, including as a result of strikes, lockouts, equipment failure or other causes and the risk that such disruptions may occur; assumptions regarding the availability of reagents, equipment, operating parts, and supplies critical to production (including the availability of acid at the company’s operations in Kazakhstan and hydrofluoric acid at the company’s Port Hope operations), and which are subject to the risk that our assumptions may be incorrect; our assumed level of electrical production, and the risk that actual levels may be lower due to planned outages extending beyond their scheduled periods or unplanned outages; assumptions regarding uranium spot prices, gold spot prices, Ontario electrical spot prices and the US/Canadian spot exchange rate, which are subject to the risk of fluctuations that would be materially adverse

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to us; the assumptions and risk factors regarding uranium price sensitivity set out under the heading “Uranium Price Sensitivity (2009 to 2013)”; the schedule for the development and rampup of production from Inkai is achieved, which is subject to the risk of delay; the successful transition to new mining areas at McArthur River commencing in 2009, which is subject to various expected and unanticipated risks; the dewatering and depressurization programs at Kumtor continue to produce the expected results and the water management systems work as planned, which is subject to various expected and unanticipated risks; the success and timely completion of planned development and remediation projects, including the remediation of and return to pre-flood construction at Cigar Lake, and the risk of delay or ultimate lack of success; the risk of a significant decline in general economic conditions, which we have assumed will not occur; and other development, operating, environmental and safety risks.

The forward-looking information and statements included in this MD&A represent Cameco’s views as of the date of this MD&A and should not be relied upon as representing Cameco’s views as of any subsequent date. While Cameco anticipates that subsequent events and developments may cause its views to change, Cameco specifically disclaims any intention or obligation to update forward-looking information and statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws. Forward-looking information and statements contained in this MD&A about prospective results of operations, financial position or cash flows that are based upon assumptions about future economic conditions and courses of action is presented for the purpose of assisting Cameco’s shareholders in understanding management’s current views regarding those future outcomes, and may not be appropriate for other purposes.

There can be no assurance that forward-looking information and statements will prove to be accurate, as actual results and future events could vary, or differ materially, from those anticipated in them. Further, expected future production estimates are inherently uncertain, particularly in the latter years of the forecast, and could materially change over time. Accordingly, readers of this MD&A should not place undue reliance on forward-looking information and statements. Forward-looking information and statements for time periods subsequent to 2009 involve greater risks and require longer-term assumptions and estimates than those for 2009, and are consequently subject to greater uncertainty. Therefore, the reader is especially cautioned not to place undue reliance on such long-term forward-looking information and statements.

ADDITIONAL INFORMATION

Additional information on Cameco, including its annual information form, is available on SEDAR at sedar.com and the company’s website at cameco.com.

- End -

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EX-99.3 4 o56613exv99w3.htm EXHIBIT 99.3 Exhibit 99.3

Cameco Corporation
Consolidated Financial Statements
June 30, 2009

Cameco Corporation
Highlights
(Unaudited)


	Three Months Ended				Six Months Ended
	Jun 30/09		Jun 30/08		Jun 30/09			Jun 30/08

Financial (in millions)
Revenue	$	774	$	620	$	1,389		$	1,213
Earnings from operations		283		120		360			283
Net earnings		247		150		329			284
Adjusted net earnings		140		139		230			287
Cash provided by operations		125		113		316			259
Working capital (end of period)						872			406
Net debt to capitalization						12	%		22	%

Per common share
Net earnings — Basic	$	0.63	$	0.44	$	0.86		$	0.82
— Diluted		0.63		0.42		0.85			0.79
— Diluted, adjusted		0.36		0.39		0.60			0.79
Dividend		0.06		0.06		0.12			0.12

Weighted average number of paid common shares outstanding (in thousands)		392,505		344,461		383,174			344,439

Uranium price information
Average uranium spot price for the period (US$/lb)	$	48.33	$	61.33	$	46.50		$	67.42
Average uranium realized price for the period (US$/lb)		40.64		47.35		38.86			43.84
Average uranium realized price for the period (Cdn$/lb)		51.45		51.12		49.31			47.64

Sales volumes
Uranium (in thousands lbs U₃O₈)		8,538		6,348		15,603			13,794
Fuel services (tU)		4,108		3,078		6,020			6,471
Gold (troy ounces)		115,000		160,000		224,000			284,000
Electricity (TWh)		1.7		1.8		3.8			3.4

Note: Currency amounts are expressed in Canadian dollars unless stated otherwise.


	Cameco’s			Three Months Ended				Six Months Ended
Cameco Production	Share			Jun 30/09		Jun 30/08		Jun 30/09		Jun 30/08

Uranium production (in thousands lbs U₃O₈)
McArthur River		69.8	%		1,956		3,240		5,567		6,383
Rabbit Lake		100.0	%		1,034		1,513		1,498		1,513
Crow Butte		100.0	%		183		131		356		287
Smith Ranch Highland		100.0	%		488		289		890		676
Inkai		60.0	%		85		69		192		128

Total					3,746		5,242		8,503		8,987

Fuel services (tU) ⁽ⁱ⁾		100.0	%		2,241		1,843		4,363		3,907

Gold (troy ounces)
Kumtor		100.0	%		81,000		111,000		145,000		186,000
Boroo		100.0	%		29,000		47,000		69,000		93,000

Total					110,000		158,000		214,000		279,000

(i) Includes toll conversion supplied by Springfield Fuels Ltd.

