6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 Under
the Securities Exchange Act of 1934

For the month of April, 2010

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	Notice of 2010 Annual Meeting of Shareholders
99.2	Cameco Management Proxy Circular
99.3	Cameco Proxy Form
99.4	Cameco 2010 Business Overview Brochure
99.5	Cameco 2009 Annual Report

SIGNATURE

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

Date: April 9, 2010	Cameco Corporation
	By:	/s/ Gary M.S. Chad
		Gary M.S. Chad, Q.C.
		Senior Vice-President, Governance, Law and Corporate Secretary

Page 2

EX-99.1

Exhibit 99.1

Notice of our 2010 annual meeting of shareholders

You are invited to our 2010 annual meeting of shareholders

When	Where
Wednesday, May 26, 2010	Cameco Corporation
1:30 p.m.	2121 – 11th Street West
	Saskatoon, Saskatchewan

Your vote is important
If you held common shares in Cameco on March 29, 2010, you are entitled to receive notice of and to vote at this meeting.

This enclosed management proxy circular describes who can vote, what the meeting will cover and how to vote. Please read it carefully.

By order of the board,

“Gary M.S. Chad”

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

Saskatoon, Saskatchewan
April 9, 2010

EX-99.2

Exhibit 99.2

Notice of annual meeting of shareholders to be held on May 26, 2010

Focused on

Cameco
MANAGEMENT PROXY CIRCULAR
April 9, 2010

April 9, 2010

Dear Shareholder,

As a shareholder, you are invited to attend our annual meeting of shareholders on Wednesday, May 26, 2010, at Cameco’s head office in Saskatoon. Attending the shareholder meeting gives you an opportunity to hear first hand about the company, vote in person on the items of business and meet with management, our board of directors and fellow shareholders. If you cannot come to the meeting, you can vote by proxy.

It’s important to vote your shares. The circular contains important information about the meeting, voting, the nominated directors, our governance practices and how we compensate our executives and directors. It also describes the board’s role and responsibilities and the key activities the five board committees undertook in 2009.

On behalf of the board, I would like to thank George Dembroski and Robert Peterson for their contributions and support over many years. Mr. Dembroski has served on Cameco’s board since 1996. As a former Vice Chairman and director of RBC Dominion Securities, Mr. Dembroski brought valuable experience in capital markets and mergers and acquisitions to the board and was particularly vigilant in keeping the board focused on shareholder value. He recently served as chair of the nominating, corporate governance and risk committee and was a member of the audit and human resources and compensation committees.

Mr. Peterson has served on the board since 1994. He was appointed to the Senate of Canada in 2005 and is currently President and Chief Operating Officer of Denro Holdings Ltd., a diversified corporation involved in real estate development, investor fund management and property management. Mr. Peterson brought the government perspective to the board and helped develop our governance and oversight practices, and served as a member of the audit, human resources and compensation and safety, health and environment committees.

Both directors are retiring from the board and we wish them well.

The board and management thank you for your confidence in Cameco. Please remember to vote.

Sincerely,

(signed)

Victor J. Zaleschuk
Chair of the board
Cameco Corporation

What’s inside
Notice of our annual meeting of shareholders	1
Management proxy circular	2
About our shareholder meeting	3
What the meeting will cover	3
Who can vote	4
How to vote	6
About the nominated directors	8
About the auditors	23
Governance at Cameco	24
How we compensate our directors and executives	43
Advisory vote on approach to executive compensation	85
Shareholder proposals	86
Other information	86
Appendixes	87
A Interpretation	87
B Board mandate	88

Notice of our 2010 annual meeting of shareholders

You are invited to our 2010 annual meeting of shareholders

When
Wednesday, May 26, 2010
1:30 p.m. Where
Cameco Corporation
2121 -11^th Street West
Saskatoon, Saskatchewan

Your vote is important

If you held common shares in Cameco on March 29, 2010, you are entitled to receive notice of and to vote at this meeting.

This enclosed management proxy circular describes who can vote, what the meeting will cover and how to vote. Please read it carefully.

By order of the board,

(signed)

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

Saskatoon, Saskatchewan
April 9, 2010

NOTICE OF OUR 2010 ANNUAL MEETING OF SHAREHOLDERS      1

Management proxy circular

You have received this circular because you owned Cameco common shares on March 29, 2010.

As a shareholder, you have the right to attend our annual meeting of shareholders on May 26, 2010 and to vote your shares in person or by proxy.

To encourage you to vote, you may be contacted directly by Cameco employees or representatives of Laurel Hill Advisory Group (Laurel Hill). If you have any concerns or need any assistance voting, please contact Laurel Hill at 1.877.304.0211.

We are paying Laurel Hill approximately $30,000 for their services.

The board of directors has approved the contents of this document and has authorized us to send it to you. We have also sent a copy to each of our directors and to our auditors.

Your package may also include our business overview brochure and 2009 annual report (if you requested a copy). This information is also available on our website (www.cameco.com).

In this document, you and your refer to the shareholder. We, us, our and Cameco mean Cameco Corporation. Shares and Cameco shares mean Cameco’s common shares, unless otherwise indicated.

The information in this management proxy circular is as of March 15, 2010, unless otherwise indicated.

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

(signed)

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

April 9, 2010

2     CAMECO CORPORATION

About our shareholder meeting

Our annual meeting gives you the opportunity to vote on items of Cameco business, receive an update on the company, meet face to face with management and interact with our board of directors.

What the meeting will cover

Directors — see page 8

You will elect directors to our board. About the nominated directors starting on page 8 tells you about the nominated directors, their background and experience, and any board committees they currently sit on. All of the directors are elected for a term of one year.

Auditors — see page 23

You will vote on reappointing the auditors. The board, on the recommendation of the audit committee, has proposed that KPMG LLP (KPMG) be reappointed as our auditors. See page 23 for information about the services KPMG provided in 2009 and the fees we paid them. The board has invited a representative of KPMG to attend the meeting.

Financial statements — see our 2009 annual report or go to www.cameco.com/investors

You will receive the consolidated financial statements for the year ended December 31, 2009, and the auditors’ report on the statements. These are included in our 2009 annual report, which has been mailed to you if you requested a copy. You can also download a copy from our website.

Advisory vote to approach to executive compensation — see page 85

In 2010, you will vote on our approach to executive compensation as disclosed in this circular. Your vote is advisory and non-binding, and will provide the board and the human resources and compensation committee with important feedback.

Other business

If other items of business are properly brought before the meeting or after any adjournment, you (or your proxyholder, if you are voting by proxy) can vote as you see fit. We are not aware of any other items of business to be considered at the meeting.

We need a quorum

We can only hold the meeting and transact business if at the beginning of the meeting we have a quorum — where the people who attend the meeting hold or represent by proxy at least 5% of the total number of issued and outstanding common shares of Cameco.

2010 MANAGEMENT PROXY CIRCULAR     3

Who can vote

We have common shares and one class B share, but only holders of common shares have full voting rights in Cameco.

If you held common shares at the close of business on March 29, 2010 (we call this the record date), you or the person you appoint as your proxyholder can attend the annual meeting and vote your shares. Each Cameco common share you own represents one vote, except where noted below.

As of March 15, 2010, we had 392,940,373 issued and outstanding common shares, and all of these shares are entitled to be voted at the meeting.

Ownership and voting restrictions

There are restrictions on issuing, transferring and owning Cameco common shares whether you own the shares as a registered shareholder, hold them beneficially or control your investment interest in Cameco directly or indirectly. These are described in the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) (ENL Reorganization Act) and our company articles.

The following is a summary of the limitations listed in our company articles. See Appendix A for the definitions in the ENL Reorganization Act.

Individuals

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

Non-residents

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

Voting restrictions

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

Enforcement

The company articles allow us to enforce the ownership and voting restrictions by:

• suspending voting rights

• forfeiting dividends

• prohibiting the issue and transfer of Cameco shares

• requiring the sale or disposition of Cameco shares

• suspending all other shareholder rights

To verify compliance with restrictions on ownership and voting of Cameco shares, we require shareholders to declare their residency, ownership of Cameco shares and other things relating to the restrictions. Nominees such as banks, trust companies, securities brokers or other financial institutions who hold the shares on behalf of beneficial shareholders need to make the declaration on their behalf.

How Cameco was formed

Cameco Corporation was formed in 1988 by privatizing two crown corporations, combining the uranium mining and milling operations of Saskatchewan Mining Development Corporation and the uranium mining, refining and conversion operations of Eldorado Nuclear Limited.

Cameco received these assets in exchange for:

• assuming substantially all of the current liabilities and certain other liabilities of the two companies

• issuing common shares

• issuing one class B share

• issuing promissory notes.

The company was incorporated under the Canada Business Corporations Act.

Ownership restrictions were put in place so that Cameco would remain Canadian owned. The uranium mining industry has restrictions on ownership by non-residents.

You can find more information about our history in our 2010 annual information form, which is available on our website (www.cameco.com/investors).

Questions?

If you have questions about completing the proxy form or residency declaration, or about the meeting in general, contact our proxy solicitation agent, Laurel Hill Advisory Group:

Phone:	1.877.304.0211
	(toll free within North America)
	1.416.637.4661
	(collect calls from outside North America)
	1.416.637.4661
	(institutional investors or brokers)

4      CAMECO CORPORATION

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

The board will use these declarations or other information to decide whether there has been a contravention of our ownership restrictions.

Principal holders of our common shares

Management, to the best of its knowledge, is not aware of any shareholder holding 5% or more of our common shares.

About Class B shares

The province of Saskatchewan holds our one class B share. This entitles the province to receive notices of and attend all meetings of shareholders, for any class or series.

The class B shareholder can only vote at a meeting of class B shareholders, and only as a class if there is a proposal to:

• amend Part 1 of Schedule B of the articles, which states that:

• Cameco’s registered office and head office operations must be in Saskatchewan

• the vice-chairman of the board, chief executive officer (CEO), president, chief financial officer (CFO) and generally all of the senior officers (vice-presidents and above) must live in Saskatchewan

• all annual meetings of shareholders must be held in Saskatchewan

• amalgamate, if it would require an amendment to Part 1 of Schedule B of the articles, or

• amend the articles, in a way that would change the rights of class B shareholders

2010 MANAGEMENT PROXY CIRCULAR      5

How to vote

You can vote by proxy, or you can attend the annual meeting and vote your shares in person.

Voting by proxy

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

Gerald W. Grandey, president and CEO of Cameco, or in his absence Gary M.S. Chad, senior vice-president, governance, law and corporate secretary (the Cameco proxyholders), have agreed to act as proxyholders to vote your shares at the meeting according to your instructions. Alternatively, you can appoint someone else to represent you and vote your shares at the meeting.

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

• for electing the nominated directors who are listed in the form and management proxy circular

• for appointing KPMG LLP as auditors

• for the advisory resolution on our approach to executive compensation

If for any reason before or during the meeting a nominated director becomes unable to serve, the Cameco proxyholders have the right to vote for another nominated director at their discretion, unless you have directed that your shares be withheld from voting.

If there are amendments or other items of business that are properly brought before the meeting, the proxyholder you have appointed can vote as he or she sees fit.

Proxy voting process

Non-registered shareholders

If you plan to vote by proxy, follow the instructions on the enclosed form to vote your shares by mail or via the internet. If you plan to appoint a proxyholder to attend the meeting for you, each financial institution has its own voting instructions so be sure to follow the instructions on the enclosed form. You are subject to an earlier deadline to give your nominee enough time to send your instructions to our transfer agent, CIBC Mellon Trust Company (CIBC Mellon) before the meeting, so be sure to send your completed form right away. If you have any questions or need help voting, please contact our proxy solicitation agent, Laurel Hill Advisory Group, at 1.877.304.0211.

Registered shareholders

You can vote by:

1.	fax
2.	mail
3.	internet
4.	appointing someone else to attend the meeting and vote your shares for you

By fax

Complete the enclosed proxy form, including the section on declaration of residency, sign and date it and fax both pages of the form to:

CIBC Mellon Trust Company
Attention: Proxy department
1.866.781.3111 (toll free within North America)
416.368.2502 (from outside North America)

By mail

Complete your proxy form, including the section on declaration of residency, sign and date it, and send it to CIBC Mellon in the envelope provided.

If you are mailing your proxy and did not receive a return envelope, please send the completed form to:

CIBC Mellon Trust Company
Attention: Proxy department
P.O. Box 721
Agincourt, Ontario M1S 0A1

6      CAMECO CORPORATION

On the internet

Go to www.eproxyvoting.com/cameco and follow the instructions on screen. You will need your control number, which appears below your name and address on your proxy form. We need to receive your voting instructions before 1:30 p.m. CST on Monday, May 24, 2010.

Appointing someone else to attend the meeting and vote your shares for you

Print the name of the person you are appointing as your proxyholder in the space provided. This person does not need to be a shareholder. Make sure the person you are appointing is aware and attends the meeting. Your proxyholder will need to see a representative of CIBC Mellon when they arrive at the meeting.

The voting process is different depending on whether you are a registered or non-registered shareholder

You are a registered shareholder if your name appears on your share certificate.

You are a non-registered shareholder if your bank, trust company, securities broker, trustee or other financial institution holds your shares (your nominee). This means the shares are registered in your nominee’s name, and you are the beneficial shareholder.

Signing the proxy

If you are an administrator, trustee, attorney or guardian for a person who beneficially holds or controls Cameco shares, or an authorized officer or attorney acting on behalf of a corporation, estate or trust that beneficially holds or controls our common shares, please follow the instructions on the proxy form.

Send us your proxy form right away

Your vote will be counted if CIBC Mellon receives your vote online before 1:30 p.m. CST on Monday, May 24, 2010, or your properly completed proxy form via fax or mail before 1:30 p.m. CST on Tuesday, May 25, 2010. They must receive this information at least 24 hours before the start of any meeting that is postponed or adjourned.

Voting in person

If you want to vote in person at the meeting:

Non-registered shareholders

Follow the instructions on the enclosed form, or contact your nominee to find out how you can attend the meeting and vote in person.

Registered shareholders

Do not complete the enclosed proxy form. When you arrive at the meeting, please see a representative of CIBC Mellon. Your vote will be taken and counted during the meeting.

Changing your vote

If you have voted by proxy, you can revoke your vote in the following ways:

Non-registered shareholders

Instructions that are provided on a form with a later date, or at a later time in the case of voting on the internet, will revoke any prior instructions provided they are received at least 24 hours before the meeting. Otherwise, contact your nominee if you want to revoke your proxy or change your voting instructions, or if you change your mind and decide to vote in person.

Registered shareholders

Instructions that are provided by a form with a later date at least 24 hours before the meeting, or at a later time at least 48 hours before the meeting in the case of voting on the internet, will revoke any prior instructions. Otherwise:

• send a notice in writing to the corporate secretary at Cameco, at 2121 — 11^th Street West, Saskatoon, Saskatchewan S7M 1J3 so he receives it by 4:30 p.m. CST on May 25, 2010. If the meeting is postponed or adjourned, you will need to send the notice by 4:30 p.m. CST at least one business day before the postponed or adjourned meeting is held.

• give notice in writing to the chair of the meeting, at the meeting or the postponed or adjourned meeting

The notice can be from you or your attorney if he or she has your written authorization. If the shares are owned by a corporation, the written notice must be from its authorized officer or attorney.

Voting results

CIBC Mellon, our transfer agent, counts the votes on our behalf. This is carried out independently to make sure the individual shareholder votes are kept confidential. CIBC Mellon only sends a proxy form to us when:

• it is clear that a shareholder wants to communicate with management

• the law requires it.

Go to www.cameco.com/investors or www.sedar.com after the meeting to see the voting results.

2010 MANAGEMENT PROXY CIRCULAR      7

About the nominated directors

Our board of directors is responsible for overseeing management and Cameco’s business affairs. As shareholders, you elect the board as your representatives. This section tells you about the directors who have been nominated to serve on our board.

This year the board has decided that 12 directors are to be elected. All of the nominated directors currently serve on the board. George Dembroski and Robert Peterson are retiring from the board because they will both be at least 72 as of our next annual meeting, which is the retirement age for our directors.

You can vote for all of these directors, vote for some of them and withhold votes for others, or withhold votes for all of them. Unless otherwise instructed, the named proxyholders will vote for all of the nominated directors listed on pages 9 to 14.

See the following pages for key information about the directors:

Director profiles	9
Meeting attendance	16
Skills and experience	18
Continuing education and development	21

Our goal is to assemble a board that operates cohesively, and challenges and questions management in a constructive way. When assessing directors for the board, we look at:

• the overall mix of their skills and experience

• how active they are in understanding our business and participating in meetings

• their character, integrity, judgment and record of achievement

• diversity (including gender, aboriginal heritage, age and geographic representation such as Canada, the US, Europe and Asia)

We also look at a director’s ability to contribute to our board, the time they have available and their other directorships because these are important factors that enhance the quality of the board’s decision-making and its oversight of management and our business affairs overall.

All of the nominated directors are independent, except for Gerald W. Grandey, our president and CEO, and Donald H. F. Deranger, president of Points Athabasca Contracting Ltd., which provides construction and other services to Cameco. (We paid Points Athabasca Contracting Ltd. $30.8 million in 2009 for construction and contracting services.) Each of the nominated directors is eligible to serve as a director and has expressed his or her willingness to do so. Directors who are elected will serve until the end of the next annual meeting, or until a successor is elected or appointed.

Our policy on majority voting

If a director receives more withheld votes than for votes, he or she will offer to resign. Our nominating, corporate governance and risk committee will review the matter and then recommend to the board whether to accept the resignation. The director will not participate in any board or committee deliberations on the matter.

The board will announce its decision within 90 days of the meeting. If it rejects the offer, it will disclose the reasons why. If the board accepts the offer, it may appoint a new director to fill the vacancy.

The board adopted this policy in 2006 on the recommendation of the nominating, corporate governance and risk committee, and we believe it reflects good corporate governance.

Serving together on other boards

A. Anne McLellan and Victor J. Zaleschuk serve together on the boards of Agrium Inc. and Nexen Inc.

They do not sit on the same committees at Agrium, but serve together on Nexen’s finance committee and health, safety, environment and social responsibility committee.

8      CAMECO CORPORATION

Director profiles

The table below provides information about each nominated director, including their background and experience, other directorships and Cameco securities they held as of December 31, 2009.

John H. Clappison
63

Toronto, Ontario
Canada

Director since 2006
Independent

John H. Clappison is the former managing partner of the Greater Toronto Area office of PricewaterhouseCoopers LLP. He is a fellow of the Institute of Chartered Accountants and worked with PwC (or its predecessor firm) for 37 years. Mr. Clappison brings extensive financial experience to Cameco’s board with his accounting expertise and as a financial expert and chair of the audit committee.

In addition to the public company boards listed below, Mr. Clappison serves as a director of the private company, Summitt Energy Holdings LP, and is actively involved with the Canadian Foundation for Facial Plastic and Reconstructive Surgery, Shaw Festival Theatre Endowment Foundation and The Corporation of Massey Hall and Roy Thomson Hall Endowment Foundation. Other than the public company boards listed below, Mr. Clappison has not served on any other public company boards over the past five years.

Cameco board and board committees	Meeting attendance			Other public company boards
Board of directors	12 of 12	100	%	Canadian Real Estate Investment Trust
Audit (chair)	6 of 6	100	%	Rogers Communications Inc.
Reserves oversight	1 of 1	100	%	Sun Life Financial Inc.
Safety, health and environment	5 of 5	100	%

Securities held:

							Total value of		Meets share
	Cameco				Total Cameco		Cameco shares and		ownership
Fiscal year	shares		DSUs		shares and DSUs		DSUs		target
2009		2,000		7,494		9,494	$	322,131	no — has until
2008		2,000		4,869		6,869	$	144,592	Jan. 3, 2011 to
Change		—		2,625		2,625	$	177,539	acquire additional
									shares and DSUs
									equal to $360,000

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $322,131 in 2009, $144,592 in 2008

Joe F. Colvin
67

Kiawah Island, South Carolina
USA

Director since 1999
Independent

Joe F. Colvin is a board director and the vice president/president-elect of the American Nuclear Society. He was elected president emeritus of the Nuclear Energy Institute Inc. (the Washington-based policy organization for the US nuclear energy industry) in February 2005, after serving as the Institute’s president and CEO from 1996 to 2005. Mr. Colvin also held senior management positions with the Nuclear Management and Resources Committee and the Institute for Nuclear Power Operations, and served as a line officer with the US Navy nuclear submarine program for 20 years. Mr. Colvin also serves as a director of the Foundation for Nuclear Studies. Other than the public company board listed below, he has not served on any other public company boards over the past five years.

Mr. Colvin has a bachelor of science degree in electrical engineering from the University of New Mexico, has completed advanced studies in nuclear engineering and is a graduate of Harvard University’s advanced management program. Mr. Colvin brings a wealth of knowledge of the nuclear industry to the board and his role as chair of the safety, health and environment committee.

Cameco board and board committees	Meeting attendance			Other public company boards
Board of directors	12 of 12	100	%	American Ecology Corporation
Nominating, corporate governance and risk	7 of 7	100	%
Safety, health and environment (chair)	5 of 5	100	%

Securities held:

						Total value of		Meets share
	Cameco			Total Cameco		Cameco shares and		ownership
Fiscal year	shares		DSUs	shares and DSUs		DSUs		target
2009	4,000		81,502	85,502	$	2,901,083	Yes
2008	6,000		77,781	83,781	$	1,763,590
Change	(2,000	)	3,721	1,721	$	1,137,493

Options held : nil

Total amount of equity at risk (Cameco shares, DSUs and options): $2,901,083 in 2009, $1,763,590 in 2008

2010 MANAGEMENT PROXY CIRCULAR      9

James R. Curtiss
56

Brookeville, Maryland
USA

Director since 1994
Independent

James R. Curtiss has been the principal of Curtiss Law since April 2008. He was a partner with the law firm of Winston & Strawn LLP in Washington, DC, where he concentrated his practice in energy policy and nuclear regulatory law from 1993 until March 2008. He was also a commissioner with the US Nuclear Regulatory Commission from 1988 to 1993. Other than the public company board listed below, Mr. Curtiss has not served on any other public company boards over the past five years.

Mr. Curtiss received a bachelor of arts and a juris doctorate from the University of Nebraska. Mr. Curtiss is a frequent speaker at nuclear industry conferences and has spoken on topics such as licensing and regulatory reform, advanced reactors and fuel cycle issues. Mr. Curtiss brings legal experience in the nuclear industry to the board, particularly in the area of nuclear regulatory law. Mr. Curtiss has been the chair of our human resources and compensation committee since 2002, and has kept abreast of the wide range of issues in executive compensation through various director education seminars.