-2-

Cameco Corporation
Consolidated Statements of Earnings
(Unaudited)
($Cdn Thousands)


	Three Months Ended						Six Months Ended
	Jun 30/09			Jun 30/08			Jun 30/09			Jun 30/08

Revenue from
Products and services	$	774,379		$	619,749		$	1,388,977		$	1,212,578


Expenses
Products and services sold ⁽ⁱ⁾		469,427			339,600			845,078			644,222
Depreciation, depletion and reclamation		91,277			53,594			167,563			113,982
Administration [note 10]		40,907			86,017			77,811			93,718
Exploration		17,147			18,714			34,302			31,765
Research and development		1,081			647			2,213			2,902
Interest and other [note 7]		(129,359	)		(2,376	)		(87,180	)		32,417
Cigar Lake remediation		4,688			1,883			10,192			6,733
Restructuring of gold business [note 12]		(2,100	)		1,800			(19,100	)		6,600
Loss (gain) on sale of assets		(1,948	)		31			(2,154	)		(3,077	)

		491,120			499,910			1,028,725			929,262

Earnings from operations		283,259			119,839			360,252			283,316
Equity in loss of associated companies		(6,367	)		(1,840	)		(20,021	)		(3,804	)

Earnings before income taxes and minority interest		276,892			117,999			340,231			279,512
Income tax expense (recovery) [note 8]		45,878			(39,455	)		39,421			(22,699	)
Minority interest		(16,090	)		7,105			(28,037	)		18,482

Net earnings	$	247,104		$	150,349		$	328,847		$	283,729

Basic earnings per common share [note 9]	$	0.63		$	0.44		$	0.86		$	0.82

Diluted earnings per common share [note 9]	$	0.63		$	0.42		$	0.85		$	0.79


(i) Excludes depreciation, depletion and reclamation expenses of:	$	88,908		$	51,297		$	162,186		$	109,581

See accompanying notes to consolidated financial statements

-3-

Cameco Corporation
Consolidated Balance Sheets
(Unaudited)
($Cdn Thousands)


	As At
	Jun 30/09		Dec 31/08

Assets
Current assets
Cash and cash equivalents	$	349,354	$	269,176
Accounts receivable		318,132		568,340
Inventories [note 3]		508,191		470,649
Supplies and prepaid expenses		289,244		301,937
Current portion of long-term receivables, investments and other [note 5]		155,501		49,836

		1,620,422		1,659,938

Property, plant and equipment		4,532,962		4,416,293
Intangible assets and goodwill		269,941		283,344
Long-term receivables, investments and other [note 5]		636,897		628,972
Long-term inventories [note 3]		24,969		22,054

		5,464,769		5,350,663

Total assets	$	7,085,191	$	7,010,601


Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	480,249	$	580,903
Short-term debt		85,263		89,817
Dividends payable		23,554		21,943
Current portion of long-term debt		11,092		10,175
Current portion of other liabilities		63,584		117,222
Future income taxes		85,141		68,857

		748,883		888,917

Long-term debt		810,560		1,212,982
Provision for reclamation		347,528		353,344
Other liabilities		176,777		179,880
Future income taxes		63,801		81,352

		2,147,549		2,716,475

Minority interest		704,066		779,203

Shareholders’ equity
Share capital		1,512,498		1,062,714
Contributed surplus		135,509		131,858
Retained earnings		2,435,060		2,153,315
Accumulated other comprehensive income		150,509		167,036

		4,233,576		3,514,923

Total liabilities and shareholders’ equity	$	7,085,191	$	7,010,601

Commitments and contingencies [notes 8,12,13]

See accompanying notes to consolidated financial statements

-4-

Cameco Corporation
Consolidated Statements of Shareholders’ Equity
(Unaudited)
($Cdn Thousands)


	Six Months Ended
	Jun 30/09			Jun 30/08

Share capital
Balance at beginning of period	$	1,062,714		$	819,268
Stock option plan		4,252			622
Conversion of debentures		—			80
Equity issuance [note 6]		445,532			—

Balance at end of period	$	1,512,498		$	819,970


Contributed surplus
Balance at beginning of period	$	131,858		$	119,531
Stock-based compensation		4,143			(339	)
Options exercised		(492	)		—

Balance at end of period	$	135,509		$	119,192


Retained earnings
Balance at beginning of period	$	2,153,315		$	1,788,418
Net earnings		328,847			283,729
Dividends on common shares		(47,102	)		(41,334	)

Balance at end of period	$	2,435,060		$	2,030,813


Accumulated other comprehensive income (loss)
Balance at beginning of period	$	167,036		$	25,433
Other comprehensive income		(16,527	)		(84,802	)

Balance at end of period	$	150,509		$	(59,369	)

Total retained earnings and accumulated other comprehensive income	$	2,585,569		$	1,971,444

Shareholders’ equity at end of period	$	4,233,576		$	2,910,606

See accompanying notes to consolidated financial statements

-5-

Cameco Corporation
Consolidated Statements of Comprehensive Income
(Unaudited)
($Cdn Thousands)


	Three Months Ended						Six Months Ended
	Jun 30/09			Jun 30/08			Jun 30/09			Jun 30/08

Net earnings	$	247,104		$	150,349		$	328,847		$	283,729
Other comprehensive income (loss), net of taxes [note 8]
Unrealized foreign currency translation (losses) gains		(83,848	)		(2,950	)		(47,853	)		22,707
Gains (losses) on derivatives designated as cash flow hedges		38,102			(11,297	)		84,402			(44,466	)
Gains on derivatives designated as cash flow hedges transferred to net earnings		(32,143	)		(30,019	)		(54,836	)		(54,640	)
Unrealized gains (losses) on assets available-for-sale		991			(2,172	)		1,760			(8,403	)

Other comprehensive income		(76,898	)		(46,438	)		(16,527	)		(84,802	)

Total comprehensive income	$	170,206		$	103,911		$	312,320		$	198,927

Cameco Corporation
Consolidated Statement of Accumulated Other Comprehensive Income
(Unaudited)
($Cdn Thousands)


	Currency
	Translation			Cash Flow			Available-For-
(net of related income taxes)[note 8]	Adjustment			Hedges			Sale Assets			Total

Balance at December 31, 2008	$	66,642		$	101,654			($1,260	)	$	167,036
Change in unrealized foreign currency translation losses		(47,853	)		—			—			(47,853	)
Change in gains on derivatives designated as cash flow hedges		—			84,402			—			84,402
Change in gains on derivatives designated as cash flow hedges transferred to net earnings		—			(54,836	)		—			(54,836	)
Change in unrealized gains on available-for-sale securities		—			—			1,760			1,760

Balance at June 30, 2009	$	18,789		$	131,220		$	500		$	150,509


Balance at December 31, 2007		($150,935	)	$	182,734			($6,366	)	$	25,433
Change in unrealized foreign currency translation gains		22,707			—			—			22,707
Change in losses on derivatives designated as cash flow hedges		—			(44,466	)		—			(44,466	)
Change in gains on derivatives designated as cash flow hedges transferred to net earnings		—			(54,640	)		—			(54,640	)
Change in unrealized losses on available-for-sale securities		—			—			(8,403	)		(8,403	)

Balance at June 30, 2008		($128,228	)	$	83,628			($14,769	)		($59,369	)

See accompanying notes to consolidated financial statements

-6-

Cameco Corporation
Consolidated Statements of Cash Flows
(Unaudited)
($Cdn Thousands)


	Three Months Ended						Six Months Ended
	Jun 30/09			Jun 30/08			Jun 30/09			Jun 30/08

Operating activities
Net earnings	$	247,104		$	150,349		$	328,847		$	283,729
Items not requiring (providing) cash:
Depreciation, depletion and reclamation		91,277			53,594			167,563			113,982
Provision for future taxes [note 8]		21,695			(55,655	)		(10,308	)		(65,709	)
Deferred gains		(13,589	)		(14,901	)		(24,312	)		(79,347	)
Unrealized (gains) losses on derivatives		(100,129	)		(11,049	)		(113,019	)		18,405
Unrealized foreign exchange gains		(11,969	)		—			—			—
Stock-based compensation [note 10]		(14	)		(3,957	)		4,143			(339	)
Loss (gain) on sale of assets		(1,948	)		31			(2,154	)		(3,077	)
Equity in loss of associated companies		6,367			1,840			20,021			3,804
Restructuring of gold business [note 12]		(2,100	)		1,800			(19,100	)		6,600
Minority interest		(16,090	)		7,105			(28,037	)		18,482
Other operating items [note 11]		(95,789	)		(15,981	)		(7,220	)		(37,640	)

Cash provided by operations		124,815			113,176			316,424			258,890


Investing activities
Additions to property, plant and equipment		(116,747	)		(127,500	)		(238,092	)		(240,199	)
Increase in long-term receivables, investments and other		(14,368	)		(138,585	)		(23,736	)		(157,360	)
Proceeds on sale of property, plant and equipment		1,425			(35	)		3,633			3,073

Cash used in investing		(129,690	)		(266,120	)		(258,195	)		(394,486	)


Financing activities
Decrease in debt		(312,550	)		(2,212	)		(414,380	)		(4,329	)
Increase in debt		44,621			165,117			44,726			162,197
Issue of shares, net of issue costs [note 6]		(1,000	)		422			440,150			701
Issue of shares, stock option plan		3,690			—			4,058			—
Dividends		(23,548	)		(20,666	)		(45,491	)		(37,886	)

Cash provided by (used in) financing		(288,787	)		142,661			29,063			120,683

Increase (decrease) in cash during the period		(293,662	)		(10,283	)		87,292			(14,913	)
Exchange rate changes on foreign currency cash balances		(12,857	)		(1,076	)		(7,114	)		3,864
Cash and cash equivalents at beginning of period		655,873			132,242			269,176			131,932

Cash and cash equivalents at end of period	$	349,354		$	120,883		$	349,354		$	120,883


Cash and cash equivalents comprised of:
Cash							$	105,632		$	67,396
Cash equivalents								243,722			53,487

							$	349,354		$	120,883


Supplemental cash flow disclosure
Interest paid	$	6,386		$	10,714		$	21,005		$	22,883
Income taxes paid	$	4,967		$	19,470		$	57,308		$	101,260

See accompanying notes to consolidated financial statements

-7-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

1.		Accounting Policies

		These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) and follow the same accounting principles and methods of application as the most recent annual consolidated financial statements except for the recent accounting standards adopted described below. Since the interim financial statements do not include all disclosures required by GAAP, they should be read in conjunction with Cameco’s annual consolidated financial statements included in the 2008 annual financial review. Certain comparative figures for the prior period have been reclassified to conform to the current period’s presentation.

	(a)		Goodwill and Intangible Assets

			Effective January 1, 2009, Cameco adopted the new Canadian standard, Handbook Section 3064, Goodwill and Intangible Assets, which replaced Handbook Section 3062, Goodwill and Other Intangible Assets and Section 3450, Research and Development Costs. The standard introduces guidance for the recognition, measurement and disclosure of goodwill and intangible assets, including internally generated intangible assets. The standard also harmonizes Canadian standards with IFRS and applies to annual and interim financial statements for fiscal years beginning on or after October 1, 2008. There was no material impact to previously reported financial statements as a result of the implementation of the new standard.

Future Changes in Accounting Policy

	(a)		International Financial Reporting Standards (IFRS)

			The Accounting Standards Board (AcSB) has announced that Canadian publicly accountable enterprises will be required to adopt IFRS effective January 1, 2011. Although IFRS employs a conceptual framework that is similar to Canadian GAAP, there are significant differences in recognition, measurement and disclosure. Cameco has undertaken a project to assess the potential impacts of the transition to IFRS and has developed a detailed project plan to ensure compliance with the new standards.