Cameco board and board committee	Meeting attendance			Other public company boards
Board of directors	12 of 12	100	%	Constellation Energy Group
Human resources and compensation (chair)	8 of 8	100	%
Nominating, corporate governance and risk	4 of 4	100	%
Safety, health and environment	2 of 2	100	%

Securities held:

							Total value of
	Cameco			Total Cameco			Cameco shares		Meets share
Fiscal year	shares		DSUs	shares and DSUs			and DSUs		ownership target
2009	5,700		92,120	97,820		$	3,319,033	yes
2008	15,600		88,298	103,898		$	2,187,053
Change	(9,900	)	3,822	(6,078	)	$	1,131,980

Options held:

			Total		Value of in-the-
Date granted	Expiry date	Exercise price	unexercised		money options
Feb 26/02	Feb 25/10	7.307	6,000	$	556,193
March 10/03	March 9/11	5.880	12,000
Sept 21/04	Sept 20/14	15.792	3,300

Total amount of equity at risk (Cameco shares, DSUs and options): $3,875,226 in 2009, $2,468,902 in 2008

Donald H.F. Deranger
54

Prince Albert, Saskatchewan
Canada

Director since 2009
Not independent

Donald H.F. Deranger has been the Athabasca Vice Chief of the Prince Albert Grand Council since 2003. He has won a number of awards for his initiatives in employment, training and economic development for members of the Athabasca sector in northern Saskatchewan.

Mr. Deranger is an advisor to the Athabasca Basin Development Corporation and president of Points Athabasca Contracting Ltd., which does business with Cameco. He also serves as a director of the Prince Albert Development Corporation, Mackenzie River Basin Board and the City of Prince Albert Board of Police Commissioners, and is a member of the Saskatchewan Fisheries Advisory Committee. Mr. Deranger has not served on any other public company boards over the past five years.

As a leader in the Saskatchewan aboriginal community, Mr. Deranger brings to the board a deep understanding of the culture and peoples of northern Saskatchewan where Cameco’s richest assets are located. Mr. Deranger also worked as a uranium miner many years ago and brings this personal experience to the board and as a member of the safety, health and environment committee.

Cameco board and board committees	Meeting attendance			Other public company boards
Board of directors	6 of 6	100	%	none
Reserves oversight	1 of 1	100	%
Safety, health and environment	3 of 3	100	%

Securities held:

					Total value of
	Cameco		Total Cameco		Cameco shares	Meets share
Fiscal year	shares	DSUs	shares and DSUs		and DSUs	ownership target
2009	0	1,739	1,739	$	59,004	no — has until
2008	n/a	n/a	n/a		n/a	May 27, 2014 to
Change	—	1,739	1,739	$	59,004	acquire additional
						shares and DSUs
						equal to $360,000

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $59,004 in 2009

10     CAMECO CORPORATION

James K. Gowans
58

Toronto, Ontario
Canada

Director since 2009
Independent

James K. Gowans is the chief operating officer and chief technical officer of DeBeers SA and president and CEO of DeBeers Canada Inc. (a diamond exploration and mining company). Prior to that, he was the senior vice-president and COO of PT Inco in Indonesia (a nickel producing company) from 2002 to 2006. In addition to the public company board listed below, Mr. Gowans sits on the board of DeBeers Canada Inc. and is the chair of The Mining Association of Canada. He is the past-president of the Canadian Institute of Mining, Metallurgy and Petroleum, and served on the board of Bison Gold Resources Inc., a junior exploration public company, from 2006 to 2008.

Mr. Gowans received a bachelor of applied science in mineral engineering (mining and mineral processing) degree from the University of British Columbia and attended the Banff School of Advanced Management. Mr. Gowans brings to the board experience in exploration and mining and as a CEO of a mining company. His mining knowledge and perspective on the importance of corporate social responsibility are valuable as a member of our reserves oversight and our safety, health and environment committees.

Cameco board and board committees	Meeting attendance			Other public company boards
Board of directors	6 of 6	100	%	PhosCan Chemical Corp.
Nominating, corporate governance and risk	4 of 4	100	%
Reserves oversight	1 of 1	100	%
Safety, health and environment	3 of 3	100	%

Securities held:

					Total value of
	Cameco		Total Cameco		Cameco shares	Meets share
Fiscal year	shares	DSUs	shares and DSUs		and DSUs	ownership target
2009	1,000	3,179	4,179	$	141,793	no — has until
2008	n/a	n/a	n/a		n/a	May 27, 2014 to
Change	1,000	3,179	4,179	$	141,793	acquire additional
						shares and DSUs
						equal to $360,000

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $141,793 in 2009

Gerald W. Grandey
63

Saskatoon, Saskatchewan
Canada

Director since 2000

Not independent — President and CEO

Gerald W. Grandey is the president and CEO of Cameco Corporation. He has a degree in geophysical engineering from the Colorado School of Mines and a law degree from Northwestern University. Mr. Grandey’s presence on the board is fundamental to maintaining the necessary level of communication between the board and management for a well run organization. He also provides the board with knowledge and insights to further their understanding of all aspects of the nuclear industry.

Mr. Grandey currently serves on the board of the Nuclear Energy Institute, and the boards of the Saskatoon Chapters of the YMCA and Junior Achievement. He served on the public company board of Centerra Gold Inc., a gold mining company and former Cameco subsidiary, from 2004 to 2007.

Cameco board and board committees	Meeting attendance			Other public company boards
Board of directors	11* of 12	92	%	none
Not a member of any committee because he is president and CEO

* Mr. Grandey could not attend the short board meeting immediately following the 2009 annual meeting of shareholders because he was attending a Cameco press conference.

Securities held:

					Total value of
	Cameco		Total Cameco		Cameco shares and		Meets share
Fiscal year	shares	DSUs	shares and DSUs		DSUs		ownership target
2009	314,666	—	314,666	$	10,676,617	yes
2008	309,302	—	309,302	$	6,510,807
Change	5,364	—	5,364	$	4,165,810

Options held: see Incentive plan awards on page 77

Total amount of equity at risk (Cameco shares and options): $32,231,359 in 2009, $15,984,249 in 2008

2010 MANAGEMENT PROXY CIRCULAR      11

Nancy E. Hopkins
55
Saskatoon, Saskatchewan
Canada
Director since 1992
Independent

Nancy E. Hopkins, Q.C. is a partner with the law firm of McDougall Gauley, LLP in Saskatoon, where she concentrates her practice on corporate and commercial law and taxation. In addition to the public company boards listed below, Ms. Hopkins is vice-chair of the board of governors of the University of Saskatchewan, chair of the board of the Saskatoon Airport Authority and serves as a director of the Canada Pension Plan Investment Board. Except for the public companies listed below, she has not served on any other public company boards over the past five years.

Ms. Hopkins has a bachelor of commerce degree and a bachelor of laws degree from the University of Saskatchewan. She is an honorary member of the Institute of Chartered Accountants of Saskatchewan.

Ms. Hopkins brings to the board extensive experience in the Saskatchewan business community. Her board experience with a wide range of respected organizations has provided her with a strong governance background and a wealth of knowledge for assuming her new role as chair of our nominating, corporate governance and risk committee.

Cameco board and board committees	Meeting attendance		Other public company boards
Board of directors	11 of 12	92%	Growthworks Canadian Fund Ltd.
Audit	6 of 6	100%	Growthworks Commercialization Fund Ltd.
Nominating, corporate governance and risk (chair)	7 of 7	100%

Securities held:

				Total value of
	Cameco		Total Cameco	Cameco shares and	Meets share
Fiscal year	shares	DSUs	shares and DSUs	DSUs	ownership target
2009	11,500	13,443	24,943	$846,316	yes
2008	11,500	10,761	22,261	$468,594
Change	—	2,682	2,682	$377,722

Options held:

			Total	Value of in-the-
Date granted	Expiry date	Exercise price	Unexercised	money options
Feb 26/02	Feb 25/10	$7.307	9,000	$	996,957
Mar 10/03	Mar 9/11	$5.880	27,000

Total amount of equity at risk (Cameco shares, DSUs and options): $1,843,273 in 2009, $1,001,871 in 2008

Oyvind Hushovd
60
Kristiansand S.,
Norway
Director since 2003
Independent

Oyvind Hushovd is a corporate director and the former chair and CEO of Gabriel Resources Ltd. (a precious metals exploration and development company), retiring in 2005. Prior to that, he was the president and CEO of Falconbridge Limited (a nickel and copper mining company) from 1996 to 2002. In addition to the public company boards listed below, Mr. Hushovd sits on the board of Ivanhoe Nickel & Platinum Ltd, a privately held corporation. During the last five years, he served on the public company boards of Gabriel Resources Ltd. (2002-2006), Lionore Mining International Limited (2002-2007), Nuinsco Resources Limited (2002-2005) and Western Oil Sands Inc. (2003-2007).

Mr. Hushovd received a master of economics and business administration degree from the Norwegian School of Business and a master of law degree from the University of Oslo. He brings many years of experience as a mining executive to the board. His mining knowledge is very important as a member of the reserves oversight committee, and his financial experience as chief financial officer of Falconbridge Limited is valuable as a member of the audit committee.

Cameco board and board committees	Meeting attendance		Other public company boards
Board of directors	12 of 12	100%	Inmet Mining Corporation
Audit	6 of 6	100%	Nyrstar NV
Human resources and compensation	8 of 8	100%
Reserves oversight	2 of 2	100%

Securities held:

				Total value of
	Cameco		Total Cameco	Cameco shares	Meets share
Fiscal year	Shares	DSUs	shares and DSUs	and DSUs	ownership target
2009	0	22,825	22,825	$774,452	yes
2008	0	17,306	17,306	$364,291
Change	—	5,519	5,519	$410,161

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $774,452 in 2009, $364,291 in 2008

12      CAMECO CORPORATION

J.W. George Ivany
71
Kelowna, British Columbia
Canada
Director since 1999
Independent

J.W. George Ivany is a corporate director and is the former president and vice-chancellor of the University of Saskatchewan. Dr. Ivany received a bachelor of science degree in chemistry and physics and a diploma in education from the Memorial University of Newfoundland. He received a master of arts degree in physics education from the Teachers College, Columbia University and a PhD in secondary education from the University of Alberta. He has not served on any other public company boards over the past five years.

Dr. Ivany brings his scientific and educational training to the board, along with his management and governance experience in running a major Canadian university.

Cameco board and board committees	Meeting attendance		Other public company boards
Board of directors	12 of 12	100%	none
Audit	6 of 6	100%
Human resources and compensation	8 of 8	100%
Nominating, corporate governance and risk	4 of 4	100%
Safety, health and environment	3 of 3	100%

Securities held:

				Total value of
	Cameco		Total Cameco	Cameco shares	Meets share
Fiscal year	shares	DSUs	shares and DSUs	and DSUs	ownership target
2009	0	25,707	25,707	$872,239	yes
2008	0	22,908	22,908	$482,213
Change	—	2,799	2,799	$390,026

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $872,239 in 2009, $564,671 in 2008

A. Anne McLellan
59
Edmonton, Alberta
Canada
Director since 2006
Independent

The Honourable A. Anne McLellan is a former Deputy Prime Minister of Canada and has held several senior cabinet positions, including federal Minister of Natural Resources, Minister of Health, Minister of Justice and Attorney General of Canada, and federal interlocutor of Métis and non-status Indians. Prior to entering politics in 1993, Ms. McLellan was a law professor and administrator at the University of Alberta. Since leaving politics, she has been appointed distinguished scholar in residence at the University of Alberta in the Institute for United States Policy Studies and is counsel in the national law firm of Bennett Jones, LLP.

Ms. McLellan holds a bachelor of arts degree and a law degree from Dalhousie University, and a master of laws degree from King’s College, University of London. In 2007, Ms. McLellan completed the Directors’ Education Program through the Corporate Governance College. She brings an understanding of government regulatory matters and international affairs to the board. As a member of the human resources and compensation committee, nominating corporate governance and risk committee and the safety, health and environment committee, Ms. McLellan brings diverse management experience gained as a senior Minister and Deputy Prime Minister of the Government of Canada and from her work on other boards and with non-profit organizations.

In addition to the public company boards listed below, Ms. McLellan serves on the boards of Canadian Business for Social Responsibility, the Royal Alexandra Hospital Charitable Foundation, the Edmonton Airport Authority and the Edmonton Chapter of Habitat for Humanity. She is a Trudeau Foundation mentor and the chair of the 2010 campaign for the United Way of Capital Region (Edmonton). Except for the public company boards listed below, she has not served on any other public company boards over the past five years.

Cameco board and board committees	Meeting attendance		Other public company boards
Board of directors	11 of 12	92%	Agrium Inc.
Human resources and compensation	8 of 8	100%	Nexen Inc.
Nominating, corporate governance and risk	7 of 7	100%
Safety, health and environment	5 of 5	100%

Securities held:

				Total value of	Meets share
	Cameco		Total Cameco	Cameco shares and	ownership
Fiscal year	shares	DSUs	shares and DSUs	DSUs	target
2009	100	13,331	13,431	$455,714	yes
2008	100	10,650	10,750	$226,288
Change	—	2,681	2,681	$229,426

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $455,714 in 2009, $226,288 in 2008

2010 MANAGEMENT PROXY CIRCULAR      13

A. Neil McMillan
58
Saskatoon, Saskatchewan
Canada
Director since 2002
Independent

A. Neil McMillan is the president and CEO of Claude Resources Inc. (a Saskatchewan-based gold mining and oil and gas producing company). He previously served on the board of Atomic Energy Canada Ltd. (a Canadian government nuclear reactor production and services company). Except for the public company boards listed below, Mr. McMillan has not served on any other public company boards over the past five years.

Mr. McMillan received a bachelor of arts degree in history and sociology from the University of Saskatchewan, and is a former member of the Saskatchewan legislature. Prior to joining Claude Resources Inc. in 1995, Mr. McMillan worked with RBC Dominion Securities Inc. as a registered representative and the Saskatoon branch manager.

Mr. McMillan’s experience as the CEO of a Saskatchewan-based mining company gives the board access to a ground level view of many of the daily mining risks and opportunities faced by Cameco. His background as an investment adviser and legislator are valuable when the board is reviewing investment opportunities. Mr. McMillan’s knowledge and experience of the mining industry assist in the board’s oversight of regulatory matters and are important attributes as he assumes his new role as chair of our reserves oversight committee.

Cameco board and board committees	Meeting attendance		Other public company boards
Board of directors	12 of 12	100%	Claude Resources Inc.
Audit	6 of 6	100%	Shore Gold Inc.
Reserves oversight (chair)	2 of 2	100%
Safety, health and environment	2 of 2	100%

Securities held:

				Total value of
	Cameco		Total Cameco	Cameco shares and	Meets share
Fiscal year	shares	DSUs	shares and DSUs	DSUs	ownership target
2009	600	18,680	19,280	$654,170	yes
2008	600	15,948	16,548	$348,335
Change	—	2,732	2,732	$305,835

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $654,170 in 2009, $348,335 in 2008

Victor J. Zaleschuk
66
Calgary, Alberta
Canada
Director since 2001
Independent

Victor J. Zaleschuk is a corporate director and chair of Cameco’s board of directors. He is the former president and CEO of Nexen Inc., a publicly traded independent global energy and chemicals company. Mr. Zaleschuk brings to the board his vast experience in the resource industry as a former CEO of a major Canadian oil and gas resource company with international holdings, a financial background as a former chief financial officer and experience in mergers and acquisitions.

Mr. Zaleschuk has been a chartered accountant since 1967 and holds a bachelor of commerce degree from the University of Saskatchewan. Except for the public company boards listed below, Mr. Zaleschuk has not served on any other public company boards over the past five years.

Cameco board and board committees*	Meeting attendance		Other public company boards
Board of directors (chair)	12 of 12	100%	Agrium Inc.
Human resources and compensation	5 of 5	100%	Nexen Inc.
Nominating, corporate governance and risk	4 of 4	100%
Reserves oversight	2 of 2	100%

* As board chair, Mr. Zaleschuk also attended 13 board committee meetings in an ex officio capacity.

Securities held:

				Total value of
	Cameco		Total Cameco shares	Cameco shares and	Meets share
Fiscal year	shares	DSUs	and DSUs	DSUs	ownership target
2009	10,615	43,605	54,220	$1,839,685	yes
2008	10,615	35,106	45,721	$962,427
Change	—	8,499	8,499	$877,258

Options held:

			Total	Value of in-the-
Date granted	Expiry	Exercise price	unexercised	money options
Mar 10/03	Mar 9/11	$5.880	18,000	$504,900

Total amount of equity at risk (Cameco shares, DSUs and options): $2,344,585 in 2009, $1,482,861 in 2008

14     CAMECO CORPORATION

Notes to the director profiles:

• Each director has provided the information about the Cameco shares they own or exercise control or direction over.

• DSUs refer to deferred share units under our DSU plan for directors.

• We calculated the total value of Cameco shares and DSUs using $33.93 for 2009 and $21.05 for 2008, the year-end closing prices of Cameco shares on the Toronto Stock Exchange (TSX).

• Options held refer to stock options under our plan that have not been exercised. The board stopped granting options to directors on October 28, 2003. In 2004, Mr. Curtiss exercised reload options to receive additional options with a 10-year term. We stopped awarding reload options in 1999.

• The exercise prices and number of options have been adjusted to reflect stock splits of Cameco shares.

• The in-the-money value is calculated as the difference between $33.93 (the 2009 year-end closing price of Cameco shares on the TSX) and the exercise price of the options, multiplied by the number of options held at December 31, 2009.

2010 MANAGEMENT PROXY CIRCULAR      15

Meeting attendance

We believe that an active board governs more effectively, so we expect directors to attend all board meetings, all of their respective committee meetings, and the annual meeting of shareholders. Directors can participate by teleconference if they cannot attend in person. The table below shows the number of board and committee meetings each director attended in 2009:

Name		Board meetings attended				Committee meetings attended			Total meetings attended
John S. Auston	5 of 6		83	%	3 of 5		60	%	8 of 11	73	%
John H. Clappison	12 of 12		100	%	12 of 12		100	%	24 of 24	100	%
Joe F. Colvin	12 of 12		100	%	12 of 12		100	%	24 of 24	100	%
Harry D. Cook	5 of 6		83	%	7 of 7		100	%	12 of 13	92	%
James R. Curtiss	12 of 12		100	%	14 of 14		100	%	26 of 26	100	%
George S. Dembroski	11 of 12		92	%	15 of 18		83	%	26 of 30	87	%
Donald H.F. Deranger	6 of 6		100	%	4 of 4		100	%	10 of 10	100	%
James K. Gowans	6 of 6		100	%	8 of 8		100	%	14 of 14	100	%
Gerald W. Grandey	11 of 12		92	%	n/a		n/a		11 of 12	92	%
Nancy E. Hopkins	11 of 12		92	%	13 of 13		100	%	24 of 25	96	%
Oyvind Hushovd	12 of 12		100	%	16 of 16		100	%	28 of 28	100	%
J.W. George Ivany	12 of 12		100	%	21 of 21		100	%	33 of 33	100	%
A. Anne McLellan	11 of 12		92	%	20 of 20		100	%	31 of 32	97	%
A. Neil McMillan	12 of 12		100	%	10 of 10		100	%	22 of 22	100	%
Robert W. Peterson	12 of 12		100	%	19 of 19		100	%	31 of 31	100	%
Victor J. Zaleschuk	12 of 12		100	%	11 of 11		100	%	23 of 23	100	%

Mr. Auston could not attend one board meeting and two committee meetings due to illness. Mr. Auston and Mr. Cook resigned from the board on May 27, 2009.

Mr. Grandey could not attend the short board meeting immediately following the 2009 annual meeting because he was attending a Cameco press conference. Mr. Grandey, as president and CEO of Cameco, is not a member of any board committees so they can operate independently of management.

Mr. Zaleschuk also attended 13 committee meetings in an ex-officio capacity, as chair of the board.

16       CAMECO CORPORATION

The table below shows the current committee membership, director independence and the total number of board and committee meetings held in 2009:

					Nominating,
			Human resources and		corporate				Safety, health and
			compensation		governance and risk		Reserves oversight		environment
Name	Audit committee		committee		committee		committee		committee
Independent directors
John H. Clappison	Chair									•
Joe F. Colvin						•			Chair
James R. Curtiss			Chair			•
George S. Dembroski		•		•		•
James K. Gowans						•		•		•
Nancy E. Hopkins		•			Chair
Oyvind Hushovd		•		•				•
J.W. George Ivany		•		•						•
A. Anne McLellan				•		•				•
A. Neil McMillan		•					Chair
Robert W. Peterson		•		•						•
Victor J. Zaleschuk								•
Non-independent directors
Donald H.F. Deranger								•		•
Gerald W. Grandey
Total meetings in 2009 Board: 12		6		8		7		2		5

2010 MANAGEMENT PROXY CIRCULAR      17

Skills and experience

A board with a broad mix of skills and expertise can more effectively oversee the wide range of issues that arise with a company of our size and complexity, and make more informed decisions.

To help with the board’s ongoing development, assist in recruiting new directors, and enhance the quality of the board overall as we embark on our ambitious growth strategy, in 2009 the nominating, corporate governance and risk committee:

• completed a comprehensive review of the board skills matrix

• asked the directors to complete a self-assessment against the new matrix

• carried out a survey of board diversity

The committee will use this information when it is recruiting new directors to the board. You can find information about board renewal and director tenure on page 31.

Skills matrix

The committee retained an independent consultant to assist with the effort. Together, they developed a seven-step review that solicited input from the committee, the board chair and senior management at critical stages:

The new skills matrix has 14 categories of skills and attributes, and all of the directors, including Mr. Dembroski and Mr. Peterson, completed a self-assessment of their skills.

The matrix includes three core skills and attributes we expect of all directors who serve on our board. The table below lists the core competencies and the number of directors by level according to their self-assessments.

Self-assessment of core skills and attributes	Number of directors who ranked themselves in these areas
(expected of all directors)	Outstanding		Strong		Average
Independent minded Willingness to articulate and challenge points of view with management and fellow directors		12		2		0
Team player Respectful, collegial approach and willingness to step up to share expertise and lead as appropriate		14		0		0
Financially literate Comfortable with reading, interpreting and working with basic financial reports; demonstrates understanding of the key financial levers of the business		8		4		2

18    CAMECO CORPORATION

The next table lists the 11 categories of skills and experience that are essential to the board overall, to effectively oversee and act as a strategic resource for the company. The table also illustrates the number of directors who have the indicated level of expertise according to their self-assessments.

			Strong working		Basic level of
Self-assessment of skills and experience	Expert		knowledge		knowledge
Managing/leading growth Experience driving strategic direction and leading growth of an organization, preferably including the management of multiple significant projects		8		2		4
Business judgment Track record of leveraging own experience and wisdom in making sound strategic and operational business decisions; demonstrates business acumen and a mindset for risk oversight		6		8		0
Mining, exploration and operations Experience with a leading mining or resource company with reserves, exploration and operations expertise		4		3		7
Operational excellence Experience in a complex chemical or nuclear operating environment creating and maintaining a culture focused on safety, the environment and operational excellence		4		3		7
Industry knowledge Knowledge of the uranium/nuclear industries, market and business imperatives, international regulatory environment and stakeholder management		3		6		5
International Experience working in a major organization that carries on business in one or more international jurisdictions, preferably in countries or regions where we have or are developing operations		6		4		4
Human capital Experience in the oversight of significant, sustained succession planning and talent development and retention programs, including executive compensation		10		4		0
Financial expertise Experience as a professional accountant, CFO or CEO in financial accounting and reporting and corporate finance		5		5		4
Investment banking/mergers and acquisitions Experience in the field of investment banking or in mergers and acquisitions		2		5		7
Board experience Prior or current experience as a board member for a major organization with a current governance mindset, including a focus on Corporate Social Responsibility		11		3		0
Government relations Experience in, or a thorough understanding of, the workings of government and public policy both domestically and internationally		6		7		1

Board diversity

We are subject to terms of the Investment Canada Act, the Uranium Non-Resident Ownership Policy and the Canada Business Corporations Act. These require at least two-thirds of our directors to be Canadian citizens and half to be Canadian residents.