			Cameco has completed the initial phase of the implementation project including the detailed diagnostic analysis which included a high-level impact assessment to identify key areas that may be impacted by the adoption of IFRS. This analysis resulted in the prioritization of areas to be evaluated in the next phase of the project plan, component evaluation. This phase, which is currently in progress, includes the analysis of accounting policy alternatives available under IFRS as well as the determination of changes required to existing information systems and business processes. As of June 30, 2009, the systems changes necessary to support the IFRS conversion had been fully tested and implemented. Cameco continues to assess the impact of the conversion on internal controls over financial reporting and disclosure controls and procedures and will continue to invest in training and resources throughout the transition period to facilitate a timely conversion. Cameco is currently assessing the impact of the adoption of IFRS on our results of operations, financial position and financial statement disclosures.

	(b)		Financial Instruments — Disclosures

			In June 2009, the CICA issued amendments to Handbook Section 3862, Financial Instruments – Disclosures. The amendments provide for enhanced disclosures on liquidity risk and require new disclosures on fair value measurements of financial instruments. These requirements harmonize Canadian standards with IFRS and apply to annual financial statements for fiscal years ending after September 30, 2009. Cameco is assessing the impact the new standard on its consolidated financial statements.

-8-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

Inventories


	As At
(thousands)	Jun 30/09			Dec 31/08

Uranium
Concentrate	$	309,051		$	287,079
Broken ore		23,108			21,396

		332,159			308,475

Fuel Services		112,540			89,635

Gold
Finished		17,590			18,662
Stockpile		70,871			75,931

		88,461			94,593

Total		533,160			492,703
Less: Non-current portion		(24,969	)		(22,054	)

Net	$	508,191		$	470,649

		The non-current portion of inventory represents values assigned to low-grade stockpiles of gold ore that are not expected to be processed in the next 12 months.

4.		Derivatives

		The following tables summarize the fair value of derivatives and classification on the balance sheet:


As at June 30, 2009
(thousands)	Cameco			BPLP			Total

Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(2,378	)	$	6,173		$	3,795
Foreign currency contracts		2,183			—			2,183
Cash flow hedges:
Energy and sales contracts		—			139,639			139,639

Net	$	(195	)	$	145,812		$	145,617

Classification:
Current portion of long-term receivables, investments and other [note 5]	$	57,931		$	96,433		$	154,364
Long-term receivables, investments and other [note 5]		418			50,900			51,318
Current portion of other liabilities		(56,152	)		(1,521	)		(57,673	)
Other liabilities		(2,392	)		—			(2,392	)

Net	$	(195	)	$	145,812		$	145,617

-9-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

As at December 31, 2008


(thousands)	Cameco			BPLP			Total

Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(8,951	)	$	4,344		$	(4,607	)
Foreign currency contracts		(105,125	)		—			(105,125	)
Cash flow hedges:
Energy and sales contracts		—			71,116			71,116

Net	$	(114,076	)	$	75,460		$	(38,616	)

Classification:
Current portion of long-term receivables, investments and other [note 5]	$	5,793		$	43,654		$	49,447
Long-term receivables, investments and other [note 5]		—			32,340			32,340
Current portion of other liabilities		(110,918	)		(73	)		(110,991	)
Other liabilities		(8,951	)		(461	)		(9,412	)

Net	$	(114,076	)	$	75,460		$	(38,616	)

The following tables summarize different components of the (gains) and losses on derivatives:

For the three months ended June 30, 2009


(thousands)	Cameco			BPLP			Total

Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(5,844	)	$	(1,120	)	$	(6,964	)
Foreign currency contracts		(95,373	)		176			(95,197	)
Cash flow hedges:
Energy and sales contracts		—			977			977

Net	$	(101,217	)	$	33		$	(101,184	)

For the three months ended June 30, 2008


(thousands)	Cameco			BPLP			Total

Non-hedge derivatives:
Embedded derivatives — sales contracts	$	200		$	—		$	200
Foreign currency contracts		(8,021	)		—			(8,021	)
Energy and sales contracts		—			2,941			2,941
Cash flow hedges:
Energy and sales contracts		—			(70	)		(70	)
Ongoing hedge inefficiency		510			—			510

Net	$	(7,311	)	$	2,871		$	(4,440	)

-10-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

For the six months ended June 30, 2009


(thousands)	Cameco			BPLP			Total

Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(6,119	)	$	(2,068	)	$	(8,187	)
Foreign currency contracts		(64,341	)		239			(64,102	)
Cash flow hedges:
Energy and sales contracts		—			43			43

Net	$	(70,460	)	$	(1,786	)	$	(72,246	)

For the six months ended June 30, 2008


(thousands)	Cameco		BPLP		Total

Non-hedge derivatives:
Embedded derivatives — sales contracts	$	258	$	—	$	258
Foreign currency contracts		20,453		—		20,453
Energy and sales contracts		—		5,566		5,566
Cash flow hedges:
Energy and sales contracts		—		265		265
Ongoing hedge inefficiency		2,677		—		2,677

Net	$	23,388	$	5,831	$	29,219

Over the next 12 months, based on current exchange rates, Cameco expects an estimated $32,730,000 of pre-tax gains from the foreign currency cash flow hedges to be reclassified through other comprehensive income to net earnings. The maximum length of time Cameco hedges its exposure to the variability in future cash flows related to foreign currency on anticipated transactions is five years.

Over the next 12 months, based on current prices, Cameco expects an estimated $93,340,000 of pre-tax gains from BPLP’s various energy and sales related cash flow hedges to be reclassified through other comprehensive income to net earnings. The maximum length of time BPLP is hedging its exposure to the variability in future cash flows related to electricity prices on anticipated transactions is five years.

-11-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

Long-Term Receivables, Investments and Other


	As At
(thousands)	Jun 30/09			Dec 31/08

Bruce A L.P. (BPLP)
Capital lease receivable from BPLP ⁽ⁱ⁾	$	96,001		$	97,044
Derivatives [note 4]		147,333			75,994
Accrued pension benefit asset		17,676			6,061
Kumtor Gold Company (KGC)
Reclamation trust fund		7,622			6,219
Equity accounted investments
Global Laser Enrichment LLC (privately held)		213,577			240,018
Govi High Power Exploration Inc. (privately held)		29,518			34,442
UNOR Inc. (market value $1,632)		968			1,088
UEX Corporation (market value $50,394)		6,071			6,714
Huron Wind (privately held)		4,205			4,623
Minergia S.A.C. (privately held)		294			534
Available-for-sale securities
Western Uranium Corporation (market value $4,581)		4,581			3,296
Cue Resources Ltd. (market value $464)		464			422
Derivatives [note 4]		58,349			5,793
Deferred charges
Cost of sales		6,414			6,414
Advances receivable from Inkai JV LLP⁽ⁱⁱ⁾		144,678			126,130
Accrued pension benefit asset		4,144			4,815
Other		50,503			59,201

		792,398			678,808
Less current portion		(155,501	)		(49,836	)

Net	$	636,897		$	628,972

⁽ⁱ⁾		BPLP leases the Bruce A nuclear generating plants and other property, plant and equipment to Bruce A L.P. under a sublease agreement. Future minimum base rent sublease payments under the capital lease receivable are imputed using a 7.5% discount rate.

⁽ⁱⁱ⁾		Through an unsecured shareholder loan, Cameco has agreed to fund the development of the Inkai project. The limit of the loan facility is $350,000,000 (US) and advances under the facility bear interest at a rate of LIBOR plus 2%. At June 30, 2009, $311,000,000 (US) of principal and interest was outstanding (2008 — $257,000,000 (US)), of which 40% represents the joint venture partner’s share. Of the cash available for distribution each year, 80% is to be used to repay the loan until it is repaid in full.

Share Capital

	(a)		At June 30, 2009, there were 392,565,683 common shares outstanding.

	(b)		Options in respect of 8,255,610 shares are outstanding under the stock option plan and are exercisable up to 2018. For the quarter ended June 30, 2009, 109,660 options were exercised resulting in the issuance of shares (2008 – 27,540). For the six months ended June 30, 2009, 180,360 options were exercised resulting in the issuance of shares (2008 – 68,260).

	(c)		On March 5, 2009, Cameco finalized and issued 26,666,400 common shares pursuant to a public offering for a total consideration of $459,995,000. The proceeds of the issue after deducting expenses, net of taxes, were $445,532,000.

-12-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

Interest and Other


	Three Months Ended						Six Months Ended
(thousands)	Jun 30/09			Jun 30/08			Jun 30/09			Jun 30/08

Interest on long-term debt	$	7,499		$	10,738		$	17,395		$	21,680
Interest on short-term debt		658			—			1,419			—
Foreign exchange (gains) losses		(31,091	)		1,606			(20,147	)		2,721
Losses (gains) on derivatives [note 4]		(101,184	)		(4,440	)		(72,246	)		29,219
Other charges		2,300			1,329			6,966			3,660
Interest income		(630	)		(3,963	)		(2,868	)		(8,830	)
Capitalized interest		(6,911	)		(7,646	)		(17,699	)		(16,033	)

Net	$	(129,359	)	$	(2,376	)	$	(87,180	)	$	32,417

Income Tax Expense (Recovery)


	Three Months Ended						Six Months Ended
(thousands)	Jun 30/09			Jun 30/08			Jun 30/09			Jun 30/08

Earnings (loss) before income taxes and minority interest
Canada	$	169,728		$	(69,695	)	$	54,237		$	(117,541	)
Foreign		107,164			187,694			285,994			397,053

	$	276,892		$	117,999		$	340,231		$	279,512


Current income taxes
Canada	$	17,146		$	3,939		$	24,299		$	10,675
Foreign		7,036			12,261			25,430			32,335

	$	24,182		$	16,200		$	49,729		$	43,010

Future income taxes (recovery)
Canada	$	25,514		$	(57,656	)	$	(15,645	)	$	(70,199	)
Foreign		(3,818	)		2,001			5,337			4,490

	$	21,696		$	(55,655	)	$	(10,308	)	$	(65,709	)

Income tax expense (recovery)	$	45,878		$	(39,455	)	$	39,421		$	(22,699	)

		In 2008, as part of the ongoing annual audits of Cameco’s Canadian tax returns, Canada Revenue Agency (CRA) disputed the transfer pricing methodology used by Cameco and its wholly-owned Swiss subsidiary, Cameco Europe Ltd. (CEL), in respect of sale and purchase agreements for uranium products. In December 2008, CRA issued a notice of reassessment, which increased Cameco’s 2003 Canadian taxable income by approximately $43,000,000 (which does not result in any cash taxes becoming payable for that year). Cameco believes it is likely that CRA will reassess Cameco’s tax returns for the years 2004 through 2008 on a similar basis.

		Late in 2008, CRA’s Transfer Pricing Review Committee decided not to impose a penalty for 2003 based on the documentation that had been submitted by Cameco.

-13-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

		Having regard to advice from its external advisors, Cameco’s opinion is that CRA’s position is incorrect, and Cameco intends to contest CRA’s position. However, to reflect the uncertainties of CRA’s appeals process and litigation, Cameco has decided to increase its reserve for uncertain tax positions and recognize an income tax expense of $15,000,000 in 2008 for the years 2003 through 2008. No provisions for penalties or interest have been recorded. We do not expect any cash taxes to be payable due to availability of elective deductions and tax loss carryforwards. 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 over the period. However, an unfavourable outcome for the years 2003 to 2008 could be material to Cameco’s financial position, results of operations or cash flows in the year(s) of resolution.

		Further to Cameco’s decision to contest CRA’s 2003 reassessment, a Notice of Appeal was filed with the Tax Court of Canada on July 22, 2009.