As part of the matrix review process, the nominating, corporate governance and risk committee also surveyed its members, the board chair and our senior executives about board diversity.

2010 MANAGEMENT PROXY CIRCULAR     19

The survey focused on ethnicity, non-Canadian residents, gender, political affiliation and age, and confirmed the importance of having:

• at least one aboriginal director from Saskatchewan because many of our operations are based in the province

• two directors who are US residents

• one or two directors from Europe and/or Asia

• two to three female directors

• younger directors

None of the respondents felt there was a need to seek directors who have specific political affiliations.

The survey results give the committee and the board important insights for enhancing board composition in the future.

20    CAMECO CORPORATION

Continuing education and development

Continuing education helps our directors keep abreast of changing governance issues and requirements, and understand issues we face within the context of our business. The table below lists the conferences, seminars and courses that our directors attended in 2009, and the sessions that members of the audit committee attended as part of their continuing education program.

2009	Topic	Presented/hosted by	Attended by
January 8	The directors’ series: Preparing for year-end audit committee meetings	Deloitte & Touche	Nancy E. Hopkins
January 13	The financial crisis: Implications for executive compensation	Hugessen Consulting	A. Anne McLellan
February 5	Traditional lands, duty to consult and treaty land entitlement in western Canada	Gary Merasty Vice-President, Corporate Social Responsibility	John H. Clappison Joe F. Colvin Harry D. Cook James R. Curtiss George S. Dembroski Gerald W. Grandey Nancy E. Hopkins	Oyvind Hushovd J.W. George Ivany A. Anne McLellan A. Neil McMillan Robert W. Peterson Victor J. Zaleschuk
February 6	IFRS: Benefits, risks and risk mitigation	Kelly Orr Vice-President, Controller	John H. Clappison Joe F. Colvin Harry D. Cook James R. Curtiss George S. Dembroski Gerald W. Grandey Nancy E. Hopkins	Oyvind Hushovd J.W. George Ivany A. Anne McLellan A. Neil McMillan Robert W. Peterson Victor J. Zaleschuk
April 22	Directors’ briefing — managing risk	PricewaterhouseCoopers	John H. Clappison
April 23	How will the new income tax accounting standard affect your IFRS conversion plan?	KPMG	John H. Clappison
May 4	Third annual executive compensation: Getting it right	Lexpert	James R. Curtiss George S. Dembroski
May 26	Executive compensation: Tackling pay for performance in a volatile environment	Hugessen Consulting	A. Anne McLellan
June 10	Strengthening audit committee oversight during economic uncertainty	KPMG Audit Committee Roundtable	John H. Clappison
June 11	The directors’ series: Governing through a recession	Deloitte & Touche	Nancy E. Hopkins
June 26	IFRS and GAAP update	KPMG	John H. Clappison
June 29-30	Nuclear industry overview	Cameco Corporation	John H. Clappison Donald H.F. Deranger James K. Gowans A. Neil McMillan
August 10	IFRS Presentation to Cameco	KPMG	John H. Clappison George S. Dembroski Donald H.F. Deranger James K. Gowans Nancy E. Hopkins	Oyvind Hushovd J.W. George Ivany A. Neil McMillan Robert W. Peterson Victor J. Zaleschuk
September 14-16	The impact of governance in the nuclear power industry	Goizueta Business School — Emory University in Association with INPO	James R. Curtiss
September 30	Board committee peer exchange	NYSE and Corporate Board Member	John H. Clappison James R. Curtiss
October 1-2	Annual boardroom summit	NYSE and Corporate Board Member	John H. Clappison Joe F. Colvin James R. Curtiss George S. Dembroski	Donald H.F. Deranger J.W. George Ivany Robert W. Peterson Victor J. Zaleschuk
October 8	Say on pay	Hugessen Consulting	James R. Curtiss

2010 MANAGEMENT PROXY CIRCULAR    21

2009	Topic	Presented/hosted by	Attended by
October 15	IFRS update	Deloitte & Touche	John H. Clappison
October 17	Executive and director compensation committee seminar	National Association of Corporate Directors (NACD)	James R. Curtiss
October 29	Uranium exploration	Colin Macdonald Vice-President, Exploration	John H. Clappison Joe F. Colvin James R. Curtiss Donald. H.F. Deranger Gerald W. Grandey Nancy E. Hopkins	Oyvind Hushovd J.W. George Ivany A. Anne McLellan A. Neil McMillan Robert W. Peterson Victor J. Zaleschuk
October 29	Cameco’s transition to IFRS	Kelly Orr Vice-President, Controller Cherise Grychowski Manager, Financial Reporting	John H. Clappison Joe F. Colvin James R. Curtiss Donald. H.F. Deranger Gerald W. Grandey Nancy E. Hopkins	Oyvind Hushovd J.W. George Ivany A. Anne McLellan A. Neil McMillan Robert W. Peterson Victor J. Zaleschuk
November 4-5	Nuclear safety: Setting the global standard	Institute of Nuclear Power Operations (INPO)	Gerald W. Grandey
November 19	The directors’ series: Risk intelligent governance	Deloitte & Touche	John H. Clappison Nancy E. Hopkins
November 24	Agencies, boards and crowns: Understanding the dynamics	Institute of Corporate Directors (ICD)	A. Anne McLellan
December 2	Overseeing the IFRS transition and communications with stakeholders	KPMG Audit Committee Roundtable	Nancy E. Hopkins John H. Clappison
December 2	The Canadian mining sector: Transition to IFRS	KPMG	All directors
December 9	IFRS training	Agrium Inc.	A. Anne McLellan Victor J. Zaleschuk

22      CAMECO CORPORATION

About the auditors

The auditors fulfill a critical role, reinforcing the importance of a diligent and transparent financial reporting process that strengthens investor confidence.

KPMG LLP (KPMG), or its predecessor firms, have been our auditors since incorporation. You can vote for reappointing KPMG as our auditors until the end of the next annual meeting, or you can withhold your vote. Unless otherwise instructed, the named proxyholders will vote for reappointing KPMG. We need a simple majority of votes cast for KPMG, by person or by proxy, to approve their reappointment.

KPMG provides us with four types of services:

• audit services - generally relate to reviewing annual and interim financial statements and notes, conducting the annual audit and providing other services regulators may require of auditors. These may also include services for registration statements, prospectuses, reports and other documents that are filed with securities regulators, or other documents issued for securities offerings.

• audit-related services - include consulting on accounting matters, attest services not directly linked to the financial statements that are required by regulators, conducting audits of employee benefit plans and audits of affiliates, as well as reviewing and testing results for internal controls over financial reporting.

• tax services - relate to tax compliance, tax advice and tax planning that are beyond the scope of the annual audit. These may include transfer-pricing surveys for the tax authorities, preparing corporate and personal tax returns, and advice and consulting on international tax matters, tax implications of capital market transactions and capital tax.

• other services - include other professional services that KPMG and/or its affiliates provide us and our subsidiaries or joint ventures from time to time.

The table below shows the fees we paid to KPMG and its affiliates for their services for the years ended December 31, 2009 and 2008:

							% of
	2009		%of total fees		2008		total fees
	($)		(%)		($)		(%)
Audit fees
Cameco		1,756,900		49.2		1,388,760		44.6
Centerra and other subsidiaries		978,600		27.4		1,197,276		38.5
Total audit fees		2,735,500		76.6		2,586,036		83.1
Audit-related fees
Cameco		219,800		6.1		98,200		3.1
Centerra and other subsidiaries		32,300		0.9		—		—
Translation services		424,000		11.9		170,000		5.5
Pensions		—		—		15,000		0.5
Total audit-related fees		676,100		18.9		283,200		9.1
Tax fees
Compliance		40,000		1.1		121,500		3.9
Planning and advice		122,400		3.4		122,300		3.9
Total tax fees		162,400		4.5		243,800		7.8
All other fees		—		—		—		—
Total fees		3,574,000		100.0		3,113,036		100.0

The audit committee is responsible for reviewing and approving KPMG’s audit plan, fees, performance, qualifications, independence and audit of our financial statements. You can find more information about the audit committee starting on page 35.

2010 MANAGEMENT PROXY CIRCULAR      23

Governance at Cameco

Cameco recognizes the importance of sound governance, and we firmly believe it is the foundation for strong corporate performance.

This section tells you about two key elements of governance at Cameco: our board and how it operates, and our compensation practices.

About our board	25
Independence	25
Our expectations for directors	26
The role of the board	29
Board renewal and tenure	31
Governance policies, standards and practices	31
Communicating with the board	33
Board committees	33

24      CAMECO CORPORATION

About our board

Our board of directors is responsible for overseeing management and Cameco’s business affairs. Its goal is to ensure we continue to operate as a successful business, optimizing financial returns to increase our value over time while effectively managing the risks we face in our business.

Our board works within a climate of respect, trust and candor, fostering a culture of open dialogue. It fulfills its duties by:

• maintaining a governance framework that sets broad areas of responsibility and includes appropriate checks and balances for effective decision-making and approvals

• making decisions that set the tone, character and strategic direction for the company and approving the vision, mission, values and guiding principles developed by management

• regularly monitoring management’s effectiveness, including its leadership, recommendations, decisions and execution of strategies to ensure that the CEO and senior management carry out their responsibilities

The board has delegated the day-to-day responsibility for corporate governance to the nominating, corporate governance and risk committee. The committee is responsible for defining our approach to corporate governance issues (including reviewing our corporate governance guidelines once a year and recommending any appropriate changes to the board) and managing the board’s relationship with management.

The board reviews our corporate governance framework and practices and revises them as regulations change, and as industry and shareholder expectations and corporate best practices continue to evolve.

You can find more information about our corporate governance practices on our website (www.cameco.com/responsibility/governance/practices/), or by writing to our corporate secretary.

Independence

Any director who does not have a direct or indirect material relationship with us is defined as independent. A relationship is material when it could reasonably interfere with a director’s ability to make independent decisions, regardless of any other association he or she may have.

The board believes that at least a substantial majority of our directors must be independent, and that the audit committee, human resources and compensation committee and the nominating, corporate governance and risk committee must consist entirely of independent directors.

Directors must give the nominating, corporate governance and risk committee information about their business and other relationships with us (including our affiliates) and with senior management (and their affiliates). They must also advise the committee if there are any material changes to their circumstances or relationships that could affect the board’s assessment of independence.

The board is responsible for determining whether or not each director is independent. It uses criteria that meet the standards of the Canadian Securities Administrators as set out in Multilateral Instrument 52-110 — Audit Committees, National Policy 58-201 — Corporate Governance Guidelines and the New York Stock Exchange (NYSE) corporate governance standards.

We reviewed and updated our criteria for director independence in February 2008. See Appendix B for more information.

Assessment

The board has reviewed each nominated director and decided that Gerald W. Grandey and Donald H.F. Deranger are not independent. Mr. Grandey is our president and CEO, and Mr. Deranger is an executive with Points Athabasca Contracting Ltd., which provides construction and other services to Cameco.

2010 MANAGEMENT PROXY CIRCULAR      25

Independent chair

The board appointed a non-executive, independent director as its chair to help it function independently of management. Victor J. Zaleschuk has served as our chair since 2003.

The chair is responsible for the following duties and responsibilities, among other things:

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

• presiding as the chair at all board and shareholder meetings

• implementing procedures so the board can carry out its work effectively, efficiently and independently of management. This includes scheduling, calling and chairing board meetings.

• acting as the liaison between the board and senior management, and as an advisor and sounding board to the CEO

• ensuring that the board has timely and relevant information and access to other resources to adequately support its work

The board has adopted a position description for the chair, which it reviews from time to time. You can access a copy on our website (www.cameco.com/responsibility/governance/chairs_role/) or by writing to our corporate secretary.

Our expectations for directors

We expect each member of our board of directors to act honestly and in good faith and to exercise business judgment that is in the best interests of Cameco overall.

Each director is expected to:

• comply with our code of conduct and ethics, including conflict of interest disclosure requirements. See Governance policies, standards and practices starting on page 31 for more information about the code.

• develop an understanding of our strategy, business environment and operations, the markets we operate in and our financial position and performance. See Measuring performance starting on page 57 for a discussion of our corporate performance.

• diligently prepare for each board and committee meeting by reviewing all of the meeting materials

• actively and constructively participate in each meeting and seek clarification from management and outside advisors when necessary to fully understand the issues being considered

• participate in continuing education programs, as appropriate

• participate in the board, committee and director self-assessment process

Director experience

Our board represents a cross-section of business and industry experiences we believe are critical for effective oversight and to support our future growth. We have developed a new skills matrix to assess board composition and recruit new directors in the future. Turn to page 18 for more information about the skills and experience we believe are critical for serving on our board.

When a director’s principal occupation or business association changes substantially from when he or she was first appointed to our board, the director must approach the chair of the board immediately and offer to resign. The nominating, corporate governance and risk committee will consider the change in circumstance and recommend to the board whether to accept or reject the resignation.

Board and committee evaluation

The nominating, corporate governance and risk committee assesses the effectiveness of the board, the committees and the individual directors through a formal process every year.

We alternate between a shorter, online survey one year, and a comprehensive set of surveys the following year. The committee uses the results to assess the effectiveness and performance of each, and also to assess the composition of the committees and the effectiveness of their meetings, make the most of a director’s expertise and identify gaps in skills and experience.

26      CAMECO CORPORATION

The table below outlines the process in more detail.

Year 1		Year 2
Comprehensive set of surveys		Shorter online survey
Board survey •   completed by all directors	•   nominating, corporate governance and risk committee analyses results and prepares a summary report for the board •   corporate secretary tracks the resulting action items	Board and committee survey •   about the board, committees, directors, board chair, committee chairs and CEO	•   chair of nominating, corporate governance and risk committee reviews the results and presents them to the committee
Director self-evaluation •   completed by all directors	•   chair of the nominating, corporate governance and risk committee analyses results and discusses them with individual directors during their personal interviews	•   completed by all directors	•   also prepares a summary report for the board •   corporate secretary tracks the resulting action items
Board chair evaluation •   completed by all directors	•   chair of the nominating, corporate governance and risk committee reviews the results and presents the results to the board chair
	•   also prepares a summary report for the committee and the board
CEO evaluation •   completed by all directors	•   chair of the nominating, corporate governance and risk committee reviews the results and consults with the board chair as needed •   discusses the results with the CEO •   also prepares a summary report for the committee and the board	Audit committee survey •   completed by members of the audit committee	•   chair of the audit committee analyses the results and prepares a summary report for the committee and reports to the board
			•   corporate secretary tracks the resulting action items
Committee surveys •   completed by members of each committee	•   each committee chair analyses the results and prepares a summary report for the committee and reports to the board
	•   corporate secretary tracks the resulting action items
Survey of committee chair •   completed by members of each committee	•   board chair reviews the results and discusses the issues raised with each committee chair

We used the comprehensive set of surveys to evaluate the board in 2009. The results showed that the board and committees are meeting their mandates, and performing well overall. The process identified some topics for further education for each committee. The board also asked management to consider some additional models in its strategic planning process.

Every second year each director also completes a survey of his or her own skills, performance and relevant experience, and the chair of the nominating, corporate governance and risk committee conducts annual one-on-one interviews so directors have an opportunity to discuss any matters relating to the performance of their peers or other aspects of the functioning of the board.

The committee reviews the results of the surveys and interviews and decides whether to recommend any changes to the composition of the board or committees, structure or processes or other changes to enhance board performance and submits them to the board for approval.

The audit committee conducts an annual self-assessment as part of the committee surveys.

Other directorships

Our directors do not serve on the boards of competitor firms, nor can they join organizations or groups that may have adverse interests, unless they have our board’s permission.

In 2006, we started limiting the number of boards our directors can serve on because of the increasing demands on directors of public companies. A director who is an active CEO may serve on the boards of up to three other public companies, including the company for which he or she is a CEO. Other directors may serve on the boards of up to four other public companies.

2010 MANAGEMENT PROXY CIRCULAR      27

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

See About the nominated directors — Director profiles starting on page 9 for the other public company directorships that the directors have.

Meeting attendance

We expect each director to attend all board meetings, all meetings of committees he or she is a member of, and the annual meeting of shareholders. Directors can participate by teleconference if they are unable to attend a board or committee meeting in person.

See About the nominated directors — Meeting attendance on page 16 for the attendance record of each director and the total number of board and committee meetings held in 2009.

In camera sessions

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

Although the board has regular in camera sessions, no sessions are held for only the independent directors. Mr. Deranger is the only non-management, non-independent director. He is not independent because he is the president of a company that Cameco has a material contract with. If any matters related to that material contract were raised, Mr. Deranger would leave the meeting until the discussion was completed and not participate in any related votes. To date, the board has determined that it can hold open and candid discussions among the independent directors with Mr. Deranger in attendance for all other situations.

Only independent directors attend the in camera sessions of the audit committee, human resources and compensation committee and nominating, corporate governance and risk committee as all the members of these committees are independent.

Director education

We believe that director education is important for helping directors maintain skills, gain insights and increase their understanding of our operations, and current and developing issues affecting our business and governance practices. We offer an orientation program for new directors, and a continuing education program for all directors.

Orientation for new directors

The orientation session helps familiarize new directors with the uranium and nuclear industries, our company and what we expect of our board members. Directors also have an opportunity to meet senior management through their presentations and at informal social gatherings.

We also provide an educational manual that covers a wide range of topics including:

• information on our corporate and organizational structure

• background information on the company and the uranium and nuclear industries

• recent regulatory filings

• financial information

• governance documents

• important policies

Continuing education

Our continuing education program has three components:

• receiving management presentations at board and committee meetings

• visiting facilities we operate, or other nuclear facilities

• attending conferences and seminars

Management makes presentations to the board and committees:

• when they are making key business decisions

• during strategic planning meetings

• on topical issues from time to time

• in response to requests from directors

Directors can also enhance their understanding of our operations and the nuclear industry through site visits to facilities we operate, or to other nuclear facilities.

28      CAMECO CORPORATION

We encourage directors to attend conferences, seminars or courses at our expense. They can be on any subject that is related to their role on our board or board committees, or that is important for enhancing their knowledge of an industry relevant to us. Our corporate secretary notifies the directors of pertinent conferences, seminars and other educational opportunities to see if they are interested in attending them.

You can find the list of different sessions attended by our directors in 2009 under Continuing education and development on page 21.

The role of the board

The company articles require our board to have at least three directors and no more than 15. This year the board has decided that 12 directors are to be elected at our upcoming annual meeting.

Mandate and scope

The board has a formal mandate (see Appendix B) that lists its specific duties and responsibilities including, among others:

• selecting, evaluating and, if necessary, terminating the CEO

• assessing the integrity of the executive officers and ensuring there is a culture of integrity throughout the company

• succession planning and monitoring the performance and compensation of senior management

• adopting an annual strategic planning process that includes approving the strategic plans and monitoring our performance against those plans

• approving policies and procedures for identifying our principal risks and overseeing the risk management systems to mitigate those risks

• overseeing the integrity of our internal control and management information systems

• making decisions about material corporate matters, including those that require director approval by law or regulations

Overseeing the CEO

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

Our annual objectives become the CEO’s mandate from year to year, and they include specific goals that can be quantified. The human resources and compensation committee reviews the CEO’s annual objectives before recommending them to the board for approval.

The CEO is accountable to the board and board committees, and the board conducts a formal review of his performance once a year. The board has established clear limits of authority for the CEO. These are described in our delegation of financial authority policy, which the board updated in 2009.

The policy states, among other things, that the board must approve a number of decisions, including any that involve:

• operating expenditures exceeding the total operating budget by more than 10%

• unbudgeted project expenditures exceeding $10 million per transaction, cost overruns on budgeted project expenditures exceeding $15 million per transaction or a total of $50 million per year for unbudgeted project expenditures and cost overruns

• acquisitions or dispositions of assets exceeding $10 million per transaction or a total of $50 million per year

The board adopted a position description for the CEO, which is reviewed from time to time. You can find a copy on our website (www.cameco.com/responsibility/governance/ceos_role/) or by writing to our corporate secretary.

Decision-making

The board strives to make all decisions in the best interests of Cameco. It considers the interests of our shareholders, debt holders, customers, employees, suppliers, communities where we operate, the environment, governments, and regulators and the general public when making decisions.

2010 MANAGEMENT PROXY CIRCULAR      29

Strategic planning

Management is responsible for developing the strategic plan, which it presents to the board each year for approval. The board holds at least one special meeting a year to specifically discuss the plan and other strategic issues such as corporate opportunities and the main risks facing our business. Management also presents strategic issues to the board as needed throughout the year.

Management carries out an annual review, revises our 10-year strategic plan based on our progress, and establishes annual corporate objectives, a one-year budget and a two-year financial plan and presents these to the board for approval.

Managing and assessing risk

Risk can take different forms, including operating risk, financial risk, governance risk, risks related to our mineral reserves, health and safety risk, environmental risk, compensation risk, strategic risk and reputational risk.

We use an enterprise risk management system to effectively manage and assess risk, and give comprehensive updates to the nominating, corporate governance and risk committee and the board.

Our enterprise risk management system is a broadly focused systematic approach to identifying, assessing, reporting and managing significant risks facing the company, in our corporate office and in our operations. We follow defined principles to help us identify and mitigate uncertainties that can negatively affect our business activities and ability to achieve our corporate objectives or strategic plan. Employees who have been identified as owning the risks outline the controls that are planned or already in place, and any risk assessments and work that are under way to mitigate risk.

Our management committee meets quarterly to review our progress in managing the most significant risks and identifying any emerging risks. Management reports on our enterprise risk management system to the nominating, corporate governance and risk committee quarterly, and to the board once a year.

The board has overall responsibility for oversight of risk at Cameco. The nominating, corporate governance and risk committee is responsible for overseeing governance and ensuring a robust risk management process is in place, and for monitoring the overall risk profile of the company. Each board committee is responsible for monitoring risks in a specific area:

• the audit committee is responsible for monitoring certain financial risks, such as hedging

• the human resources and compensation committee is responsible for oversight of compensation risk, talent management risk and succession risk

• the reserves oversight committee is responsible for overseeing the estimating of our mineral reserves

• the safety, health and environment committee reviews the policies and systems related to safety, health, environment and related operational risks

You can find more information about the board committees starting on page 33, and how we manage compensation risk starting on page 52.

Internal controls

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

The audit committee is responsible for overseeing the internal controls, including controls over accounting and financial reporting systems. The chief internal auditor reports directly to the chair of the audit committee and provides quarterly reports to the committee while the CFO makes quarterly presentations on our financial results and forecasts to the audit committee and board. You can find more information about the committee’s activities starting on page 35.

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting to provide reasonable assurance that public reporting of our financial information is reliable and accurate, our transactions are appropriately accounted for and the company’s assets are adequately safeguarded. Management evaluated the effectiveness of our system of internal control over financial reporting and concluded that the system was effective in providing reasonable assurance as at December 31, 2009.

30      CAMECO CORPORATION

Material transactions

Our board is actively engaged in overseeing the business. This year the board addressed the following material transactions and matters:

• approving a debenture issue

• approving a share offering

• approving the divestiture of our interest in Centerra Gold

• approving an increase in our annual dividend

Board renewal and tenure

The board does not believe in limiting the time a director can serve. While term limits can help ensure the board gains a fresh perspective, imposing this restriction means the board would lose the increasing contributions of longer serving directors who have developed a deeper knowledge and understanding of the company over time.

Retirement age

The board has adopted a policy requiring directors to retire when they reach 72 years of age to encourage board renewal. It can, however, extend the retirement age for an individual director, and reviews any exceptions once a year.

Governance policies, standards and practices

Code of conduct and ethics

Our board expects all directors, officers and employees to act with honesty, integrity and impartiality, to earn and maintain the trust of our shareholders, other stakeholders, customers and the communities where we operate.

Our code of conduct and ethics contains principles and guidelines for ethical behaviour and describes the governance and corporate culture we want to develop and preserve. It covers the following, among other things:

• financial reporting and accountability

• confidentiality

• conflicts of interest

• complying with the laws, rules and regulations that apply to us (including safety, health, environmental, securities disclosure and insider trading laws)

• corporate opportunities

• reporting illegal or unethical behaviour

• reporting violations or breaches of the code

Following the code means that:

• employees and directors need to report any actual, potential or perceived conflicts of interest to the corporate secretary. He will bring them to the attention of management’s ethics compliance committee if they concern an employee, and to the nominating, corporate governance and risk committee if they involve a director.

• directors must excuse themselves from any discussions or decisions where their business or personal interests would create a conflict of interest

We have had a confidential ethics hotline in place since 2006, and employees can express any concerns online or by phone about inappropriate business conduct.

All new employees must read the code when they are hired and sign an acknowledgement that they have no conflicts of interest or disclose any conflicts they do have. Directors and employees with supervisory responsibilities or in the purchasing, exploration and human resources departments must review the code every year and sign a certificate of compliance. Any issues arising from these reports are brought to the attention of the audit committee for employees who are insiders, and the nominating, corporate governance and risk committee for directors.

Disclosure policy

We are committed to communicating openly and in a timely way with shareholders, employees and the public. We describe this commitment and our policy for disseminating material information in our disclosure policy.

2010 MANAGEMENT PROXY CIRCULAR      31

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

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

• evaluating the design and effectiveness of our disclosure controls and procedures to make sure they continue to provide reasonable assurance that information is gathered accurately and on a timely basis so we can make decisions about appropriate public disclosure that complies with legal requirements

• recommending any appropriate changes to our disclosure controls and procedures to the audit committee for approval

Each board committee reviews the material public disclosure relevant to its mandate before the board considers them for approval. The audit committee is responsible for reviewing the annual and interim financial statements and management’s discussion and analysis (MD&A) and then recommending them to the board for approval.

The board also reviews and approves the following documents, which are filed publicly:

• prospectuses

• annual information forms

• management proxy circulars

• US Form 40-F filings

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

The audit committee receives regular updates from the disclosure committee, and is responsible for reviewing our disclosure controls and procedures once a year and recommending any changes to the board for approval.

Our website (www.cameco.com) has information for shareholders, investment analysts, the media and the public. The CEO and other officers meet regularly with investment analysts and institutional investors. Our investor, corporate and government relations (IR) department provides information about us to current and potential shareholders and responds to their questions or concerns.

You can reach the IR department in the following ways:

phone:	306.956.6309
fax:	306.956.6318
e-mail:	complete the e-mail form under the Contact section of our website

Standards and practices

As a publicly listed company on the TSX and the NYSE, we must meet a variety of corporate governance guidelines and requirements in Canada and the United States.

Standards

We comply with the corporate governance standards that apply to Canadian companies listed on the TSX, and with the requirements of the Sarbanes-Oxley Act of 2002 (SOX) and the NYSE corporate governance standards that apply to us as a foreign private issuer registered with the Securities and Exchange Commission (SEC) in the US.

We also comply with many of the NYSE corporate governance standards that apply to US issuers:

• the majority of our board is independent under the NYSE standards

• non-management directors meet separately from management at regularly scheduled meetings

• the audit committee has a written mandate and its committee members are independent under the SEC and NYSE requirements

• the audit committee conducts an annual self-assessment survey to track its activities against its mandate

• our internal audit department provides management and the audit committee with ongoing assessments of our internal controls

• the human resources and compensation committee has a written mandate and its members are independent under the NYSE standards

• the nominating, corporate governance and risk committee has a written mandate and its members are independent under the NYSE standards

• our enterprise risk management group provides the nominating, corporate governance and risk committee with ongoing assessments of corporate risk management

• our code of conduct and ethics applies to directors, officers and employees

32      CAMECO CORPORATION

Practices

There is only one major difference between our corporate governance practices and what is required of US issuers under the NYSE standards. The NYSE standards require shareholders to approve all equity compensation plans and any material revisions to the plans, whether or not the securities issued under the plans are newly issued or purchased on the open market, subject to a few limited exceptions.

The TSX rules require shareholders to approve equity compensation plans that involve newly issued securities. In addition, the TSX rules require:

• if the plan does not provide for the issue of a fixed maximum number of securities, shareholders to approve the plan every three years

• if the plan has an amendment procedure, shareholders to approve an amendment only when it involves:

• reducing the exercise price or extending the term of options held by insiders

• removing an insider participation limit or when it results in an insider participation limit being exceeded

• adding a cashless exercise feature to a plan with a fixed maximum number of securities issuable when there is no corresponding full deduction of the underlying securities to be issued under the plan

• increasing any fixed maximum number of securities to be issued under the plan

• changing the amendment procedure or when the plan requires the amendment to receive shareholder approval

• if the plan does not have an amendment procedure, shareholders to approve all amendments to it

Under the terms of our stock option plan, certain other changes also require shareholder approval, see Stock option plan on page 65 for more information.

Communicating with the board

Shareholders, employees or other interested parties can contact the chair of the board, or the independent directors as a group, by writing to them at our corporate office.

Send the sealed envelope to:
Cameco Corporation	Please mark it:
2121-11th Street West	Private and strictly confidential
Saskatoon, SK S7M 1J3	Attention — Chair of the board of directors
If you want to contact the	Please mark it:
chair of either the audit	Private and strictly confidential
committee or the human	Attention — Chair of the audit committee or
resources and compensation	Chair of the human resources
committee, send your sealed	and compensation committee
envelope to the same address.

These envelopes will be delivered unopened.

Board committees

The board carries out its responsibilities directly and through its committees, which make recommendations to the board for approval.

The board has five standing committees:

• audit committee

• human resources and compensation committee

• nominating, corporate governance and risk committee

• reserves oversight committee

• safety, health and environment committee

The audit, human resources and compensation, and nominating, corporate governance and risk committees are independent. This means each committee member is independent according to the board’s independence criteria and the terms of the Canadian Securities Administrators’ Multilateral Instrument 52-110 — Audit committees, National Policy 58-201 — Corporate Governance Guidelines, the SEC’s requirements and NYSE corporate governance standards.

2010 MANAGEMENT PROXY CIRCULAR      33

The nominating corporate governance and risk committee recommends the composition of each committee and chair, and the board makes the final decisions. Each committee has a mandate, which lists the responsibilities and duties of both the committee and the chair. The committee chair is responsible for determining the meeting agenda, how often the committee will meet and the conduct of each meeting. The committees set aside time at each meeting to meet without management present.

You can find the committee mandates on our website (www.cameco.com/responsibility/governance/documents/), or request them from our corporate secretary. The committee reports start on the next page and list the committees’ activities in 2009 and the current members and chairs. The committee memberships may change once the new board is elected at the annual meeting. The board chair is a regular member of the reserves oversight committee and an ex-officio member of the other four committees.

Access to management and outside advisors

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

Committees can engage outside advisors to assist in carrying out their duties, as authorized by their mandates. Individual directors can also engage outside advisors with approval of the nominating, corporate governance and risk committee.

34      CAMECO CORPORATION

Audit committee

The audit committee has seven members:

• John H. Clappison (chair, financial expert)

• George S. Dembroski

• Nancy E. Hopkins

• Oyvind Hushovd

• J.W. George Ivany

• A. Neil McMillan

• Robert W. Peterson

Members of our audit committee must be independent and financially literate to meet regulatory requirements in Canada and the US, and the NYSE corporate governance standards. Mr. Clappison is the audit committee financial expert as he has accounting or related financial expertise and meets the necessary requirements.

According to the committee mandate and the NYSE corporate governance standards, members of the audit committee must receive the board’s approval if they sit on the audit committees of more than three public companies. In 2007, the board approved Mr. Clappison serving on the audit committees of four public companies, including Cameco. Mr. Clappison continues to serve on the four audit committees.

The audit committee is responsible for assisting the board in overseeing:

• the quality and integrity of our financial reporting

• the quality and integrity and performance of our internal control systems for finance and accounting, our internal audit function and our disclosure controls

• the annual audit plan, fees, quality, performance and independence of our external auditors

• our compliance with certain laws and regulations, our code of conduct and ethics and our international business conduct policy

Financial reporting

The committee is responsible for reviewing the following items and recommending them to the board for approval:

• annual audited financial statements and MD&A

• quarterly financial statements and MD&A

• accounting and financial reporting process

It also reviews quarterly press releases.

Internal control systems

The committee receives reports every year on:

• our disclosure controls and procedures

• our internal controls over financial reporting

• the timetable and process for the CEO and CFO to certify that our quarterly and annual securities filings are accurate

It oversees the internal audit function and the chief internal auditor reports directly to the chair of the audit committee.

External auditors

KPMG are our current auditors. From time to time, KPMG and or its affiliates also provide us and our subsidiaries or joint ventures with other professional services. See About the auditors starting on page 23 for more information.

The audit committee is responsible for reviewing and approving KPMG’s performance, fees, qualifications, independence and audit of our financial statements.

Approving services

The committee must pre-approve all services the external auditors will provide to make sure they remain independent. Any service that is not generally pre-approved must be approved by the audit committee before the work is carried out, or by the committee chair or board chair as long as the proposed service is presented to the full audit committee at its next meeting.

2010 MANAGEMENT PROXY CIRCULAR      35

Compliance

The audit committee is responsible for:

• overseeing compliance with the laws and regulations that apply to us (other than environment and safety compliance, which are the responsibility of the safety, health and environment committee, and human resources and compensation compliance, which are the responsibility of the human resources and compensation committee)

• monitoring employees’ compliance with the code of conduct and ethics and the international business conduct policy

• overseeing certain financial risks as delegated by the board

It also makes recommendations to the board on the above matters and is responsible for reviewing the succession plan for the CFO and controller and making any related recommendations to the human resources and compensation committee.

2009 highlights

The committee carried out the following activities as part of its 2009 work plan:

• reviewed and approved interim financial statements and MD&A, and annual audited financial statements and the annual MD&A

• carried out an assessment of the internal auditor, and reviewed and confirmed the internal audit department’s mandate, approved the 2009 audit plan and received an update on the five-year audit plan

• carried out an assessment of the external auditors, and reviewed and approved their audit plan and audit fees

• reviewed year-end audit issues

• received reports on compliance with the Sarbanes-Oxley Act of 2002 (SOX) and ongoing compliance activities

• reviewed related party transactions and political and charitable donations

• reviewed the CEO’s expenses

• received updates on the implementation of International Financial Reporting Standards (IFRS) and made certain accounting policy decisions regarding the adoption of IFRS

• reviewed the committee’s mandate and the committee’s self-assessment

The audit committee met six times in 2009. It met in camera without management present at every meeting, and also separately with the internal auditor and external auditors at five of the six meetings.

36      CAMECO CORPORATION

Human resources and compensation committee

The human resources and compensation committee has six members:

• James R. Curtiss (chair)

• George S. Dembroski

• Oyvind Hushovd

• J.W. George Ivany

• A. Anne McLellan

• Robert W. Peterson

It is responsible for assisting the board in overseeing:

• human resource policies

• executive compensation

• succession planning

• our pension plans

• director compensation

Executive compensation

The committee is responsible for:

• consulting with management to develop our general philosophy on compensation

• reviewing and recommending to the board for approval all compensation policies and programs for our executives (vice-presidents and above) including:

• the corporate goals and objectives relating to the compensation for the CEO and senior vice-presidents

• evaluating the CEO’s performance against those goals and objectives

• the compensation for the CEO based on the committee’s evaluation

• the compensation for our senior vice-presidents based on the CEO’s evaluations

• employment contracts with executive officers

• overseeing the development and implementation of compensation programs, including establishing any incentive and equity-based compensation plans

The committee believes in the fundamental importance of aligning the interests of executives and shareholders and paying for performance. It is also responsible for reviewing all executive and director compensation disclosure before we disclose it publicly. Our Compensation discussion and analysis explains our philosophy and objectives, policies and guidelines, the different components that make up our executive compensation program, what we base executive compensation on and how we evaluate performance and approve compensation. This report was prepared by management and reviewed and approved by the human resources and compensation committee.

The committee retained Hugessen Consulting Inc. (Hugessen) as its primary independent compensation consultant throughout 2009. Hugessen has not performed any services for management.

See Executive compensation — Compensation discussion and analysis starting on page 49 for a detailed discussion of our compensation programs and Developments in 2010 on page 83 for more information about our compensation risk assessment.

Succession planning

We have a succession plan for our entire executive team. We also have a leadership development program to instill our leadership competencies throughout Cameco and to prepare certain senior level employees to take on executive positions in the future.

The human resources and compensation committee is responsible for:

• reviewing our executive talent pool and the succession plan twice a year. The audit committee is also responsible for reviewing the succession plan for the CFO and controller and making related recommendations to the human resources and compensation committee.

• ensuring the succession plan is presented to the board each year

The board ensures there are opportunities for directors to get to know the employees who have been identified as potential executives. They make presentations to the board and are invited to company functions where they can interact with directors more informally.

2010 MANAGEMENT PROXY CIRCULAR      37

Pension plan governance

While the board has overall responsibility and accountability for our pension plans (defined contribution plans, a defined benefit plan, and a supplemental executive pension plan), it has delegated certain responsibilities to the human resources and compensation committee and management’s pension investment committee.

The human resources and compensation committee is responsible for overseeing management’s supervision of our pension plans:

• making recommendations to the board on plan design and policy after receiving advice from management

• providing a high level review of the performance of the investment options

• making recommendations on the investment managers when necessary

• receiving reports from management’s pension investment committee and the finance, human resources and legal departments from time to time on the above noted matters

It receives reports from the pension investment committee at least twice a year and ensures a pension plan report is submitted to the board at least once a year for review.

The pension investment committee is mainly responsible for selecting and monitoring the performance of the investment managers, monitoring the performance of the investment options under the plan and providing guidance to management on administrative matters. Its members include the CFO, senior vice-president, corporate services, senior vice-president, governance, law and corporate secretary, vice-president, human resources, the vice-president and treasurer and the vice-president, controller.

Director compensation

The human resources and compensation committee is also responsible for reviewing the compensation of our directors and recommending it to the board for approval. It conducts a thorough review of director compensation every two to three years so our program continues to meet our objectives and remains competitive. The committee carried out a review in 2009 with assistance from Hugessen and, based on the findings, agreed not to recommend any changes to the level or mix of compensation, but to conduct a further review in 2010. The committee also recommended the board approve a change, allowing directors who meet their share ownership requirements to receive all or a portion of their annual retainer in cash.

See Director compensation — Compensation discussion and analysis starting on page 44 for more information about our director compensation practices.

2009 highlights

The committee carried out the following activities as part of its 2009 work plan:

• implemented the changes to the executive compensation plan approved for 2009

• reviewed the executive compensation market data to ensure that our compensation levels remain competitive

• reviewed the succession plan for vice-presidents with a focus on operations, and consulted with the audit committee on the succession plan for the CFO and senior finance employees

• reviewed the performance measures under the short-term incentive and performance share unit plans

• reviewed the CEO’s performance

• reviewed the CEO’s annual performance assessments of the senior vice-presidents

• reviewed and recommended changes to base salary, and determined the short and long-term incentive plan awards for the CEO and senior vice-presidents

• reviewed and recommended payouts of the PSUs granted in 2007

• reviewed the compensation discussion and analysis in the management proxy circular

• received semi-annual reporting on the pension plan

• discussed various governance issues and industry development on ‘say on pay’, ‘clawbacks’ and hold periods

• reviewed the committee’s mandate and the report on its self-assessment

• recommended the appointment of the senior vice-president, corporate services

• reviewed director compensation

• reviewed the director and executive share ownership guidelines

• looked at the alignment of Cameco’s compensation with the executive compensation principles of the Canadian Coalition for Good Governance (CCGG)

• at our request, the chair of the board and the committee chair met with the CCGG

The committee met eight times in 2009. It met in camera without management present at every meeting.

38      CAMECO CORPORATION

Nominating, corporate governance and risk committee

The nominating, corporate governance and risk committee has six members:

• Nancy E. Hopkins (chair)

• Joe F. Colvin

• James R. Curtiss

• George S. Dembroski

• James K. Gowans

• A. Anne McLellan

It is responsible for assisting the board in overseeing:

• our approach to corporate governance, including establishing corporate governance principles and a code of conduct and ethics

• identifying and recommending qualified individuals as potential members of our board and board committees

• risk management

Corporate governance principles

The committee is responsible for:

• assessing the size and composition of the board

• assessing the number of board committees and their composition and mandates

• evaluating our approach to corporate governance

• recommending the board adopt a code of conduct and ethics for the organization

• overseeing directors’ compliance with our code of conduct and ethics

The committee is responsible for defining our approach to corporate governance issues (including reviewing our corporate governance guidelines once a year and recommending any appropriate changes to the board), and managing the board’s relationship with management.

As a publicly listed company on the TSX and NYSE, we must meet a variety of corporate governance guidelines and requirements in Canada and the US. The board has adopted guidelines for meeting these responsibilities and ensuring that our corporate governance practices comply with the governance rules and legislation in Canada and those that apply to foreign private issuers in the US.

Board evaluation

The committee assesses the overall effectiveness of the board and its committees by:

• developing and implementing an evaluation process

• maintaining a skills matrix for the board and identifying additional skills we should recruit for when we are making changes to the board

• maintaining a succession plan for the board that meets our corporate needs and the interests of shareholders

Evaluating performance

See page 26 for a description of the evaluation process that the committee conducts to assess the effectiveness of the board, its chair, board committees, committee chairs and individual directors.

Evaluating the composition of the board

The committee is responsible for establishing the competencies and skills necessary for the board overall, and for any new candidates being considered for nomination to the board.

As part of this process, we have developed a skills matrix for the board, identifying 11 areas that are important to our business and the directors with expert knowledge, strong working knowledge or basic knowledge in these key areas. The committee uses the information to identify any possible gaps in the skills of the board. We updated the skills matrix in 2009 to reflect our growing needs as we embark on our ambitious growth plans. The committee also canvassed the board and senior management on different elements of diversity desired for the board.

The committee assesses the size of the board and its composition once a year to determine whether we have all of the necessary elements in place for effective decision-making.

The committee identifies potential candidates based on their character, integrity, judgment, record of achievement, experience/diversity and any other qualities or qualifications that would enhance the board’s decision-making process and overall management of the business and affairs of Cameco. A candidate must disclose any potential conflicts of interest before he or she can be nominated to the board.

See About our board starting on page 25 for more information.

Risk management

The committee is also responsible for overseeing Cameco’s risk management process, which includes:

• overseeing our program and procedures to identify significant risks and the systems to mitigate risk

2010 MANAGEMENT PROXY CIRCULAR       39

• receiving regular reports from management on our significant risks or exposures and the steps taken to monitor and manage these risks

• recommending risk management policies to the board as appropriate

• reviewing management’s reports on our insurance program and the directors’ and officers’ liability insurance and indemnity agreements

The audit committee is responsible for monitoring certain financial risks while the safety, health and environment committee reviews the policies and systems related to safety, health and environmental risk. The reserves oversight committee is responsible for overseeing the estimating of our mineral reserves. The human resources and compensation committee is responsible for assessing compensation risks.

2009 highlights

The committee carried out the following activities as part of its 2009 work plan:

• received enhanced reporting on enterprise risk management to generate a deeper understanding of the principal and emerging risks facing our business

• encouraged management to develop a risk standard for a consistent way to manage risk at all levels throughout the company

• completed the search for a director of aboriginal descent

• revised the board skills matrix after carrying out a review of the skills matrix and examining the need for greater diversity on the board

• reviewed the director retirement policy and decided no changes were required

• reviewed the board composition and directors’ independence and conflicts

• reviewed the composition of the board committees and the committee chairs, responsibilities of the committee chairs and the committee self-assessments

• reviewed and updated our corporate governance practices and reviewed third-party governance rankings and comments and monitored changes in corporate governance

• reviewed the results of the board and committee assessments

• reviewed the governance disclosure in our management proxy circular

• reviewed management’s report on our insurance coverage

• received reports on proxy voting recommendations and voting results

• received reports on Canadian and US regulatory and legal governance developments

• recommended to the board an update to our international business conduct policy

The committee met seven times in 2009. It met in camera without management present at every meeting.

40       CAMECO CORPORATION

Reserves oversight committee

The reserves oversight committee is made up of five members:

• A. Neil McMillan (chair)

• Donald H.F. Deranger

• James K. Gowans

• Oyvind Hushovd

• Victor J. Zaleschuk

It is responsible for assisting the board in overseeing:

• management’s estimating of our mineral reserves and resources

• the review of our mineral reserves and resources before they are disclosed to the public

Estimating our mineral reserves and resources

The committee is responsible for:

• confirming the appointment of our designated qualified persons for estimating our mineral reserves and resources

• reviewing management’s annual reserve and resource report and annual reconciliation of reserves to mine production

• receiving management reports on our internal controls and procedures for estimating our mineral reserves and resources

• keeping abreast of industry standards and regulations on estimating and publishing mineral reserve and resource information and any related issues and developments with reports from management

Disclosing our mineral reserves and resources

Before we disclose our mineral reserves and resources, the committee:

• receives a report on the reserve and resource estimates by the qualified persons from the leading qualified person

• ensures the qualified persons have not been restricted or unduly influenced in any way

• has the leading qualified person and the chief operating officer (COO) confirm that:

• the information is reliable

• mineral reserves and resources have been estimated and will be published according to the securities laws and regulations that apply

• disclosure controls and procedures for disclosing mineral reserve and resource estimates comply with industry standards

2009 highlights

The committee carried out the following activities as part of its 2009 work plan:

• confirmed the appointments of the qualified persons

• received a report on estimating and reporting reserves and resources under IFRS

• reviewed its mandate

• reviewed and recommended to the board the annual estimation of reserves and resources as of the end of 2008

• received a report on the key assumptions to be used in the Cigar Lake technical report

• received a report on our internal controls and procedures related to reserves and resources

• received a report on developments in mineral reserve and resource standards in Canada, the US and Australia

The committee met twice in 2009. It met in camera without management present and separately with the leading qualified person at every meeting.