		Other comprehensive income (OCI) included on the consolidated statements of shareholders’ equity and the consolidated statements of comprehensive income are presented net of income taxes. The following income tax amounts are included in each component of other comprehensive income:


	Three Months Ended						Six Months Ended
(thousands)	Jun 30/09			Jun 30/08			Jun 30/09			Jun 30/08

Gains (losses) on derivatives designated as cash flow hedges	$	22,027		$	(5,940	)	$	39,129		$	(30,401	)
Gains on derivatives designated as cash flow hedges transferred to net earnings		(13,859	)		(12,028	)		(22,272	)		(21,916	)
Unrealized gains (losses) on assets available-for-sale		155			(339	)		275			(1,153	)

Total income tax expense (recovery) included in OCI	$	8,323		$	(18,307	)	$	17,132		$	(53,470	)

Accumulated other comprehensive income included on the consolidated statements of shareholders’ equity and the consolidated statement of accumulated other comprehensive income is presented net of income taxes. The following income tax amounts are included in each component of accumulated other comprehensive income:


	As At
(thousands)	Jun 30/09		Jun 30/08

Gains on derivatives designated as cash flow hedges	$	53,597	$	29,611
Unrealized gains (losses) on assets available-for-sale		78		(2,305	)

Total income tax expense included in AOCI	$	53,675	$	27,306

-14-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

Per Share Amounts


	Three Months Ended				Six Months Ended
(thousands)	Jun 30/09		Jun 30/08		Jun 30/09		Jun 30/08

Basic earnings per share computation
Net earnings	$	247,104	$	150,349	$	328,847	$	283,729
Weighted average common shares outstanding		392,505		344,461		383,174		344,439

Basic earnings per common share	$	0.63	$	0.44	$	0.86	$	0.82

Diluted earnings per share computation
Net earnings	$	247,104	$	150,349	$	328,847	$	283,729
Dilutive effect of:
Convertible debentures		—		2,558		—		5,115

Net earnings, assuming dilution	$	247,104	$	152,907	$	328,847	$	288,844

Weighted average common shares outstanding		392,505		344,461		383,174		344,439
Dilutive effect of:
Convertible debentures		—		21,201		—		21,201
Stock options		1,931		2,238		1,731		2,153

Weighted average common shares outstanding, assuming dilution		394,436		367,900		384,905		367,793

Diluted earnings per common share	$	0.63	$	0.42	$	0.85	$	0.79

		For the six months ended June 30, 2009, excluded from the calculation were 4,826,681 options whose exercise price was greater than the average closing market price (2008 – 901,950). For the quarter ended June 30, 2009, excluded from the calculation were 3,256,469 options as their exercise price was greater than the average closing market price (2008 – 901,950).

10.		Stock Option Plan

		Cameco has established a stock option plan under which options to purchase common shares may be granted to officers and other employees of Cameco. The options vest over three years and expire eight years from the date granted. Options granted prior to 1999 expire 10 years from the date of the grant of the option.

		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 24,307,079 shares have been issued.

		On July 27, 2007, Cameco’s board of directors approved an amendment to the company’s stock option program introducing a cash settlement feature for the exercise of employee stock options. The cash settlement feature allowed option holders to elect to receive an amount in cash equal to the intrinsic value, being the excess market price of the common share over the exercise price of the option, instead of exercising the option and acquiring common shares. All outstanding stock options were subsequently classified as liabilities and carried at their intrinsic value. The intrinsic value of the liability was marked to market each period and amortized to expense over the shorter of the period to eligible retirement or the vesting period. Effective November 10, 2008, the stock option plan was amended to eliminate the alternative to settle in cash. As a result of the amendment all outstanding options are classified as equity and the fair value determined using the Black-Scholes option pricing model.

		For the quarter ended June 30, 2009, Cameco has recorded compensation expense of $1,024,000 with an offsetting credit to contributed surplus to reflect the estimated fair value of stock options granted to employees. For the quarter ended June 30, 2008, a net expense of $39,713,000 was recorded based on the intrinsic value of stock options granted to employees. For the six months ended June 30, 2009, Cameco has recorded compensation expense of $4,143,000 with an offsetting credit to reflect the estimated fair value of stock options granted to employees. For the six months ended June 30, 2008, a net expense of $20,115,000 was recorded based on the intrinsic value of stock options granted to employees.

-15-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

The fair value of the options issued was determined using the Black-Scholes option-pricing model with the following assumptions:



Number of options granted		1,376,039
Average strike price	$	19.37
Expected dividend		1.2	%
Expected volatility		36	%
Risk-free interest rate		1.6	%
Expected life of option	3 - 5 years
Expected forfeitures		15	%
Weighted average grant date fair values	$	5.21

11.		Statements of Cash Flows

		Other Operating Items


	Three Months Ended						Six Months Ended
(thousands)	Jun 30/09			Jun 30/08			Jun 30/09			Jun 30/08

Accounts receivable	$	(43,477	)	$	(26,900	)	$	225,279		$	117,705
Inventories		7,487			(4,849	)		(49,488	)		(88,011	)
Accounts payable and accrued liabilities		22,387			48,493			(114,551	)		(77,516	)
Other		(82,186	)		(32,725	)		(68,460	)		10,182

Total	$	(95,789	)	$	(15,981	)	$	(7,220	)	$	(37,640	)

12.		Restructuring of the Gold Business

		During the first quarter of 2007, the Parliament of the Kyrgyz Republic accepted in the first reading and returned to committee for further deliberation draft legislation that, among other things, challenges the legal validity of Kumtor Gold Company’s (Kumtor) agreements with the Kyrgyz Republic, proposes recovery of additional taxes on amounts relating to past activities, and provides for the transfer of gold deposits (including Kumtor) to a state-owned entity.