2010 MANAGEMENT PROXY CIRCULAR       41

Safety, health and environment committee

The safety, health and environment committee is made up of seven members:

• Joe F. Colvin (chair)

• John H. Clappison

• James R. Curtiss

• Donald H.F. Deranger

• J.W. George Ivany

• A. Anne McLellan

• Robert W. Peterson

The safety, health and environment committee is responsible for assisting the board in overseeing safety, health and environmental matters by:

• assessing our policies and management systems for these areas and making any appropriate recommendations to the board

• monitoring our safety, health and environmental performance

Assessing policies and management systems

The committee is responsible for overseeing management in the following areas:

• reviewing our safety, health and environmental policies

• overseeing the implementation of related systems to make sure we comply with the policies and all safety, health and environmental legislation

• bringing any material issues of non-compliance to the attention of the board in a timely fashion

• monitoring the effectiveness of our policies, systems and monitoring processes to protect the safety and health of our employees, contractors, visitors and the general public and manage any environmental impacts

• reviewing the benchmarking results of our policies, systems and monitoring processes against best practices in the industry

• reporting any related recommendations to the board

Monitoring our performance

The committee is responsible for overseeing management in the following areas:

• keeping abreast of significant safety, health and environmental issues (and monitoring any trends in significant events) with reports from management

• monitoring our corporate performance in safety, health and the environment and receiving regular updates from management

• reviewing the findings of our health, safety and environmental audits, action plans and results of investigations into significant events

• reviewing our Sustainable Development Report

• receiving regular compliance updates from management

• reviewing the annual budget for our safety, health and environmental operations so there is sufficient funding for compliance

2009 highlights

The committee carried out the following activities as part of its 2009 work plan:

• received updates on the Cigar Lake mine corrective action process

• received reports on injuries and environmental incidents

• reviewed quarterly reports on our environmental leadership initiative (including waste, air emissions, greenhouse gas emissions and water usage)

• enhanced its oversight of quality control at Cameco Fuel Manufacturing

• received reports on implementation of the corrective action program

• received reports on the safety, health and environmental audits under the direction of the chief internal auditor, who attended all committee meetings

• enhanced the audit reporting process, including instituting regular meetings of the committee chair and the lead safety, health and environment internal auditor to discuss audit issues prior to the committee meetings

• determined the impact of our safety, health and environmental performance on our executive compensation

• encouraged management to improve its corrective action process and audit response time

• received reports on regulatory and legislative reform initiatives

• met with the general managers in our mining division and received reports on the implementation of the contractor management program and the revised corrective action program

The committee met five times in 2009. It met in camera without management present at every meeting.

42       CAMECO CORPORATION

How we compensate our directors and executives

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

This section is a report by the board of directors on the recommendation of the human resources and compensation committee. It gives you insight into our compensation process and discusses the different components of our program. We have also provided information that is not required by regulators, to give you a more complete understanding of our decisions.

Director compensation	44
• Compensation discussion and analysis	44
• 2009 results	46
- Summary compensation table	46
- Incentive plan awards	48
- Loans to directors	48
Executive compensation	49
• Compensation discussion and analysis	49
• 2009 results	74
- Summary compensation table	74
- Incentive plan awards	77
- Retirement plan benefits	79
- Loans to executives	82
• Developments in 2010	83
Advisory vote on our approach to executive compensation	85

2010 MANAGEMENT PROXY CIRCULAR       43

Director compensation

Compensation discussion and analysis

Four elements make up our director compensation framework:

1. Philosophy and objectives

2. Share ownership requirements

3. Fees and retainers

4. Assessing the program

1 Philosophy and objectives

Our philosophy and objectives for director compensation revolve around three key areas:

• recruiting and retaining qualified individuals to serve as members of our board of directors and contribute to our overall success

• aligning the interests of members of our board with those of our shareholders by requiring directors to hold a multiple of their annual retainer in shares or share equivalents, and receive at least 60% of their annual retainer in deferred share units (DSUs) until they meet our share ownership guidelines

• offering competitive compensation to our directors by positioning it at, or slightly above, the median of director compensation paid by companies that are comparable in size and in a similar business

2 Share ownership requirements

We introduced share ownership guidelines for our directors in 2003 to help align their interests with those of our shareholders. Directors must hold three times their annual retainer in Cameco shares or deferred share units (DSUs), and must meet the minimum level by January 1, 2010 or within five years of becoming a director, whichever is later.

Starting in 2010, directors who have reached the share ownership target can decide before the beginning of each fiscal year whether to receive all of their fees in cash, or a portion (0%, 25%, 50% or 75%) in cash and the balance in DSUs. Previously, directors had to receive at least 60% of their annual retainer in DSUs every year. We revised this policy because we have several long-standing directors with holdings of DSUs or Cameco shares that far exceed the minimum requirement.

As of December 31, 2009, all of the nominated directors are in compliance with the guidelines. Three of them must continue to acquire DSUs or Cameco shares prior to the following deadlines:

• Mr. Clappison, who joined the board in January 2006, has until January 2011 to meet the target

• Mr. Deranger and Mr. Gowans, who joined the board in May 2009, have until May 2014 to meet the target

If a director does not meet the target by the required date, or fails to maintain the minimum level required, the human resources and compensation committee will review the situation and recommend a course of action to the board. The board has the discretion to decide what action, if any, should be taken.

As of December 31, 2009, directors held $12,687,140 worth of DSUs payable on retirement, based on the year-end closing price on the TSX of $33.93 per common share.

3 Fees and retainers

Our director compensation includes:

• an annual retainer

• an annual fee for serving as the non-executive chair, a committee chair or committee member

• an attendance fee for each board and committee meeting they attend

• a travel fee, where applicable, to cover the necessary travel time to attend board and committee meetings

We also pay for any reasonable travel and other out-of-pocket expenses relating to their duties as directors.

The table below shows our 2009 fee schedule for directors. Directors who are employees of Cameco or any of our affiliates (such as Mr. Grandey, our CEO) do not receive any compensation for serving as a director. All amounts are shown in Canadian dollars, unless otherwise indicated.

44       CAMECO CORPORATION

Annual retainer	($)
Non-executive chair of the board		250,000
Other directors		120,000
Committee members (per committee)		3,500
Committee chairs
Audit committee and Human resources and compensation committee		15,000
Other committees		10,000
Attendance fees (per meeting)
Board meetings		1,500
Audit committee meetings		2,000
Other committee meetings		1,500
Travel fees (per trip)
Greater than 1,000 km within Canada		1,500
From the US	1,500		(US)
From outside North America	2,500		(US)

In 2009, the retainer for directors and the non-executive chair was paid 60% in DSUs and 40% in cash, or directors could decide to take a portion of the remaining amount in DSUs in increments of 25%. This policy will change in 2010, as described above.

4 Assessing the program

The human resources and compensation committee reviews director compensation every few years and makes recommendations to the board. After its review in 2007, the committee increased director compensation and the retainer for the non-executive chair to approximately the median of the compensation peer group.

In 2009, working with its independent consultant, Hugessen Consulting Inc. (Hugessen), the committee assessed director compensation against:

• the compensation peer group of 21 companies we use to assess executive compensation

• broader market trends using five different third party sources

• research with various Canadian institutional shareholders

The review indicated that our director compensation remains at approximately the median, while the compensation for the non-executive board chair is below the median.

Both the committee and Hugessen recommended there be no changes to the compensation program in 2009 and that it be further reviewed in 2010. The board approved this recommendation in October 2009.

2010 MANAGEMENT PROXY CIRCULAR       45

2009 results

Mr. Deranger and Mr. Gowans were elected to the board at the 2009 annual meeting on May 27, 2009 and Mr. Auston and Mr. Cook resigned from the board.

Mr. Colvin, Mr. Curtiss and Mr. Hushovd receive their compensation in US dollars because they are non-residents of Canada. The amounts relating to their compensation were converted from US dollars to Canadian dollars at the following exchange rates:

	March 31, 2009	June 30, 2009	September 30, 2009	December 23, 2009
$1 (US)	$1.2618 (Cdn)	$1.1567 (Cdn)	$1.0855 (Cdn)	$1.0484 (Cdn)

Summary compensation table

The table below shows what we paid to each non-executive director in 2009.

	Retainer							Attendance fees								% of total
				Committee		Committee				Committee				Total fees		fees in
	Board			member		chair		Board		meetings		Travel fee		paid		DSUs
Name1	($)			($)		($)		($)		($)		($)		($)		(%)
J. Auston		48,791			1,423		4,066		7,500		3,000		3,000		67,780		43
J. Clappison		120,000			6,327		8,942		16,500		21,000		7,500		180,269		40
J. Colvin		136,572			3,983		11,381		19,284		18,695		8,401		198,316		41
H. Cook		48,791			4,269		0		7,500		9,000		0		69,560		42
J. Curtiss		136,572			3,983		17,072		19,284		20,430		8,401		205,742		40
G. Dembroski		120,000			7,673		4,038		15,000		19,000		4,500		170,211		71
D. Deranger		71,538			4,173		0		7,500		6,000		1,500		90,711		60
J. Gowans		71,538			6,260		0		7,500		12,000		3,000		100,298		100
N. Hopkins		120,000			4,462		11,058		15,000		21,000		1,500		173,020		42
O. Hushovd		136,572			11,950		0		19,284		27,484		16,894		212,184		69
G. Ivany		120,000			10,500		0		16,500		30,000		9,000		186,000		39
A. McLellan		120,000			10,500		0		15,000		25,500		1,500		172,500		42
N. McMillan		120,000			6,327		5,962		16.500		18,000		1,500		168,289		43
R. Peterson		120,000			10,500		0		16,500		28,500		1,500		177,000		41
V. Zaleschuk		250,000	2		6,327		0		16,500		29,000		3,000		304,827		75
Total		1,740,374			98,657		62,519		215,352		288,609		71,196		2,476,707		52.7

Notes:

1.	Mr. Grandey does not receive any compensation as a director, as he is our president and CEO. See the Summary compensation table on page 74 for his compensation.
2.	Mr. Zaleschuk is the chair of the board, and his board retainer reflects the fees paid to him in this capacity.

46      CAMECO CORPORATION

Director compensation table

The next table shows what each non-executive director earned in 2009, in cash and DSUs. It includes the information for two mandatory tables: Director compensation and Incentive plan awards — Value vested or earned during the year.

Directors received a portion of their fees in DSUs.

• Fees earned is the amount directors received in cash

• Share-based awards is the amount that directors received in DSUs in 2009, valued as of the grant date. It includes all of the DSUs that vested as of the grant date, including DSUs granted in the equivalent amount as dividends paid on Cameco common shares in 2009. These totals include the dividend equivalents, and are therefore higher than the total fees paid disclosed on the previous page.

	Fees earned		Share-based awards		Total
Name	($)		($)		($)
John S. Auston		38,505		33,385		71,890
John H. Clappison		108,269		73,433		181,702
Joe F. Colvin		116,373		100,999		217,372
Harry D. Cook		40,285		35,221		75,506
James R. Curtiss		123,799		103,533		227,332
George S. Dembroski		49,105		128,756		177,861
Donald H.F. Deranger		35,841		54,950		90,791
James K. Gowans		0		100,450		100,450
Nancy E. Hopkins		101,020		74,853		175,873
Oyvind Hushovd		65,120		151,807		216,927
J.W. George Ivany		114,000		77,780		191,780
A. Anne McLellan		100,500		74,826		175,326
A. Neil McMillan		96,289		76,103		172,392
Robert W. Peterson		105,000		75,412		180,412
Victor J. Zaleschuk		77,412		236,696		314,108
Total		1,171,518		1,398,204		2,569,722

2010 MANAGEMENT PROXY CIRCULAR      47

Incentive plan awards

We stopped granting options to directors on October 28, 2003.

The table below lists the non-executive directors who had unexercised option awards as at December 31, 2009.

All of the directors’ options have vested except Mr. Dembroski’s reload options (3,300 vest in 2010 and 3,300 vest in 2011). We stopped awarding reload options in 1999. Mr. Curtiss and Mr. Dembroski exercised their reload options to acquire additional options with a 10-year term. They are exercisable at the closing market price of Cameco shares on the day before they are exercised.

See About the nominated directors — Director profiles starting on page 9 for the amount of equity each director has at risk.

	Option-based awards
			Number of securities
	Grant		underlying		Option		Option expiry		Value of unexercised
	date		unexercised options		exercise price		date		in-the-money options
Name	(mm/dd/yyyy)		(#)		($)		(mm/dd/yyyy)		($)
John S. Auston		03/10/2003		6,000		5.88		03/09/2011		168,300
Total				6,000						168,300
Harry D. Cook		02/26/2002		6,000		7.31		02/25/2010		159,738
		03/10/2003		18,000		5.88		03/09/2011		504,900
Total				24,000						664,638
James R. Curtiss		02/26/2002		6,000		7.31		02/25/2010		159,738
		03/10/2003		12,000		5.88		03/09/2011		336,600
		09/21/2004		3,300		15.79		09/20/2014		59,855
Total				21,300						556,193
George S. Dembroski		02/26/2002		18,000		7.31		02/25/2010		479,214
		03/10/2003		18,000		5.88		03/09/2011		504,900
		03/01/2007		3,300		43.25		02/28/2017		0
		03/03/2008		3,300		38.55		03/02/2018		0
Total				42,600						984,114
Nancy E. Hopkins		02/26/2002		9,000		7.31		02/25/2010		239,607
		03/10/2003		27,000		5.88		03/09/2011		757,350
Total				36,000						996,957
Robert W. Peterson		03/10/2003		6,000		5.88		03/09/2011		168,300
Total				6,000						168,300
Victor J. Zaleschuk		03/10/2003		18,000		5.88		03/09/2011		504,900
Total				18,000						504,900

Loans to directors

As of March 15, 2010, we and our subsidiaries had no loans outstanding to any current or former directors, except routine indebtedness as defined under Canadian securities laws.

48      CAMECO CORPORATION

Executive compensation

Compensation discussion and analysis

1 Executive summary

Corporate performance remains the single biggest factor affecting our decisions on executive pay. This section discusses our executive compensation program and the decisions we made affecting the compensation of our most senior people in 2009 (our named executives):

• Gerald W. Grandey, President and Chief Executive Officer (CEO)

• O. Kim Goheen, Senior Vice-President and Chief Financial Officer (CFO)

• George B. Assie, Senior Vice-President, Marketing and Business Development

• Timothy S. Gitzel, Senior Vice-President and Chief Operating Officer (COO)

• Gary M.S. Chad, Senior Vice-President, Governance, Law and Corporate Secretary

We ended 2009 with record financial performance and excellent progress at our operations. We had record revenue and earnings, higher uranium production, strong safety performance and high ratings as a corporate employer. Our strong performance was balanced across four strategic areas: safe and rewarding workplace, clean environment, supportive communities and outstanding financial performance. We believe these four measures will continue to play a strong role in determining our future growth and long-term success.

Our conservative approach to risk management, and compensation risk in particular, encourages the right management behaviours, uses a balanced scorecard to assess performance, and avoids excessive risk-taking or extreme payouts to our most senior people. This approach includes:

• maintaining a multi-year strategic plan

• considering risk when we set our annual corporate objectives

• working within an enterprise risk management framework

• establishing absolute as well as relative measures of performance

• setting levels of threshold performance under our incentive plans

• using appropriate payout curves to cap performance incentives

• having a clawback policy for our CEO and CFO, consistent with US statutory requirements

• committing to full and open disclosure

Against this backdrop, the board of directors approved the following executive compensation decisions for 2009:

Modest increases in base salary

The named executives generally received a modest increase in base salary for 2009, consistent with market practices. Mr. Gitzel received a larger increase to bring him closer to the median of the market peers.

Payouts under our short-term incentive plan

Our solid performance across all four performance measures in 2009 resulted in a corporate performance payout factor of 113% under the plan. The board acknowledged the CEO’s outstanding performance in leadership effectiveness and his impact on strategic initiatives, and strong performance by the other named executives.

Moderate payouts of PSU awards granted in 2007 and vesting in 2009

The 2009 PSU payouts were based on an overall performance factor of 63.85% due to stronger financial results (our absolute measure) and weaker total shareholder return (our relative measure) over the three-year period.

A conservative grant of new long-term incentive awards

The board approved a conservative grant of long-term incentive awards at or slightly below the median of our compensation peer group. The LTI awards are based on targets by position, to motivate executives to ensure superior corporate performance. All of the LTI award is at risk and not guaranteed.

The human resources and compensation committee also undertook a review of compensation risk as part of our ongoing efforts to enhance our governance practices.

2010 MANAGEMENT PROXY CIRCULAR      49

The image below shows our timeline for the different elements of our executive compensation program.

Our long-term incentives (LTI) include a stock option plan and performance share unit (PSU) plan, which have different terms for vesting and payouts. We offer these incentive plans to drive longer-term corporate performance.

50      CAMECO CORPORATION

The table below is voluntary and shows the total compensation our named executives have received in the last three years and the 2010 compensation known to date, such as long-term incentives that were granted in March 2010 to drive performance over the next three to eight years. The ultimate value of a long-term incentive award depends on future events, so its value can change significantly after it has been granted.

Turn to the Summary compensation table on page 74 for more information about the named executives’ compensation. See Total compensation starting on page 59 for a description of each element of compensation and Developments in 2010 on page 83 for more information about the 2010 compensation known to date.

	2007		2008		2009			2010
Total compensation	($)		($)		($)			($)
Gerald W. Grandey President and CEO
Base salary		950,000		986,000		999,500			1,019,500
Short-term incentive (cash bonus)		945,000		553,000		963,000
Long-term incentive (performance share units)		703,200		970,750		774,800			1,387,200
Long-term incentive (options)		856,400		1,347,000		1,215,600			2,104,900
Pension benefits (annual pension service cost)		254,400		290,500		251,700
Other compensation1		n/a		412,611		n/a
Total CEO compensation		3,709,000		4,559,861		4,204,600
O. Kim Goheen Senior Vice-President and CFO
Base salary		440,000		460,000		473,800			483,300
Short-term incentive (cash bonus)2		254,000		173,000		420,000	2
Long-term incentive (performance share units)		375,040		388,300		213,070			346,800
Long-term incentive (options)		535,250		539,000		455,850			516,040
Pension benefits (annual pension service cost)		139,100		153,300		123,800
Other compensation1		n/a		82,923		n/a
Total compensation		1,743,390		1,796,523		1,686,520
George B. Assie Senior Vice-President, Marketing and Business Development
Base salary		530,000		550,000		566,500			577,800
Short-term incentive (cash bonus)		336,000		227,000		360,000
Long-term incentive (performance share units)		375,040		388,300		271,180			520,200
Long-term incentive (options)		642,300		606,000		506,500			746,900
Pension benefits (annual pension service cost)		134,500		146,400		124,700
Other compensation1		n/a		226,269		n/a
Total compensation		2,017,840		2,143,969		1,828,880
Timothy S. Gitzel Senior Vice-President and COO
Base salary		440,000		470,000		550,000			561,000
Short-term incentive (cash bonus)		404,000		194,000		360,000
Long-term incentive (performance share units)		140,640		388,300		271,180			578,000
Long-term incentive (options)		214,100		539,000		506,500			814,800
Pension benefits (annual pension service cost)		118,100		139,700		98,400
Other compensation1		n/a		7,598		n/a
Total compensation		1,316,840		1,738,598		1,786,080
Gary M.S. Chad Senior Vice-President, Governance, Law and Corporate Secretary
Base salary		415,000		432,000		445,000			453,900
Short-term incentive (cash bonus)		215,000		146,000		220,000
Long-term incentive (performance share units)		281,280		232,980		116,220			173,400
Long-term incentive (options)		428,200		337,000		303,900			271,600
Pension benefits (annual pension service cost)		123,900		134,500		110,100
Other compensation1		n/a		153,869		n/a
Total compensation		1,463,380		1,436,349		1,195,220

2010 MANAGEMENT PROXY CIRCULAR       51

Notes:

1.	Total employer contributions to the perquisites of each of the named executives were less than $50,000 and 10% of the executive’s base salary in each year, so they are not disclosed in this table. Perquisites include life insurance premiums, a tax planning allowance, an executive medical plan and a vehicle allowance.
	Other compensation includes vacation time paid to the named executives in February 2008 for the time they had accrued over many years. Accrued vacation pay had grown to a significant amount, so we chose to make a one-time payout to all employees who had banked vacation time in excess of our policy. We have revised our vacation policy so employees no longer bank excess vacation time (subject to exceptions that might be granted from time to time) so we do not incur such a liability in the future.
2.	The amount for Mr. Goheen in 2009 includes a one-time discretionary bonus of $150,000 for his role in the divestiture of Cameco’s interest in Centerra Gold.

2 Our compensation framework

Philosophy and objectives

Our compensation policies and programs are designed to accomplish four specific goals:

• attract, retain and motivate executives operating in a highly demanding, complex and competitive business environment

• link executive compensation to corporate performance

• motivate executives to create shareholder value by:

• rewarding them when they successfully achieve corporate and individual performance objectives over the short and long term

• ensuring that total compensation of all of our executives includes a significant component that is at risk, reflecting their ability to influence business outcomes and financial performance

• position our total direct executive compensation at the median of our compensation peer group. This means that half of the companies in our peer group pay more than we do and half pay less

Our executive compensation program includes a base salary, short and long-term incentives, pension and other benefits. The short and long-term incentives are at-risk compensation, which is awarded according to how well we perform as a company (corporate performance), and how well the executive performs in his or her role (individual performance). The most senior people in our organization have the highest amount and proportion of compensation that is at risk.

Managing compensation risk

The complex nature of our business makes us conservative in our approach to risk management, and we have structured our compensation program in a way that reinforces this:

Comprehensive and disciplined compensation framework

• We have a formal disciplined process for risk oversight that involves the board and all of the board committees.

• We have a multi-year strategic plan to balance risk and reward. The plan contemplates risks facing Cameco and the industry overall so we are proactive in our planning, risk management and decision-making.

• We embed our corporate objectives into how we assess the performance of our executives and make decisions. The human resources and compensation committee assesses each objective before it is reviewed and approved by the board and also assesses whether it can be easily manipulated. Objectives may be assigned to the executives with individual or joint accountability.

• We award compensation based on performance and not length of service.

• A significant portion of executive compensation is variable or at risk because it is not guaranteed.

• Our compensation program is designed in a way that does not encourage excessive risk-taking by employees.

• Our enterprise risk management system enables us to develop appropriate risk-adjusted performance expectations.

Balanced decision-making

• We use absolute and relative measures to assess performance.

• We introduced a balanced scorecard approach for our short-term incentive (STI) plan and performance share unit (PSU) plan to broaden the way we assess performance and provide a more direct and representative link between pay and performance.

52       CAMECO CORPORATION

Threshold performance

• We must deliver threshold performance in order to receive a payout under our STI plan and PSU plan. Otherwise there is a zero payout.

• Payouts under our PSU plan are based on our performance of our three-year objectives and the value of our shares when the units vest at the end of the three-year period.

Limits on incentive pay

• We have a maximum limit of two times target on payouts under our STI plan and PSU plan.

• We use typical and modified payout curves to clearly indicate caps on performance so there is no incentive for executives to take on extreme risk, to result in extreme levels of performance payouts.

Clawback policy

• We have instituted a clawback policy requiring the CEO and CFO to reimburse part of their incentive compensation if there is misconduct that results in Cameco restating its financial statements. This is consistent with US statutory requirements.

Our culture also encourages management to be objective in recognizing its level of performance and to make recommendations to the board to lower its compensation when appropriate. The board has used its discretion to reduce executive compensation in the past. For example, the board awarded annual bonuses to the executives that were lower than target for 2005, 2006 and 2008.

Who participates

Our executive compensation program covers the entire executive team:

• our CEO (Mr. Grandey)

• five senior vice-presidents (including the other four named executives)

• 18 vice-presidents and two presidents of our US subsidiaries

Target compensation and mix

We target overall executive compensation at the median of our compensation peer group and we benchmark base salaries at the median. The human resources and compensation committee also consults with the safety, health and environment committee on our performance in meeting our safety, health and environmental goals for confirmation of the related corporate results. Performance in those areas is factored in when determining the STI awards.

The charts below show the 2009 target direct compensation mix for our CEO and other senior executives.

2010 MANAGEMENT PROXY CIRCULAR       53

The table below compares the targets for the 2009 short-term and long-term incentives with the actual awards, expressed as a percentage of the executives’ base salary. The targets are comparable to those of our compensation peer group.

Target at-risk compensation

Total 2009 at-risk compensation

Short-term

Long-term

Actual 2009 short-term

Actual 2009 long-term

incentive target

incentive target

incentive

incentive grants

Position

(% of base salary)

(% of base salary)

(% of 2009 base salary)

(% of 2009 base salary)

CEO

80

%

250 to 375

%

96

%

199

%

Senior executives

45 to 55

%

80 to 225

%

49 to 65

%

94 to 141

%

Research and benchmarking

We review the results of national compensation forecast surveys and benchmark our executive compensation program to our compensation peer group as part of our analysis and assessment to make sure our compensation is fair and competitive. We also benchmark our compensation internally to make sure we are balanced in our decision-making.

In 2008, the human resources and compensation committee, with the support of its external consultant, reviewed the list of peers we use to assess our corporate performance and executive pay. As a publicly traded, global nuclear energy company based in Canada, Cameco has few peers, so the committee established a performance peer group of 36 companies with a subset of Canadian companies to assess pay levels. The compensation peer group does not include companies that are much larger than us, or US companies, because the committee felt they could skew the results. Since forming the groups, the performance peer group has been reduced by two companies due to mergers and acquisitions. (Petro-Canada is no longer in the performance peer group and Nova Chemicals Corp. is no longer in either peer group.)

The new performance peer group of 34 companies includes the 21 companies in the compensation peer group, and 13 global companies with a larger revenue base and representing the energy, gold and coal mining industries. The committee uses this peer group to calculate the relative total shareholder return (TSR), which is a performance measure under our PSU plan.

The new compensation peer group consists of 21 Canadian companies, representing a cross-section of capital-intensive companies from different sectors that are similar to us in terms of size of assets and revenue. We typically target the median of this peer group for total direct compensation although the human resources and compensation committee has the discretion to adjust the target up or down, depending on our corporate performance and other factors like market conditions. We compare the compensation of our executives against comparable executive positions from the compensation peer group when we determine the compensation for our executive officers. Total direct compensation for the three most senior positions was below the median for 2009.

The table below lists the companies in the two peer groups.

54       CAMECO CORPORATION

	Compensation peer		Performance peer
Company name	group		group
Agrium Inc.		•		•
Barrick Gold Corporation		•		•
Canadian Oil Sands Trust		•		•
Enerplus Resources Fund		•		•
Emera Inc.		•		•
First Quantum Minerals Ltd.		•		•
Fortis Inc.		•		•
Goldcorp Inc.		•		•
Inmet Mining Corporation		•		•
Kinross Gold Corp.		•		•
Lundin Mining Corp.		•		•
Methanex Corp.		•		•
Nexen Inc.		•		•
Penn West Energy Trust		•		•
Potash Corp. of Saskatchewan		•		•
Sherritt International Corporation		•		•
SNC Lavalin Group Inc.		•		•
Talisman Energy Inc.		•		•
Teck Cominco Ltd.		•		•
TransAlta Corp.		•		•
TransCanada Corp.		•		•
Agnico-Eagle Mines Ltd.				•
Alpha Natural Resources Inc.				•
Arch Coal Inc.				•
Canadian Natural Resources Ltd.				•
CONSOL Energy Inc.				•
Enbridge Inc.				•
EnCana Corp.				•
Husky Energy Inc.				•
Imperial Oil Ltd.				•
Massey Energy Co.				•
Peabody Energy Corp.				•
Suncor Energy Inc.				•
Yamana Gold, Inc.				•

Annual decision-making process

We have developed a comprehensive process for making compensation decisions. The illustration below shows the different inputs we use to determine compensation and the flow of information, recommendations and approval by our board.

Assessing the program

The human resources and compensation committee reviews all of our policies and programs relating to executive compensation and makes recommendations to the board. This process involves:

• establishing the annual corporate objectives to measure performance

• evaluating performance

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

• committee review and recommendation to the board

• board approval

The committee is satisfied that our current executive compensation policies and programs and our compensation levels are aligned with our corporate performance, reflect competitive market practices and allow us to attract, retain and motivate talented executives.

It conducted a comprehensive review in 2008 resulting in changes to the STI and PSU programs in 2009, and continues to assess the competitiveness and effectiveness of our executive compensation program.

2010 MANAGEMENT PROXY CIRCULAR      55

Independent advice

The human resources and compensation committee has retained Hugessen as its independent compensation consultant since November 2008.

Hugessen’s services in 2009 mainly included:

• research and advisory services on director compensation levels and practices

• advisory services on performance, compensation peer groups, and payout and plan objectives

• advisory services on compensation risk assessment and governance issues

• attending six committee meetings and one board meeting

• consultation and advisory services on compensation-related governance matters

We paid Hugessen $247,500 for these services. Hugessen did not provide any services to management.

The committee reviews and pre-approves all fees and the terms of service for consulting services provided by its compensation consultant. The committee is ultimately responsible for its own decisions, which may take into consideration more than the information and recommendations provided by its compensation consultant or management.

Share ownership guidelines

One of the key ways we align the interests of management and shareholders is by requiring our executives to have personal holdings of Cameco shares. We introduced share ownership guidelines for our executives on January 1, 2005, based on compensation and position as follows:

• CEO — 4.0 x base salary

• senior vice-presidents — 2.0 x base salary

• vice-presidents — 1.0 x base salary

Executives must meet the share ownership targets within five years of being appointed to an executive position, or by January 1, 2010, whichever is later. The table below shows the number of shares held by our named executives. Four of them hold more than the minimum number of shares required. We calculate the target value of share ownership by using the 2009 base salary and the multiplier for the position of the named executive. The share value is based on $33.93, the closing price of Cameco common shares on the TSX on December 31, 2009.

	2009 base				Target value of				Value of
	salary				share ownership		Number of		shares held		Meets share
Name	($)		Multiple		($)		shares held		($)		ownership target
Gerald W. Grandey		999,500		4 x		3,998,000		314,666		10,676,617	yes
O. Kim Goheen		473,800		2 x		947,600		31,544		1,070,288	yes
George B. Assie		566,500		2 x		1,133,000		41,563		1,410,233	yes
Timothy S. Gitzel		550,000		2 x		1,100,000		3,073		104,267	no — has until January 9, 2012 to reach the target
Gary M.S. Chad		445,000		2 x		890,000		47,308		1,605,160	yes

56      CAMECO CORPORATION

3 Our process

Measuring performance

We make our compensation decisions based on corporate and individual performance.

Corporate performance

Our corporate performance is measured by how well we achieve both operational and financial goals. The board approves our corporate objectives every year, as recommended by the human resources and compensation committee. These objectives become the individual performance objectives for the CEO, and are allocated among the senior vice-presidents, becoming part of their individual performance objectives.

Our corporate objectives for 2009 were grouped into four broad measures of success:

1 — Safe, healthy and rewarding workplace

2 — Clean environment

3 — Supportive communities where we operate

4 — Outstanding financial performance

We had 23 corporate objectives in 2009, including 12 that were selected to determine the payouts under our annual short-term incentive plan. The table below lists these 12 corporate objectives and their results for 2009.

2009 objectives	2009 results
1 — Outstanding financial performance
•     Produce 20.1 million lbs of U3O 8 and 8 to 12 million kgU from fuel services	Exceeded •     Our share of U3O8 production was 20.8 million pounds, or 103% of plan
	•     We produced 12.3 million kgU at fuel services
•     Achieve combined unit-operating costs within budget.	Exceeded •     Unit costs were 10% below budget
•     Deliver planned capital projects within 10% of budget	Achieved •     Projects that closed in 2009 were within 10% of budget
•     Achieve budgeted net earnings and cash flow from operations (before working capital changes)	Exceeded •     Adjusted net earnings and cash flow from operations exceeded budget
•     Advance Cigar Lake mine remediation, including sealing of the August 2008 water inflow area	Achieved •      Dewatering resumed in the fourth quarter and is complete.
•     Enhance the value of Inkai	Partially achieved •     Commissioned Inkai’s main processing plant and started commissioning the first satellite plant •     Drilling on block 3 was progressed, but did not achieve target •     Negotiations with the government of Kazakhstan regarding Inkai were not finalized
•     Achieve sales targets for new long-term supply contracts	Partially achieved •      Sales targets were met for U3O8, but not for fuel services
2 — Safe, healthy and rewarding workplace
•      Strive for no lost-time injuries at all Cameco-operated sites and at a minimum, maintain a long-term downward trend in the combined (employee and contractor) injury frequency and severity, and radiation doses	Exceeded •     Overall, strong safety performance demonstrated in 2009 •     Lost-time incident frequency for employees and contractors was 0.4 per 200,000 hours worked compared to a target of 0.8 — the best performance in Cameco’s history. Medical aid frequency and severity were also better than target
•      In support of promoting a strong reporting culture, demonstrate continual improvement in the effective application of the corrective action process	Achieved •     Realized continual improvement, through more incident reporting and strengthening of the corrective action and tracking cultures

2010 MANAGEMENT PROXY CIRCULAR      57

3 — Clean environment
•     Strive to achieve zero reportable environmental incidents in all jurisdictions where we operate. Reduce the frequency of environmental incidents and incur no significant incidents at all Cameco-operated sites	Partially achieved •      There were 27 environmental incidents, which is a small improvement over 2008 (29 incidents), but is above our long-term average of 22. There were no significant environmental incidents
•      With the goal of reducing energy consumption at all Cameco business locations, develop and begin to implement energy management action plans at all Canadian mining and milling operations, and complete energy assessments at all remaining North American operations	Achieved •      We completed energy assessments and developed energy management plans for all but one of our operations •      We completed a study on renewable energy opportunities at McArthur River/Key Lake, led by the Pembina Institute •      We implemented almost all of the energy reduction actions at our operations in northern Saskatchewan
4 — Supportive communities
•     Build awareness of and support for Cameco in the communities impacted by our company through community investment, business development and public relations, and improve levels of support in these jurisdictions	Achieved •     We received positive feedback from our annual polls in Port Hope and Saskatchewan
	•     We were named one of Canada’s Top 100 employers, and one of the top 10 companies to work for in Canada

Individual performance

The board measures the CEO’s individual performance using the annual corporate performance objectives (80% weighting) and their view of his executive leadership (20% weighting). Turn to page 67 for more information about the process for determining the CEO’s compensation.

At the beginning of the year the CEO establishes individual performance objectives for each of the senior vice-presidents, allocating and weighting the annual corporate performance objectives by individual, according to the executive’s influence in a given area. At the end of each year, the CEO compares performance to the targets, analyses the compensation levels of similar positions in the compensation peer group, and prepares a comprehensive report on each senior vice-president, summarizing their individual performance and leadership effectiveness and recommending any changes to compensation. The human resources and compensation committee reviews the reports and consults with its compensation consultant before making recommendations to the board.

58      CAMECO CORPORATION

Total compensation

Total compensation for our executives includes five elements:

1.	Base salary
2.	Short-term incentive plan (STI)
3.	Long-term incentive plan (LTI) ý at-risk compensation
4.	Pension
5.	Benefits and perquisites

The table below is a summary of the different compensation elements and how they are determined.

Type of compensation	Form	Performance period	How it is determined
Base salary (page 59)	cash	one year	Based on market competitiveness among the compensation peer group, individual performance, fairness and internal equity
Short-term incentive (page 60)	cash	one year	Focuses on specific annual objectives Target award based on market competitiveness among the compensation peer group, fairness and internal equity Actual award based on corporate and individual performance
Long-term incentive (page 62)	performance share units	three-year term, with vesting at the end of three years	Focuses on longer-term objectives (three years) Target award based on market competitiveness of the LTI package among the compensation peer group Actual payout based on our overall performance, combining:
			•    financial and operating performance over the three-year performance period
			•    total shareholder return compared to the performance peer group
			At the board’s discretion, payment is made in Cameco shares purchased on the open market, or in cash
Long-term incentive (page 65)	options	eight-year term, with one-third vesting each year starting on the first anniversary of the grant date	Target award based on market competitiveness of the LTI package among the compensation peer group The final realized value is based on the appreciation of Cameco’s share price
Pension (page 67)	defined benefit plan (CEO and one senior vice-president) defined contribution plan (for all other senior vice-presidents) supplemental executive pension plan	ongoing	Based on market competitiveness
Benefits	group life, health and dental select perquisites	ongoing	Based on market competitiveness

Our named executives also have employment agreements with us. These are described in more detail starting on page 67.

Base salary

We set our benchmark for base salaries at the median of the compensation peer group.

We review base salaries of our CEO and other senior executives every year, and compare them with our compensation peer group to make sure the salary levels are fair and competitive. We compare base salaries with similar positions at companies in the compensation peer group. Then we consider our corporate performance for the year, the individual’s performance, and the salaries of others at Cameco to make sure any salary increases are fair and balanced.

2010 MANAGEMENT PROXY CIRCULAR      59

The named executives generally received a modest increase in base salary for 2009, consistent with market practices. Mr. Gitzel received a larger increase to bring him closer to the median of the market peers.

	2009 base salary				2008 base salary
			% increase				% increase
Name and position	$		from 2008		$		from 2007
Gerald W. Grandey		999,500		1.4		986,000		3.8
President and CEO
O. Kim Goheen		473,800		3.0		460,000		4.5
Senior Vice-President and CFO
George B. Assie		566,500		3.0		550,000		3.8
Senior Vice-President, Marketing and Business Development
Timothy S. Gitzel		550,000		17.0		470,000		6.8
Senior Vice-President and COO
Gary M.S. Chad		445,000		3.0		432,000		4.1
Senior Vice-President, Governance, Law and Corporate Secretary

Short-term incentive plan (STI)

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

Awards range anywhere from 0 to 150% of the STI target established for the year based on the level of performance. Payouts can be:

• 50% of the STI target if our performance meets the threshold (80% of the performance target)

• 150% of the STI target if we deliver outstanding performance (120% of the performance target)

The board has the discretion to pay up to a maximum of 200% of the STI target for exceptional performance. There is no payout if our performance is below the threshold.

The board can adjust the amount of the bonus when there are significant external challenges or opportunities that were not contemplated or reasonably expected when the objectives were set.

The human resources and compensation committee sets the STI target bonus for each executive based on the level of the position, fairness and internal equity, and overall market competitiveness. Actual awards are based on corporate and individual performance for the year using the following target levels and performance weightings:

	STI target for 2009			Corporate performance			Individual performance
Position	(% of base salary)			weighting			weighting
CEO		80	%		80	%		20	%
Senior vice-presidents	45% to 55		%		60	%		40	%
Vice-presidents		35	%		40	%		60	%

Program enhancements

We introduced a scorecard approach in 2009 to measure performance more broadly and give participants a clearer picture of their potential award. The balanced scorecard replaces the three financial targets and the safety, health and environmental factor with a number of weighted objectives aimed at driving our one-year performance in key areas, including safety, health and the environment. These objectives are tied to our four corporate measures of success and individual performance measures.

60      CAMECO CORPORATION

We calculated the STI awards for 2009 as follows:

Measuring corporate performance

The board establishes the measures and weightings every year based on the recommendation of the committee. For 2009, it identified 12 of the corporate objectives as compensable STI performance measures for 2009, and assigned them weightings. These objectives represent our four measures of success, and are grouped into two sets of measures that each add up to 100%. The product of these two sets of measures results in the corporate performance multiplier.

Outstanding financial performance (85%)	•      Reach a number of specific production targets
	•      Keep consolidated unit operating costs within budget
	•      Deliver planned capital projects within 10% of budget
	•      Achieve budgeted net earnings and cash flow from operations (before working capital changes)
	•      Make significant progress on Cigar Lake
	•      Increase the potential of Inkai
	•      Reach sales targets through new long-term supply contracts
Safe, healthy and rewarding workplace (50%)	•      Strive for no lost-time injuries, and keep reducing radiation doses and number and severity of injuries
	•      Keep improving our corrective action process and promote a strong reporting culture
Clean environment (50%)	•      Strive for no reportable environmental or significant events, and reduce the number of environmental events
	•      Initiate energy management action plans and conduct energy assessments
Supportive communities (15%)	•      Increase company awareness and support in our communities through community investment, business development and public relations

Measuring individual performance

The committee establishes individual performance measures every year, and set three core measures for 2009:

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

The committee used these measures to assess the CEO’s individual performance for 2009. The committee assessed the CEO’s leadership effectiveness and his impact on strategic change initiatives as outstanding.

The CEO decides which measures will be used for the other participants in the plan, and sets the weightings for each. He assesses the performance of senior vice-presidents. Senior vice-presidents assess the performance of vice-presidents.

2010 MANAGEMENT PROXY CIRCULAR      61

2009 award

The table below shows the STI awards made to our CEO and senior executives for 2009 and paid in 2010. STI was based 80% on corporate performance and 20% on individual performance for the CEO, and 60% on corporate performance and 40% on individual performance for the other senior executives.

								Corporate				Individual
								performance				performance
	2009 base salary							multiplier &				multiplier &				2009 STI bonus paid		2008 STI bonus paid		%
Name and position	($)			STI target				weighting				weighting				($)		($)		change
Gerald W. Grandey		999,500	x		80	%	x		(90.4	%	+		30.0	%)	=		963,000		553,000		74	%
President and CEO
O. Kim Goheen		473,800	x		50	%	x		(67.8	%	+		45.5	%)	=		270,000		173,000		56	%
Senior Vice-President
and CFO
George B. Assie		566,500	x		55	%	x		(67.8	%	+		47.0	%)	=		360,000		227,000		59	%
Senior Vice-President,
Marketing and
Business Development
Timothy S. Gitzel		550,000	x		55	%	x		(67.8	%	+		49.0	%)	=		360,000		194,000		86	%
Senior Vice-President
and COO
Gary M.S. Chad		445,000	x		45	%	x		(67.8	%	+		41.5	%)	=		220,000		146,000		51	%
Senior Vice-President,
Governance, Law and
Corporate Secretary

The Total compensation table on page 51 shows the impact that discretionary changes, market compensation and formula calculations had on STI awards for our named executives over the past three years.

Long-term incentive plan (LTI)

LTI gives executives and other employees the opportunity to receive options and performance share units (PSUs) every year. Options are awarded to employees ranging from first-line supervisors to the CEO, while PSUs are awarded to vice-presidents and above.

The human resources and compensation committee evaluates our weightings of options and PSUs every year, and discusses the national trends with its compensation consultant. The committee can adjust this weighting based on the emphasis other Canadian public companies are putting on stock options or some form of whole share plan. The committee set the targeted mix of the expected value of the long-term incentives at 40% PSUs and 60% options in 2009, similar to 2007 and 2008.

Each LTI grant is based on individual performance, the level of the position, fairness and internal equity, and overall market competitiveness. In 2009 the LTI grant to executives was targeted at the median of the compensation peer group. We grant options to other employees based on their position and performance for the year, within established ranges for the different position levels.

Awards are granted every year on March 1 (or the next business day if March 1 falls on a weekend), after we publicly disclose our results for the previous fiscal year. If we impose a trading blackout period that includes March 1, we will make the grants seven trading days after the blackout period has ended. The board can make special grants of options and PSUs at other times during the year.

Performance share unit plan

We introduced a PSU plan for executives in 2004 to replace some of the incentive opportunities granted previously through stock options. The PSU plan allows us to reduce the number of options we grant, lessening the dilutive impact to shareholders, and adds another element of compensation with performance criteria.

The longer-term nature of the PSU award is aimed at increasing retention and is designed to motivate executives to:

• consistently meet corporate performance targets

• create shareholder value that can be sustained on an absolute and relative basis over a three-year period

62      CAMECO CORPORATION

Under the plan, each PSU represents one notional common share that can be exchanged for Cameco common shares purchased on the open market (or for cash, at the board’s discretion) at the end of a three-year period as long as certain performance and vesting criteria have been met. PSUs do not earn dividends. Withholding taxes apply, so the amount of cash or shares each executive receives is reduced by that amount.

In 2009 the human resources and compensation committee introduced a scorecard approach to better align senior management’s compensation with their ability to improve corporate performance over a three-year period. PSUs issued up to and including March 4, 2008 vest at the end of the three-year period based on the previous criteria, while those awarded starting in 2009 vest based on the new scorecard.

The human resources and compensation committee sets the performance targets every year. The committee and the board view them as reasonably challenging stretch targets.

Vesting under the previous terms

PSUs issued up to and including March 4, 2008 vest at the end of the three-year period based on three criteria:

• annual cash provided by operations before working capital changes averaged over the three- year period (absolute measure)

• annualized total shareholder return (relative measure)

• employment status

We calculate the amount as follows:

			Annual cash provided by operations before working capital changes
	Absolute measure
			If our performance is:
	% of PSUs available to vest 0 to 150%	ý	•    between 95 and 105% of the target, 100% of the PSUs will vest •    below 95%, the board can lower the number of PSUs that will vest •    higher than 105% of the target, the board can increase the number of PSUs that will vest.
			No PSUs will vest if our performance is below 80% of the target. The board can pay up to 200% of the target for exceptional corporate performance.
			Annualized total shareholder return (TSR)
	Relative measure
X	% of PSUs available to vest 100% or 50%	ý	We compare our annualized total shareholder return (appreciation in share price + dividends paid) to the Metals and Mining and Utilities and Gold indices over three years. While the relative weighting of this blended index may vary, it represents the mix of industries that make up our operations.
			If our performance is similar to the index, there will be no change to the initial grant of PSUs (for example, if the return of the blended market index is 10%, our total shareholder return must be at least 8%). If our performance is less than comparable (outside a defined range), then we reduce the initial grant of PSUs by 50%.
=	% of initial grant of PSUs 0 to 150%	ý	Performance multiplier

If an executive is no longer an employee at the end of the three-year vesting period, a pro-rated portion of the PSUs will vest based on the period of employment, as long as the executive:

• was not terminated for cause

• did not resign from Cameco before being entitled to receive a pension under our registered pension plan

If an executive is terminated within 12 months after a change of control, all of the PSUs will vest and be paid out at their target value.

2010 MANAGEMENT PROXY CIRCULAR      63

New terms for vesting

The new scorecard, first used for the awards granted in 2009, uses four measures to calculate our overall performance, combining relative total shareholder return with three other corporate measures. Each of these is given a weighting, and calculated over a three-year period.