		On April 24, 2009, Cameco, Centerra, the Kyrgyz Government and other parties signed an agreement to resolve all the issues related to the Kumtor mine. On April 30, 2009, the Kyrgyz parliament ratified the agreement and enacted legislation authorizing implementation of the agreement. On June 11, 2009, closing occurred and Centerra issued 18,232,615 treasury shares to Kyrgyzaltyn JSC and Cameco transferred 25,300,000 shares (the Cameco Contributed Shares) of its 113,918,000 Centerra common shares to a custodian, to be held in escrow, for ultimate release to Kyrgyzaltyn JSC. The timing and number of the Cameco Contributed Shares that will be released to Kyrgyzaltyn JSC will be determined as follows:

	(a)		If Cameco reduces its holdings of Centerra common shares to 10.8 million or less, then the Cameco Contributed Shares will be released to Kyrgyzaltyn JSC but the number of Cameco Contributed Shares released will be subject to adjustment depending on the per share sale proceeds received by Cameco. If Cameco receives per share sale proceeds of the agreed minimum threshold or less, then 14,072,623 of the Cameco Contributed Shares will be released to Kyrgyzaltyn JSC. If Cameco receives per share sale proceeds of the agreed maximum threshold or more, then all the Cameco Contributed Shares will be released to Kyrgyzaltyn JSC. If Cameco receives per share sale proceeds between the agreed minimum and maximum thresholds, then the number of the Cameco Contributed Shares to be released to Kyrgyzaltyn JSC will be an interpolated amount.

	(b)		If, however, prior to Cameco reducing its holding of Centerra common shares as described above, the weighted average trading price of Centerra’s common shares exceeds the agreed maximum threshold for a period of 20 consecutive trading days, all the Cameco Contributed Shares will be released to Kyrgyzaltyn JSC after the expiration of a further 180 day period.

-16-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

		Cameco retains voting rights over the Cameco Contributed Shares while they are held by the custodian, and the Kyrgyz government will vote 52% of the treasury shares issued on closing as directed by Cameco until all or some of the Cameco Contributed Shares are released as set forth above. Accordingly, Cameco retains voting control over Centerra until all or some of the Cameco Contributed Shares are released.

		The estimate of the loss related to this agreement is to be based on Centerra’s share price at the end of each reporting period. At June 30, 2009, the pre-tax loss was estimated to be $111,000,000 and a recovery of $19,000,000 was recorded during 2009 to reduce the amount provided in prior years.

		As the number of the Cameco Contributed Shares ultimately transferred to Kyrgyzaltyn JSC is contingent as described above, the actual loss may be materially different than our current estimate.

13.		Commitments and Contingencies

		The following represent the material legal claims against the company and its subsidiaries.

	(a)		On February 12, 2004, Cameco, Cameco Bruce Holdings II Inc., BPC Generation Infrastructure Trust and TransCanada Pipelines Limited (collectively, the “Consortium”) sent a notice of claim to British Energy Limited and British Energy International Holdings Limited (collectively, BE) requesting, amongst other things, indemnification for breach of a representation and warranty contained in the February 14, 2003, Amended and Restated Master Purchase Agreement. The alleged breach is that the Unit 8 steam generators were not “in good condition, repair and proper working order, having regard to their use and age.” This defect was discovered during a planned outage conducted just after closing. As a result of this defect, the planned outage had to be significantly extended. The Consortium had claimed damages in the amount of $64,558,200 being 79.8% of the $80,900,000 of damages actually incurred, plus an unspecified amount to take into account the reduced operating life of the steam generators.

			By agreement of the parties, an arbitrator has been appointed to arbitrate the claims and a schedule has been set for the next steps in the proceeding. The Consortium served its claim on October 21, 2008. In addition to the $64,558,200 in damages sought in the notice of claim, the claim sought an additional $189,130,000 for the likely reduction in the useful lives of the steam generators, including lost revenues resulting from future outages to effect repairs or replacement. BE served its answer and counter-statement on December 22, 2008 and the Consortium served its reply and answer to counter-statement on January 22, 2009. On April 27, 2009 the Consortium served a further amended claim increasing the amount claimed for the likely reduction in the useful lives of the steam generators from $189,130,000 to $206,900,000 and also claiming $4,900,000 for the costs incurred for additional inspection, monitoring and maintenance costs. On August 7, 2009 the Consortium served a further amended claim discontinuing the claim for damages for the shortened useful operating lives of the Unit 8 steam generators and increased the claim for future monitoring and maintenance costs. In summary, the Consortium is claiming $64,558,200 for damages actually incurred, $4,900,000 for the costs incurred for additional inspection, monitoring and maintenance costs and $31,920,000 for additional future monitoring and maintenance costs.

			The parties have completed oral discoveries and are currently in the process of answering undertakings given during discoveries. The hearing has been scheduled from September 14 to October 9, 2009.

			In anticipation of this claim, BE issued on February 10, 2006, and then served on Ontario Power Generation Inc. (OPG) and Bruce Power LP a Statement of Claim. This Statement of Claim seeks damages for any amounts that BE is found liable to pay to the Consortium in connection with the Unit 8 steam generator arbitration described above, damages in the amount of $500,000,000, costs and pre and post judgment interest amongst other things. This action is in abeyance pending further developments on the Unit 8 steam generator arbitration.

-17-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

(b)

Cameco, TransCanada and BPC have assumed the obligations to provide financial guarantees on behalf of BPLP. Cameco has provided the following financial assurances, with varying terms that range from 2004 to 2018:

	(i)		Licensing assurances to Canadian Nuclear Safety Commission of up to $133,300,000. At June 30, 2009, Cameco’s actual exposure under these assurances was $23,700,000.

	(ii)		Guarantees to customers under power sale agreements of up to $38,300,000. Cameco did not have any actual exposure under these agreements at June 30, 2009.

	(iii)		Termination payments to OPG pursuant to the lease agreement of $58,300,000.

			The fair value of these guarantees is nominal.

	(c)		Under a supply contract with the Ontario Power Authority (OPA), BPLP is entitled to receive payments from the OPA during periods when the market price for electricity in Ontario is lower than the floor price defined under the agreement during a calendar year. On July 6, 2009, BPLP and the OPA amended the supply contract such that beginning in 2009, the annual payments received will not be subject to repayment in future years. Previously, the payments received under the agreement were subject to repayment during the entire term of the contract, dependent on the spot price in future periods. The agreement remains in effect until the earlier of December 31, 2020 or one year after the shutdown of the BPLP units. During 2009, BPLP received $184,000,000 in payments under this agreement and currently expects to repay $12,000,000. The remaining $172,000,000 was recognized as revenue with Cameco’s share being $54,000,000.