Total actual costs for capital projects (30%) 0 to 150%	ý	Total actual costs for planned capital projects (approved financial expenditures) started and closed during the three-year period not to exceed the budgeted cost by a defined margin
Average realized uranium price (20%) 0 to 150%	ý	Achieve an average realized price for uranium sales for a three-year period that exceeds the weighted average price for sales in two industry benchmarks for the same period The 2009 goal will be based on 2008, 2009 and 2010 sales due to timing of when pricing information is available
Increased production (20%) 0 to 150%	ý	Increase production of U30 8 by a defined amount during the three-year period
Our three-year average total shareholder return (TSR) (30%) 0 to 200%	ý	Achieve three-year average TSR that is the median of the three-year average TSR achieved by companies in our performance peer group We define TSR as the change in price of a Cameco common share, including reinvestment of dividends, on the Toronto Stock Exchange (TSX) from during the three-year period
Corporate performance multiplier	ý	The overall performance factor represents the sum of the above four targets
Initial grant of PSUs	ý	Notional units awarded at the beginning of the three-year performance period
PSU payout	ý	Payout amount is the initial number of PSUs granted, multiplied by the PSU corporate performance multiplier, exchanged for Cameco common shares

Applying discretion

The committee can make adjustments at its discretion. For example, it can:

• adjust a performance measure, target measure and/or two or more weightings when things change (such as when a financial indicator no longer exists or has materially changed or is no longer relevant to our business, or when there are significant external challenges and opportunities that were not contemplated or reasonably expected when the objectives were set)

• increase any of the corporate performance multipliers up to a maximum of 200% for extraordinary corporate performance, subject to the approval of the board. It can also increase the final number of PSUs to account for exceptional corporate performance, or decrease it due to corporate performance that does not meet expectations

This use of discretion helps reduce the possibility that anyone unduly benefits from or suffers because of events that are unforeseen or out of their control.

64      CAMECO CORPORATION

2009 payouts of 2007 PSU awards

The table below shows the payouts we made to our named executives in 2009 for PSUs awarded in 2007, compared to the payouts made in 2008 for PSUs awarded in 2006. Payouts were made in late December of each year, in common shares purchased in the market.

Our performance from 2007 to 2009 was better than from 2006 to 2008 due to stronger financial results. The table shows the difference in the absolute measure (defined as cash from operations before working capital changes) between the two periods. The average annual cash provided by operations before working capital changes from 2007 to 2009 was $810 million, more than 105% of target and resulting in a payout factor of 127.7%. This compares to $660 million for the period from 2006 to 2008, which was between 95% and 105% of target and resulted in a payout factor of 100%. Total shareholder return, our relative measure, was low over both three-year periods, resulting in a payout factor of 50% for that measure in both periods.

The grant date valuation of the PSUs in 2007 was based on $46.88, our share price on the TSX at the time. We also used this share price to calculate each executive’s total compensation for 2007. The PSUs were exchanged for Cameco common shares on December 11, 2009 at an average purchase price of $32.36. The performance factor (127.7% x 50% = 63.85%) and the change in share price resulted in the executives receiving 44% of the grant value in 2007.

							Value of total								Value of total
							2007 PSU payout								2006 PSU payout
							Dec. 11, 2009								Dec. 22, 2008
	2007						at a share price of		2006						at a share price of
	PSU award		Absolute measure		Relative measure		$32.36		PSU award		Absolute measure		Relative measure		$19.29
Name	(# of units)		(%)		(%)		($)		(# of units)		(%)		(%)		($)
Gerald W. Grandey		15,000		127.7		50		309,966		18,000		100		50		173,603
O. Kim Goheen		8,000		127.7		50		165,307		9,000		100		50		86,801
George B. Assie		8,000		127.7		50		165,307		10,000		100		50		96,446
Timothy S. Gitzel		3,000		127.7		50		62,006		n/a		n/a		n/a		n/a
Gary M.S. Chad		6,000		127.7		50		123,980		7,600		100		50		73,299

See the Total compensation table on page 51 for the PSUs granted to our named executives over the past three years and Performance share unit plan on page 62 for more information about the plan.

Stock option plan

Our stock option plan is designed for management, and certain professional employees and employees with supervisory responsibilities, and ties a portion of their future compensation to the long-term performance of our shares. It gives executives and other employees a form of compensation tied to the market value of our common shares. We had 847 employees participate in the plan in 2009, and we expect that 918 will participate in 2010.

The human resources and compensation committee believes that granting options is an effective way to:

• make sure that executives and other employees are committed to the longer term interests of the company and our shareholders

• attract, retain and motivate talented employees to achieve corporate success

Options have a term of eight years and one-third vest each year, starting on the first anniversary of the date of the grant. Options granted before 1999 expire 10 years after the date of the grant. The committee takes into account previous grants when it considers new grants of options.

The board fixes the exercise price of an option at the time of the grant at the TSX closing price of Cameco common shares on the trading day immediately before the date of the grant.

If an employee leaves the company, any unvested options will vest during a specific period of time depending on the reason for leaving. All vested options can be exercised for the same specified period of time. See Compensation on termination starting on page 69 for more information.

2010 MANAGEMENT PROXY CIRCULAR      65

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

Making changes

The board can change, suspend or terminate the option plan subject to the laws that apply, including but not limited to the rules, regulations and policies of any stock exchange Cameco is listed on. Some changes may require approval from shareholders or other governmental or regulatory body.

Neither the board, human resources and compensation committee nor shareholders can alter or affect the rights of an option holder in a negative way without his or her consent, except as described in the plan.

The following kinds of changes also require shareholder approval under the terms of the plan:

Administrative

• any change to the number of common shares that can be issued under the plan, including increasing the fixed maximum number of common shares, or changing from a fixed maximum number to a fixed maximum percentage of common shares

• any change to extend the period after a trading blackout when options can be exercised

• any change to extend the expiry date of an option unless it would otherwise expire during a trading blackout period

• any change that requires shareholder approval such as those described in the rules, regulations and policies of any stock exchange that we are listed on

Exercise price

• any change that would cause the exercise price of an option to be lower than the fair market value of the common shares at the time the option is granted. This does not include standard adjustment provisions relating to dividends or stock splits, recapitalizations, consolidations or other fundamental corporate changes, or provisions for the treatment of options if there is a change of control or other similar transaction that affects the powers of the board to make certain changes to the option plan.

• any other change that would cause the exercise or purchase price of an option to be lower (other than the standard adjustment provisions or if there is a change of control or other similar transaction as described in the item above). Cancelling an option or reissuing it at a lower price is considered a reduction in the exercise price.

Eligibility

• any change that increases the number of categories of people who are eligible to receive options, if it could increase the participation of insiders

• any change allowing options to be transferred other than by will or intestate succession

Securities

• adding deferred or restricted share units or other share awards that would not involve an actual cash payment

• any change that allows adding a cashless exercise feature, unless it reduces the number of underlying shares in the option plan reserve

See the Total compensation table on page 51 for information about the options granted to our named executives over the past three years.

International employees

On January 1, 2001, we introduced the non-North American stock option plan (phantom plan) to give eligible employees of our international subsidiaries the opportunity to participate in our overall growth and profitability.

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

66      CAMECO CORPORATION

Pension

The human resources and compensation committee believes pensions are an integral part of total compensation and a cost-effective and important benefit for attracting and retaining talented employees, including executives.

Our executives participate in a registered base plan and a supplemental plan.

Registered base plan

This is a defined contribution plan for the named executives, except for Mr. Grandey and Mr. Chad who participate in a registered defined benefit plan.

Supplemental plan

The supplemental executive pension plan is a non-contributory supplemental defined benefit plan that is designed to attract and retain talented executives over the longer term. It is also designed to provide a retirement income that is commensurate with the executive’s salary and offset the strict limits under the Income Tax Act (Canada) relating to registered pension plans.

All of our executives and certain officers of wholly owned subsidiaries participate in the supplemental executive pension plan. See 2009 results – Retirement plan benefits on page 79 for more information.

Perquisites

Our named executives receive a number of perquisites as part of their total compensation, including:

• life insurance

• long-term disability

• tax planning

• an executive medical plan

• a vehicle allowance

• additional salary protection in the event of a disability (at no current incremental cost to Cameco)

These perquisites are similar to those offered by the companies in our compensation peer group.

CEO compensation and employment contract

Mr. Grandey signed a new employment agreement with us on December 31, 2007 that does not include a fixed term of employment. The new contract provides for:

• a base salary

• participation in the short-term incentive plan

• participation in the long-term incentive plan (including options and PSUs)

• participation in the defined benefit pension plan

• participation in the supplemental executive pension plan

It also includes post-termination obligations requiring that he:

• not use or disclose specialized knowledge, contacts and connections he obtained while at Cameco

• not compete against us in any way for 12 months after he leaves the organization

• not solicit any of our customers, suppliers or employees or harm our relationships with any of them for 18 months after he leaves the organization

Mr. Grandey is also entitled to US currency protection for any benefits that will be paid to him under our executive defined benefit pension plan and the supplemental executive pension plan if the exchange rate from the Canadian to US dollar is less than 0.725 at the time of payment.

Compensation

The human resources and compensation committee considers the following when it reviews the salary and performance of the CEO:

• overall corporate performance

• comparative compensation – how salary, short- and long-term incentives compare to similar positions in the peer groups

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

• the CEO’s leadership measures

2010 MANAGEMENT PROXY CIRCULAR      67

The CEO submits a performance self-assessment to the committee. The committee reviews the self-assessment, considers compensation recommendations received from the compensation consultant, and then recommends the CEO’s compensation to the board for approval.

On termination

The table on page 71 gives a summary of the incremental compensation that would be paid to Mr. Grandey if his employment had been terminated on December 31, 2009.

If Mr. Grandey resigns, it will be treated as retirement because he is eligible to retire. If there is a change of control and no termination, Mr. Grandey does not receive any incremental benefits.

Employment agreements with senior executives

Mr. Assie, Mr. Goheen and Mr. Chad signed new employment agreements on November 1, 2005. The contracts are for an indefinite period of employment and provide for:

• a base salary

• participation in the short-term incentive plan

• participation in the long-term incentive plan (including options and PSUs)

• participation in the employee defined contribution pension plan (other than Mr. Chad who participates in the executive defined benefit pension plan) and the supplemental executive pension plan

All three executives met the share ownership target by January 1, 2010. See page 56 for more information.

Mr. Gitzel signed an employment agreement with us on January 9, 2007 that provides for:

• a base salary

• a signing bonus

• participation in the short-term incentive plan

• participation in the long-term incentive plan (including options and PSUs)

• participation in the employee defined contribution pension plan and the supplemental executive pension plan

Mr. Gitzel is required to own an amount of Cameco shares that is at least two times his base salary by January 9, 2012.

The contracts with all four executives also include post-termination obligations requiring that each does not:

• use or disclose specialized knowledge, contacts and connections he obtained while at Cameco

• compete against us in any way for 12 or 18 months (depending on the officer) after he leaves the organization

• solicit any of our customers, suppliers or employees or harm our relationships with any of them for 12 to 18 months (depending on the officer) after he leaves the organization

On termination

If Mr. Goheen, Mr. Assie or Mr. Chad resigns, it will be treated as retirement because they are eligible to retire. They do not receive any incremental benefits if there is a change of control but no termination of employment.

Clawback provisions

If our financial statements have to be restated because of misconduct, the CEO and CFO have to reimburse some of their incentive compensation as required by US law. This policy has been in place since 2003.

68      CAMECO CORPORATION

Compensation on termination

The table below is a summary of the compensation that would be paid to the named executives if any of them is terminated. The only difference for Mr. Gitzel is if he is terminated without cause, his severance and STI awards are based on 18 months, rather than two years.

We believe the following terms are fair, competitive with the market and based on industry practice.

Type of
termination	Severance	STI bonus	Options	PSUs	Benefits	Pension
Retirement1	•   none	•   bonus for the current year is pro-rated to retirement date	•   three years to vest •   must be exercised within three years or the original term, whichever is earlier	•   performance is measured to the end of the year of retirement •   awards are pro-rated to retirement date	•   post-retirement benefits continue until age 65 •   once the executive turns 65, life insurance is reduced and health and dental benefits are provided until death	•   credited service no longer earned
Resignation2	•   executive must give three months notice •   if we waive the notice, we must pay his base salary for three months	•   none	•   vesting continues for 90 days •   must be exercised within 90 days or the original term, whichever is earlier	•   no entitlement to any PSU payout and all PSUs are cancelled	•   none	•   credited service no longer earned
Termination without cause3	•   lump sum equal to base salary for the notice period	•   lump sum equal to the target bonus for the notice period	•   options continue to vest for the notice period •   must be exercised within the notice period (except for the CEO who is entitled to the notice period plus 90 days) or by the original expiry date, whichever is earlier •   this does not apply to the CEO’s options granted on Jan. 1, 2003 as they may be exercised until Dec. 31, 2010	•   performance is measured to the end of the year of termination •   awards are pro-rated to termination date	•   employer contributions for health, dental and life insurance benefits continue for the notice period or until executive obtains other employment, whichever is earlier	•   coverage continues and credited service continues to be earned for the notice period
Termination without cause within 12 months of a change of control4	•   same as for termination without cause	•   same as for termination without cause	•   all unvested options vest, assuming TSX approval •   must be exercised within two years or the original term, whichever is earlier	•   all PSUs vest and are paid at target	•   same as for termination without cause	•   same as for termination without cause

2010 MANAGEMENT PROXY CIRCULAR      69

Type of
termination	Severance	STI bonus	Options	PSUs	Benefits	Pension
Termination with cause	•    none	•    all entitlement to the bonus is lost	•   vesting continues for 30 days or the original term, whichever is earlier •   must be exercised within 30 days	•   no entitlement to any PSU payout and all PSUs are cancelled	•   none	•   credited service no longer earned
Death	•    none	•   pro-rated to the date of death	•   three years to vest •   must be exercised within three years or original term, whichever is earlier	•   performance is measured to the end of the year of death •   awards are pro-rated to the date of death	•   life insurance is paid on death	•   credited service no longer earned •   value of vested pension benefit is paid to the beneficiary

Notes:

1.	Retirement
	Post-retirement benefits include health, dental, accidental death and dismemberment, and life insurance. Benefits are provided only if the executive is at least 57 years old with at least 10 years of service when he retires. A supplemental amount of $1,000 per month is paid until age 65, if the executive retires and is at least 57 years old with 10 years of service.
2.	Resignation
	Mr. Grandey, Mr. Goheen, Mr. Assie and Mr. Chad are eligible for early retirement and therefore do not qualify for the compensation that is paid if a senior executive resigns.
3.	Termination without cause
	The notice period for Mr. Grandey, Mr. Goheen, Mr. Assie and Mr. Chad is two years or the period remaining until age 65, whichever is earlier. The notice period for Mr. Gitzel is 18 months or until he reaches our normal retirement date, whichever is earlier.
4.	Termination without cause within 12 months of a change of control
	According to the ENL Reorganization Act, no person, alone or together with associates may hold, beneficially own or control, directly or indirectly, more than 25% of the voting shares that can be cast to elect the directors. Because of the legislated restrictions on share ownership, there would have to be an act of federal parliament for anyone to hold more than 25% of our voting shares. For Mr. Grandey, change of control is defined as an entity holding 35% or more of our voting shares, transfer or lease of substantially all of the company’s assets, dissolution or liquidation of the company, or the board deciding that a change of control has occurred. For Mr. Goheen, Mr. Assie, Mr. Gitzel and Mr. Chad, change of control is the same except that an entity must hold 50% or more of our voting shares.

70      CAMECO CORPORATION

The table below shows the incremental values that would be paid to the named executives if any of them had been terminated on December 31, 2009 and includes a situation of termination without cause with a change of control. Cameco has legislated ownership restrictions under the ENL Reorganization Act. While a change of control is possible, it would require an act of parliament as discussed in the previous paragraph.

	Severance		STI bonus1			Options2		PSUs3			Benefits4		Pension5			Total payout
Type of termination	($)		($)			($)		($)			($)		($)			($)
| | | | | | |
Gerald W. Grandey President and CEO
Retirement6		nil		nil			nil		nil			94,200		nil			94,200
Termination without cause		1,999,000		1,599,200			nil		nil			50,500		351,800			4,000,500
Termination without cause with a change of control		1,999,000		1,599,200			1,747,200		2,205,450			50,500		351,800			7,953,150
Termination with cause		nil		(963,000	)		nil		(788,601	)		nil		nil			(1,751,601	)
Death		nil		nil			nil		nil			1,999,000		(2,510,200	)		(511,200	)
O. Kim Goheen Senior Vice-President and CFO
Retirement6		nil		nil			nil		nil			nil		nil			nil
Termination without cause		947,600		473,800			nil		nil			26,400		303,200			1,751,000
Termination without cause with a change of control		947,600		473,800			655,200		712,530			26,400		303,200			3,118,730
Termination with cause		nil		(270,000	)		nil		(258,886	)		nil		nil			(528,886	)
Death		nil		nil			nil		nil			947,600		(461,200	)		486,400
George B. Assie Senior Vice-President, Marketing and Business Development
Retirement6		nil		nil			nil		nil			198,900		nil			198,900
Termination without cause		1,133,000		623,150			nil		nil			30,700		163,000			1,949,850
Termination without cause with a change of control		1,133,000		623,150			728,000		814,320			30,700		163,000			3,492,170
Termination with cause		nil		(360,000	)		nil		(292,816	)		nil		nil			(652,816	)
Death		nil		nil			nil		nil			1,133,000		(2,255,400	)		(1,122,400	)
Timothy S. Gitzel Senior Vice-President and COO
Resignation7		nil		(360,000	)		nil		(292,816	)		nil		nil			(652,816	)
Termination without cause		825,000		453,750			nil		nil			17,400		239,400			1,535,550
Termination without cause with a change of control		825,000		453,750			728,000		814,320			17,400		239,400			3,077,870
Termination with cause		nil		(360,000	)		nil		(292,816	)		nil		nil			(652,816	)
Death		nil		nil			nil		nil			1,100,000		70,600			1,170,600
Gary M.S. Chad Senior Vice-President, Governance, Law and Corporate Secretary
Retirement6		nil		nil			nil		nil			203,200		nil			203,200
Termination without cause		890,000		400,500			nil		nil			28,000		638,600			1,957,100
Termination without cause with a change of control		890,000		400,500			436,800		407,160			28,000		638,600			2,801,060
Termination with cause		nil		(220,000	)		nil		(148,546	)		nil		nil			(368,546	)
Death		nil		nil			nil		nil			890,000		(1,102,400	)		(212,400	)

Notes:

1.	STI bonus
	When the executive resigns or is terminated for cause, he forfeits any outstanding STI bonus payment. We calculated the payment that he is forfeiting based on the STI bonus determined in 2010 for 2009 performance.
2.	Options
	The named executives only receive an incremental benefit on their options when there is a termination without cause with a change of control. Currently under the ENL Reorganization Act, a change of control for Cameco is not permitted. The amount shown is the in-the-money value at December 31, 2009 of all unvested options which would vest upon a termination without cause with a change of control.

2010 MANAGEMENT PROXY CIRCULAR      71

3.	PSUs
	When there is a retirement, termination without cause or termination without cause with a change of control, the named executives may receive an incremental benefit for any outstanding PSUs, to account for the fact that our corporate performance may be better at the end of the year of termination, than it turns out to be at the end of the original three-year vesting period. In the table, we have assumed that the performance multiplier at the end of the assumed year of termination and at the end of the original three-year vesting period are the same so there is no incremental benefit at retirement, termination without cause or death.
	When the executive resigns or is terminated for cause, he forfeits any payment. We calculated the payout of the outstanding PSUs based on the results to date to determine the amount forfeited.
	When the executive is terminated without cause with a change of control, all outstanding PSUs vest immediately at target, and are paid out on the termination date.
	The calculation in each situation in the table is based on a share price of $33.93, the closing price of a Cameco common share on the TSX on December 31, 2009.
4.	Benefits
	Post-retirement benefits include health, dental, accidental death and dismemberment, and life insurance. Benefits are provided only if the executive is at least 57 years old with at least 10 years of service when he retires. Mr. Goheen and Mr. Gitzel are not eligible for post-retirement benefits because they had not reached the age of 57 on December 31, 2009.
5.	Pension
	The incremental pension benefit is the difference between the commuted value on termination and the commuted value on retirement at December 31, 2009. If the commuted value on termination is less than the commuted value when the executive retires (or resigns in Mr. Gitzel’s case), his pension benefit is negative.
	The table below shows the commuted values for retirement (resignation in the case of Mr. Gitzel). We estimated these values using the Canadian Institute of Actuaries’ Standard Practice for Determining Pension Commuted Values, and assumed:

• 100% vesting

• the executive’s age or age 55, whichever is later

• no salary increase after December 31, 2009

• a discount rate of 3.9% each of the next 10 years and 5.4% each year thereafter for Canadian and US liabilities

• benefits are pre-tax

Commuted value	For retirement	On December 31, 2009
The commuted values are based on assumptions representing entitlements in the employment agreements, and these may change over time. The methods we use may not be exactly the same as those used by other companies, so you may not be able to compare our figures directly with those of other companies.	Gerald W. Grandey	$	6,260,800
	O. Kim Goheen	$	2,152,800
	George B. Assie	$	5,847,900
	Gary M.S. Chad	$	2,815,700
	For resignation
	Timothy S. Gitzel	$	838,500

6.	Retirement
	The termination on resignation estimate does not apply to Mr. Grandey, Mr. Goheen, Mr. Assie and Mr. Chad because they are all eligible to retire and a resignation by any one of them would be treated as a retirement.
7.	Resignation
	If Mr. Gitzel voluntarily ended his employment on December 31, 2009, this would be regarded as a resignation because of his age. Mr. Gitzel would not receive a severance. He is required to give three months advance notice when he resigns. We can waive this notice if we pay three months’ base salary, or $137,500. The table assumes that we did not waive the notice period.

72     CAMECO CORPORATION

4 – How our executive compensation aligns with share performance

The graph below compares the performance of Cameco shares over the last five years (including reinvestment of dividends) to the performance of the S&P/TSX Composite Total Return Index. It shows what $100 invested in Cameco shares and the index at the end of 2004 would be worth at the end of each of the last five years.

The bar chart shows the trend in total compensation paid to our named executives over the same period. This tracks closely with our share performance in two of the last five years. The exceptions were in 2006, 2008 and 2009:

• our share performance was very strong in 2006, but total compensation was less than 2005 because of the water inflow at Cigar Lake

• our share performance went down in 2008, but total compensation was slightly higher than 2007 because of exceptionally strong financial results. We reduced the short-term incentive bonus because we did not meet two key operational objectives. We grant long-term incentives early in the year, so the 2008 LTI awards were paid before the significant downturn in the market, and had a higher estimated grant date value than in 2007.

• although our share performance improved in 2009, the value of the long-term incentives we awarded in 2009 was lower than 2008 because they were granted in early 2009 when there was a significant downturn in the economy and our share price was lower. See the Total compensation table on page 51 for more information.

	2004		2005		2006		2007		2008		2009
Cameco	$	100	$	176	$	226	$	191	$	103	$	167
S&P/TSX Composite Total Return Index	$	100	$	124	$	146	$	160	$	107	$	145
Grant date value of total compensation for the named executives (in millions)	$	7.3	$	16.5	$	11.5	$	10.3	$	11.7	$	10.7

The grant date value of total compensation for the named executives includes the total compensation we disclosed in our previous management proxy circulars:

• salary

• short-term incentive bonus

• options (valued as of the grant date using the Black-Scholes model)

• performance share units (valued as of the grant date based on the share price on the day before the grant and target awards)

• annual pension service cost and all other compensation

It does not include any perquisites, as they all fall below the threshold.