	(d)		On June 12, 2009, Centerra received a notice from the Mineral Resources Authority of Mongolia suspending the Boroo mine’s main operating licenses for a period up to three months. During June and July, Centerra worked with the relevant regulatory authorities in Mongolia to understand and resolve the concerns raised. On July 27, 2009, the Mongolian government lifted the suspension and production has resumed. Centerra is continuing discussions with the regulatory authorities regarding their concerns.

-18-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

14.		Segmented Information

		For the three months ended June 30, 2009


				Fuel							Inter-
(thousands)	Uranium			Services		Electricity		Gold			Segment			Total

Revenue	$	443,261		$	81,578	$	127,854	$	128,801		$	(7,115	)	$	774,379

Expenses
Products and services sold		232,453			49,910		74,469		117,819			(5,224	)		469,427
Depreciation, depletion and reclamation		39,324			6,339		13,122		32,473			19			91,277
Exploration		12,187			—		—		4,960			—			17,147
Other expense		3,265			3,166		—		—			—			6,431
Cigar Lake remediation		4,688			—		—		—			—			4,688
Restructuring costs [note 12]		—			—		—		(2,100	)		—			(2,100	)
Gain on sale of assets		(1,948	)		—		—		—			—			(1,948	)
Non-segmented expenses															(87,435	)

Earnings (loss) before income taxes and minority interest		153,292			22,163		40,263		(24,351	)		(1,910	)		276,892
Income tax expense [note 8]															45,878
Minority interest															(16,090	)

Net earnings														$	247,104

For the three months ended June 30, 2008


			Fuel							Inter-
(thousands)	Uranium		Services			Electricity		Gold		Segment			Total

Revenue	$	328,998	$	54,445		$	101,183	$	142,993	$	(7,870	)	$	619,749

Expenses
Products and services sold		127,080		54,112			70,835		92,416		(4,843	)		339,600
Depreciation, depletion and reclamation		18,783		6,020			11,227		17,854		(290	)		53,594
Exploration		13,549		—			—		5,165		—			18,714
Other expense		1,886		—			—		—		—			1,886
Cigar Lake remediation		1,883		—			—		—		—			1,883
Restructuring costs [note 12]		—		—			—		1,800		—			1,800
Loss on sale of assets		31		—			—		—		—			31
Non-segmented expenses														84,242

Earnings (loss) before income taxes and minority interest		165,786		(5,687	)		19,121		25,758		(2,737	)		117,999
Income tax recovery [note 8]														(39,455	)
Minority interest														7,105

Net earnings													$	150,349

-19-

Cameco Corporation
Notes to Consolidated Financial Statements
(Unaudited)

For the six months ended June 30, 2009


				Fuel							Inter-
(thousands)	Uranium			Services		Electricity		Gold			Segment			Total

Revenue	$	779,013		$	135,186	$	240,002	$	250,402		$	(15,626	)	$	1,388,977

Expenses
Products and services sold		425,054			90,961		129,504		209,727			(10,168	)		845,078
Depreciation, depletion and reclamation		66,861			11,500		28,709		60,114			379			167,563
Exploration		22,419			—		—		11,883			—			34,302
Other expense		5,756			14,451		—		—			—			20,207
Cigar Lake remediation		10,192			—		—		—			—			10,192
Restructuring costs [note 12]		—			—		—		(19,100	)		—			(19,100	)
Gain on sale of assets		(2,154	)		—		—		—			—			(2,154	)
Non-segmented expenses															(7,342	)

Earnings (loss) before income taxes and minority interest		250,885			18,274		81,789		(12,222	)		(5,837	)		340,231
Income tax expense [note 8]															39,421
Minority interest															(28,037	)

Net earnings														$	328,847

For the six months ended June 30, 2008


				Fuel							Inter-
(thousands)	Uranium			Services			Electricity		Gold		Segment			Total

Revenue	$	666,500		$	113,576		$	191,370	$	256,169	$	(15,037	)	$	1,212,578

Expenses
Products and services sold		263,715			103,935			137,498		150,439		(11,365	)		644,222
Depreciation, depletion and reclamation		50,537			12,363			22,296		29,076		(290	)		113,982
Exploration		21,643			—			—		10,122		—			31,765
Other expense		4,237			—			—		—		—			4,237
Cigar Lake remediation		6,733			—			—		—		—			6,733
Restructuring costs [note 12]		—			—			—		6,600		—			6,600
Gain on sale of assets		(3,077	)		—			—		—		—			(3,077	)
Non-segmented expenses															128,604

Earnings (loss) before income taxes and minority interest		322,712			(2,722	)		31,576		59,932		(3,382	)		279,512
Income tax recovery [note 8]															(22,699	)
Minority interest															18,482

Net earnings														$	283,729

-20-

EX-99.4 5 o56613exv99w4.htm EXHIBIT 99.4 Exhibit 99.4

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Gerald W. Grandey, president and chief executive officer of Cameco Corporation, certify that:

1.		I have reviewed this quarterly report on Form 6-K of Cameco Corporation;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2009



		“Gerald W. Grandey"
		Gerald W. Grandey
		President and Chief Executive Officer

EX-99.5 6 o56613exv99w5.htm EXHIBIT 99.5 Exhibit 99.5

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, O. Kim Goheen, senior vice-president and chief financial officer, of Cameco Corporation, certify that:

1.		I have reviewed this quarterly report on Form 6-K of Cameco Corporation;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2009



		“O. Kim Goheen”
		O. Kim Goheen
		Senior Vice-President and Chief Financial Officer

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