The positions represented by the five named executives have remained the same throughout the last five years, but there have been changes to the executives filling those positions: Mr. Gitzel became the COO in January 2007 and Terry Rogers, the former COO, retired at the end of June 2006. The table therefore represents total compensation:

• in 2004, 2005 and 2006 for Mr. Grandey, Mr. Goheen, Mr. Assie, Mr. Rogers and Mr. Chad

• in 2007, 2008 and 2009 for Mr. Grandey, Mr. Goheen, Mr. Assie, Mr. Gitzel and Mr. Chad

2010  MANAGEMENT PROXY CIRCULAR      73

2009 results

Summary compensation table

The summary compensation table shows the base salary, incentive-based awards and other compensation awarded to the named executives in 2009.

See the Total compensation table on page 51 for the 2007 compensation and the 2010 compensation known to date.

									Non-equity
									incentive plan
									compensation ($)
					Share-		Option-
					based		based		Annual		Pension		All other		Total
Name and			Salary		awards1		awards2		incentive plans3		value4		compensation5		compensation
principal position	Year		($)		($)		($)		($)		($)		($)		($)
Gerald W. Grandey President and		2009		999,500		774,800		1,215,600		963,000		251,700		n/a		4,204,600
CEO		2008		986,000		970,750		1,347,000		553,000		290,500		412,611		4,559,861
O. Kim Goheen Senior Vice-President		2009		473,800		213,070		455,850		420,000		123,800		n/a		1,686,520
and CFO		2008		460,000		388,300		539,000		173,000		153,300		82,923		1,796,523
George B. Assie Senior		2009		566,500		271,180		506,500		360,000		124,700		n/a		1,828,880
Vice-President		2008		550,000		388,300		606,000		227,000		146,400		226,269		2,143,969
Marketing and Business Development
Timothy S. Gitzel Senior		2009		550,000		271,180		506,500		360,000		98,400		n/a		1,786,080
Vice-President and		2008		470,000		388,300		539,000		194,000		139,700		7,598		1,738,598
COO
Gary M.S. Chad Senior Vice-President		2009		445,000		116,220		303,900		220,000		110,100		n/a		1,195,220
Governance, Law and		2008		432,000		232,980		337,000		146,000		134,500		153,869		1,436,349
Corporate Secretary

Notes:

1. Share-based awards

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

We awarded the following PSUs to the named executives in 2009 and 2008:

	March 16, 2009		March 4, 2008
Gerald W. Grandey		40,000		25,000
O. Kim Goheen		11,000		10,000
George B. Assie		14,000		10,000
Timothy S. Gitzel		14,000		10,000
Gary M.S. Chad		6,000		6,000
Grant price	$	19.37	$	38.83

For purposes of financial statement disclosure, the PSUs were valued using share prices of $33.93 for 2009 and $21.05 for 2008, the year-end closing prices of a Cameco share on the TSX, and amortized over their three-year vesting period and the weighted average of the expected retirement dates of the named executives, whichever is lower.

74      CAMECO CORPORATION

The table below shows the difference between the grant date fair value and the value at December 31. The year-end value is used for purposes of financial statement disclosure.

					Difference between the grant date value and
	Total number of				accounting value as at December 31
	PSUs awarded to		Grant date		Year-end share		Difference			Total value of
	named executives		value		price		per unit			difference
Grant date	(# of units)		($)		($)		($)			($)
March 16, 2009		85,000		19.37		33.93		14.56			1,237,600
March 4, 2008		61,000		38.83		21.05		(17.78	)		(1,084,580	)

PSUs granted:

• in 2006 vested at 50% of target and paid out in shares, net of income tax, in December 2008.

• in 2007 vested at 63.85% of target and paid out in shares, net of income tax, in December 2009

See the 2009 PSU payouts table on page 65 for more information.

2. Option-based awards

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

	March 16, 2009		March 4, 2008
Gerald W. Grandey		120,000		100,000
O. Kim Goheen		45,000		40,000
George B. Assie		50,000		45,000
Timothy S. Gitzel		50,000		40,000
Gary M.S. Chad		30,000		25,000
Grant date valuation	$10.13 per option		$13.47 per option

In March of 2009 and 2008, the human resources and compensation committee reviewed estimates prepared by its compensation consultants of the value of the options on the grant dates. It then recommended to the board the number of options to grant, which the board approved. The compensation consultants used the Black-Scholes option-pricing model and the following key assumptions:

	Dividend yield		Volatility		Risk-free rate		Expected life		Exercise price
	(%)		(%)		(%)		(years)		($)
2009		1.20		52.5		3.0		8		19.37
2008		0.40		32.1		3.8		5.5		38.83

As this approach may not be identical to that used by other companies and is sensitive to the assumptions used, the figures may not be directly comparable across companies, but for compensation valuation purposes a consistent approach has been used. In 2008 the expected life assumption was different from previous years, and based on Mercer (Canada) Limited’s analysis of the expected life of Cameco options and options issued by companies in the compensation peer group. They calculated it by adding the actual term (eight years) to the vesting period (three years), and dividing in half.

For purposes of financial statement disclosure, options awarded in 2009 were valued at $5.60 each on the date of the grant, and options awarded in 2008 were valued at $11.90 each on the date of the grant. We used the Black-Scholes option-pricing model both years and the following key assumptions:

	Dividend yield		Volatility		Risk-free rate		Expected life		Exercise price
	(%)		(%)		(%)		(years)		($)
2009		1.24		36.0		1.76		4.5		19.37
2008		0.6		39.0		2.9		3.5		38.83

These accounting value assumptions are different from the compensation value assumptions in the calculations above. The human resources and compensation committee uses the compensation valuation method because it allows a comparison to market peers.

The accounting value assumptions are based on our own internal research and past experience of how employees exercise their options. In 2009 the difference between the two models is $4.53 per option granted, or $1,336,350 for the 295,000 options granted to the named executives. In 2008 the difference is $1.57 per option granted, or $392,500 for the 250,000 options granted to the named executives. For purposes of financial statement disclosure, the options were amortized over their three-year vesting period or the weighted average of the years to expected retirement of the named executives, whichever was lower.

2010 MANAGEMENT PROXY CIRCULAR      75

3. Annual incentive plans

These amounts were earned in the fiscal year shown and were paid in the following fiscal year. The amount for Mr. Goheen in 2009 includes a one-time discretionary bonus of $150,000 for his role in the divestiture of Cameco’s interest in Centerra Gold.

4. Pension value

Pension value for Mr. Goheen, Mr. Assie and Mr. Gitzel includes company contributions under the registered defined contribution pension plan, plus the projected value of the pension earned in 2009 for service credited under the supplemental executive pension plan. Pension value for Mr. Grandey and Mr. Chad includes the projected value of the pension earned in 2009 for service credited under the registered defined benefit plan and the supplemental executive pension plan.

5. All other compensation

This amount does not include perquisites and other personal benefits because they total less than $50,000 and less than 10% of the annual salary for any of the named executives. Perquisites are valued at the cost to Cameco.

For 2008 this represents vacation time that was paid to the named executives in February 2008, for time that had accrued over many years. Since accrued vacation time had grown to a significant amount, we decided to make a one-time payment to all employees who had banked vacation time in excess of our policy. We have revised our vacation policy so employees cannot bank vacation time in excess of what the policy allows (subject to exceptions that might be granted from time to time), to avoid such a liability in the future.

76      CAMECO CORPORATION

Incentive plan awards

The table below shows the total unexercised option and share awards granted to our named executives as of December 31, 2009.

				Option-based awards								Share- based awards
										Value of		Number of
				Number of		Option		Option		unexercised		shares or units of		Market or payout
	Grant			securities underlying		exercise		expiry		in-the-money		shares that		value of share- based
	date			unexercised		price1		date		options		have not		awards that have not
Name	(mm/dd/yyyy)			options1 (#)		($)		(mm/dd/yyyy)		($)		vested (#)		vested2 ($)
Gerald W. Grandey		01/01/2003			360,000		6.25		12/31/2010		9,965,880
		03/10/2003			144,000		5.88		03/09/2011		4,039,200
		03/04/2004			186,000		10.51		03/03/2012		4,355,562
		03/02/2005			210,000		27.04		03/01/2013		1,446,900
		03/10/2006			86,000		41.00		03/09/2014		0
		03/30/2007			40,000		46.88		03/29/2015		0
		03/04/2008			100,000		38.83		03/03/2016		0		25,000		0
		03/16/2009			120,000		19.37		03/15/2017		1,747,200		40,000		0
Total					1,246,000						21,554,742		65,000		0
O. Kim Goheen		11/02/2004	3		6,000		16.62		11/01/2014		103,878
		03/02/2005			90,000		27.04		03/01/2013		620,100
		03/10/2006			46,000		41.00		03/09/2014		0
		03/30/2007			25,000		46.88		03/29/2015		0
		03/04/2008			40,000		38.83		03/03/2016		0		10,000		0
		03/16/2009			45,000		19.37		03/15/2017		655,200		11,000		0
Total					252,000						1,379,178		21,000		0
George B. Assie		03/04/2004			32,000		10.51		03/03/2012		749,344
		03/02/05			84,000		27.04		03/01/2013		578,760
		03/10/2006			54,000		41.00		03/09/2014		0
		03/30/2007			30,000		46.88		03/29/2015		0
		03/04/2008			45,000		38.83		03/03/2016		0		10,000		0
		03/16/2009			50,000		19.37		03/15/2017		728,000		14,000		0
Total					295,000						2,056,104		24,000		0
Timothy S. Gitzel		03/30/2007			10,000		46.88		03/29/2015		0
		03/04/2008			40,000		38.83		03/03/2016		0		10,000		0
		03/16/2009			50,000		19.37		03/15/2017		728,000		14,000		0
Total					100,000								24,000		0
Gary M.S. Chad		03/02/2005			30,000		27.04		03/01/2013		206,700
		03/10/2006			40,000		41.00		03/09/2014		0
		03/30/2007			20,000		46.88		03/29/2015		0
		03/04/2008			25,000		38.83		03/03/2016		0		6,000		0
		03/16/2009			30,000		19.37		03/15/2017		436,800		6,000		0
Total					145,000						643,500		12,000		0

Notes:

1.	The number of options and exercise prices have been adjusted to reflect stock splits of Cameco shares.
2.	These awards are subject to performance conditions and valued at the minimum possible payout.
3.	Mr. Goheen exercised reload options to receive additional options with a 10-year term that can be exercised at the closing market price of Cameco shares on the day before exercising the reload options. We stopped awarding reload options in 1999.

2010 MANAGEMENT PROXY CIRCULAR      77

The table below shows:

• the total value of the named executive’s options when they vested during 2009

• the share-based awards that vested and were paid out in 2009

• the short-term incentive earned in 2009 and paid in 2010

	Option-based awards–			Share-based awards–		Non-equity incentive plan
	value during the			value vested during		compensation– value earned
	year on vesting			the year		during the year
Name	($)			($)		($)
Gerald W. Grandey		(1,637,259	)		309,966		963,000
O. Kim Goheen		(815,699	)		165,307		420,000
George B. Assie		(949,950	)		165,307		360,000
Timothy S. Gitzel		(353,918	)		62,006		360,000
Gary M.S. Chad		(628,766	)		123,980		220,000

The amounts for:

• option-based awards reflect the pre-tax value that the executives would have realized if they had exercised their options that vested in 2009, on the date they vested. The options that had a negative value at the time of vesting are included in the calculation of these figures.

• share-based awards are the values of the PSUs that were granted in 2007 and paid out in December 2009. The compensation value we previously disclosed for these PSUs was based on the target number of PSUs multiplied by the share value on their grant date. The named executives realized 44% of the grant date value of the PSUs when they were granted as part of their total compensation for 2007.

• non-equity incentive plan compensation are the STI payments for 2009 that were paid in 2010. Mr. Goheen’s award also includes a one-time discretionary bonus of $150,000 for his role in the divestiture of Cameco’s interest in Centerra Gold.

Securities authorized for issue under equity compensation plans

The table below shows the equity securities authorized for issue from treasury under our compensation plans at the end of 2009:

					Number of securities remaining
	Number of securities to				available for future issue under
	be issued upon exercise		Weighted-average exercise		equity compensation plans
	of outstanding options,		price of outstanding		(excluding securities reflected in
	warrants and rights		options, warrants and rights		column (a))
Plan category	(a)		(b)		(c)
Equity compensation plans approved by security holders		7,939,833	$	27.42		10,497,236
Equity compensation plans not approved by security holders		—		—		—
Total		7,939,833	$	27.42		10,497,236

Of the 7,939,833 options outstanding at December 31, 2009, 5,550,148 were exercisable and 2,389,685 were not exercisable.

The total number of Cameco shares that can be used under the option plan and other compensation arrangements must be less than 43,017,198 (10.9%) of our total and outstanding common shares as of March 15, 2010.

78      CAMECO CORPORATION

The table below gives details about the number of shares under our stock option plan at the end of 2009 and as of March 15, 2010:

	As of December 31, 2009
Number of options available for issue under the option plan and other compensation arrangements		10,497,236

	As of March 15, 2010
Number (%) of our issued and outstanding shares to be issued when outstanding options under the option plan are exercised		9,338,520 (2.4	%)
Number (%) of our issued and outstanding shares still available for issue under the option plan		8,996,909 (2.3	%)
Total dilution rate		4.7	%

The table below shows other activity in the option plan since it was introduced in 1992:

Maximum initial share reserve (August 15, 1995)	31,460,418
Increase in the reserve (June 12, 2006)	11,556,780
Total issued and outstanding shares (as at the close of business on March 15, 2010)	392,940,373
Total shares that may be issued under outstanding options/total shares issued and outstanding (as at the close of business on March 15, 2010)	2.4	%
2009 Burn rate	0.35	%

The burn rate is the number of options issued in 2009 (1,376,039), expressed as a percentage of the 392,838,733 Cameco shares that were issued and outstanding as at December 31, 2009.

Retirement plan benefits

Defined benefit plan

Mr. Grandey and Mr. Chad are the only named executives who participate in our registered defined benefit plan. The plan is being phased out and will only exist for as long as the current members, retirees and their spouses are entitled to receive benefits. No new members have been added to the plan since 1997 and none will be added in the future.

The Income Tax Act (Canada) limits the annual benefits that can be accrued under a defined benefit plan. The limit for 2009 was $2,444 for each year of credited pensionable service, and pension benefits cannot be earned on the portion of salaries above approximately $122,222 per year.

Defined contribution plan

All of our regular, full-time employees participate in our registered defined contribution plan as of December 31, 2009, except for Mr. Grandey and Mr. Chad who participate in our registered defined benefit plan.

Under the Income Tax Act (Canada), the plan had a contribution limit of $22,000 in 2009, based on a salary of approximately $183,333.

Supplemental executive pension plan

The supplemental defined benefit plan is aimed at attracting and retaining talented executives over the longer term. The plan is designed to provide a retirement income that is consistent with the executive’s salary and to offset the strict limits of registered pension plans under the Income Tax Act (Canada).

All of our executives and certain officers of wholly owned subsidiaries participate in this plan, but they must also participate in either our defined benefit plan or defined contribution plan. The plan had 27 active members as at December 31, 2009, with 18 retirees and spouses of deceased retirees who were receiving a pension, and two former members with deferred or pending entitlements.

2010 MANAGEMENT PROXY CIRCULAR      79

Under the plan, executives and officers of certain subsidiaries receive overall benefits calculated as follows:

	1.8% of average of three highest years of base salary (excluding bonuses and taxable benefits)	For the CEO and senior vice-presidents for years of service after January 1, 1998, the overall benefits that would be paid under the program are calculated using 3% of the average of the three highest years of base salary (excluding bonuses and taxable benefits).
x	number of years of credited service
–	benefits payable under the base plan
=	overall benefits under the supplemental plan

The supplemental plan only provides benefits based on actual years of service with us up to the date of termination, or until the end of the notice period for termination without cause. It is only calculated on base salary, and does not include bonuses as part of the pensionable earnings, as other companies often do. The plan does not allow past service credits or any kind of accelerated service. Full benefits are paid at the normal retirement age of 65, but they can start at 60 years of age if the person has 20 years of service. There are no social security or other deductions.

We fund the supplemental plan each year, except for benefits for participants who are US taxpayers, including two named executives. These benefits are unfunded, and this liability was approximately $6,542,000 ($6,318,100 for the two named executives) as of December 31, 2009.

Early retirement

Mr. Grandey has reached the normal retirement age under our registered defined benefit plan, and is eligible to retire with full pension under this plan. Mr. Chad is within 10 years of the normal retirement age, so is eligible to retire early under the plan. If he retires early, he can either defer receiving the full pension until he reaches the normal retirement age under the plan, or receive his pension, less 0.25% times the total number of months until he reaches the normal retirement age.

Under our registered defined contribution plan, members can transfer their account balance or begin receiving a benefit any time after termination, so early retirement does not apply. Mr. Goheen, Mr. Assie and Mr. Gitzel are members of this plan.

Under our supplemental executive pension plan, although none of the named executives is eligible yet to retire with full pension under this plan, they can take early retirement starting at age 55. This gives them the option to either:

• defer receiving their full pension until they reach the defined age under the plan which is i) at least 60 with at least 20 years of continuous employment or ii) 65, whichever is earlier; or

• receive the pension, less 0.25% times the total number of months until they reach the defined age.

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Executive pension value disclosure

The table below shows the estimated annual pension service costs for the defined benefit plans and Cameco’s contribution to the defined contribution plans as the compensatory change. It also shows the accrued pension obligations and annual pension payable under our pension plans for each of the named executives.

									Accrued						Accrued
	Age		Number of years of		Annual benefits				obligation at start		Compensatory		Non-compensatory		obligation
	at		credited service		payable1 ($)				of year		change2		change3		at year end4
Name	year end		(#)		At year end		At age 65		($)		($)		($)		($)
Gerald W. Grandey		63		17.00		422,900		494,800		4,024,700		251,700		1,080,300		5,356,700
O. Kim Goheen		56		12.87		172,000		307,000		1,510,600		123,800		263,500		1,897,900
George B. Assie		58		30.25		377,900		497,600		4,067,700		124,700		339,800		4,532,200
Timothy S. Gitzel		47		2.98		43,500		335,100		193,300		98,400		174,600		466,300
Gary M.S. Chad		58		19.13		176,200		309,700		1,996,400		110,100		428,400		2,534,900

Notes:

1. Annual benefits payable

• Mr. Grandey and Mr. Chad participate in our registered defined benefit pension plan and do not have any defined contribution costs.

• Mr. Goheen, Mr. Assie and Mr. Gitzel participate in our registered defined contribution plan. All of the named executives participate in our supplemental executive pension plan.

• The annual benefits payable for Mr. Grandey and Mr. Chad include benefits under the registered defined benefit pension plan and the supplemental executive pension plan. The annual benefits payable for Mr. Goheen, Mr. Assie and Mr. Gitzel include benefits under the registered defined contribution pension plan and the supplemental executive pension plan. The defined contribution costs for Mr. Goheen, Mr. Assie and Mr. Gitzel are also included in the service cost as described under Compensatory change. The annual benefits payable do not take into account any early retirement reductions or vesting requirements.

The amounts under at age 65 are based on current compensation levels and assume accrued years of service to age 65 for each of the named executives. Under our supplemental executive pension plan, the named executives are eligible to retire at age 55, which would reduce the pension benefits they are entitled to receive.

The accrued obligation at start of year and the compensatory change are estimated totals that include our registered defined benefit pension plan, registered defined contribution pension plan and supplemental executive pension plan. They are based on assumptions representing entitlements in employment agreements that may change over time. The methods we used to determine these estimates may not be exactly the same as methods other companies use, so the figures may not be directly comparable.

We used the following key assumptions to estimate these benefit obligations:

• 100% vesting

• a retirement age of 63 or one year after the valuation date if 63 years of age or older. The assumed retirement age of 63 is management’s best estimate for determining the accrued benefit obligation as at December 31, 2009, as reported in our financial statements.

• salary increases of 4.5% each year

• a discount rate of 6.0% each year for Canadian and US liabilities to determine the benefit obligation

• a long-term rate of return on assets of 5.25% for the registered defined benefit pension plan and 6.0% for the invested assets of the supplemental executive pension plan

• benefits are pre-tax

See note 23 of our 2009 consolidated financial statements in our 2009 annual report or on our website for more information about our pension plans.

2. Compensatory change is the value of the projected pension earned from January 1, 2009 to December 31, 2009 for our registered defined benefit pension plan, registered defined contribution pension plan and supplemental executive pension plan.

2010 MANAGEMENT PROXY CIRCULAR      81

3. Non-compensatory change includes changes such as changes in assumptions (other than those used to estimate the compensatory change), employee contributions and interest on the accrued obligation at the start of the year.

4. Accrued obligation at year end is the value of the named executive’s projected pension earned for service up to December 31, 2009 under our registered defined benefit pension plan, registered defined contribution pension plan and supplemental executive pension plan. The pension amounts for Mr. Goheen, Mr. Assie and Mr. Gitzel equal the value of their accumulated contributions under the registered defined contribution pension plan, supplemented by amounts based on final average earnings and service under the supplemental executive pension plan (a defined benefit plan).

Loans to executives

As of March 15, 2010, we and our subsidiaries had no loans outstanding to our current or former named executives, except routine indebtedness as defined under Canadian securities laws.

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Developments in 2010

Compensation risk assessment

The human resources and compensation committee continued its review of compensation risk in 2010. We have already adopted a number of best practices as outlined on page 52.

The committee examined various aspects of compensation risk. Its review included conducting research internally and externally, and benchmarking ourselves against industry best practices to mitigate risk. The committee engaged its compensation consultant to assist with the review.

The committee concluded that our practices are well developed and is satisfied that our policies and procedures are appropriate for managing compensation risk in the future.

2010 compensation to date

Reflecting strong 2009 performance, the human resources and compensation committee positioned total direct compensation in 2010 above the median at approximately the 55^th percentile.

Base salary

Each of the named executives received a 2% increase in base salary for 2010, positioning them at the median of our compensation peer group and for internal equity. The increase is consistent with the lower end of salary increases nationally.

	2010 base salary				2009 base salary
Name and position	$		% increase from 2009		$		% increase from 2008
Gerald W. Grandey		1,019,500		2.0		999,500		1.4
President and CEO
O. Kim Goheen		483,300		2.0		473,800		3.0
Senior Vice-President and CFO
George B. Assie		577,800		2.0		566,500		3.0
Senior Vice-President, Marketing and Business Development
Timothy S. Gitzel		561,000		2.0		550,000		17.0
Senior Vice-President and COO
Gary M.S. Chad		453,900		2.0		445,000		3.0
Senior Vice-President, Governance, Law and Corporate Secretary

Long-term incentives

Options and PSUs were awarded to the named executives on March 1, 2010, after we released our 2009 results. While our 2009 performance is taken into consideration, we grant these long-term incentives to motivate executives to help us meet our performance targets over the coming years and to tie a portion of their future compensation to our longer term performance. The human resources and compensation committee recommended that the board use its discretion to grant additional long-term incentive awards to position total direct compensation slightly above the usual target of the median of our compensation peer group, and to encourage the executives to continue to deliver the strong performance demonstrated in 2009, over the longer term.

The table below shows the options and PSUs that were granted to our named executives in March 2010. The options vest over three years and have an exercise price of $28.90 for a period of eight years. The PSUs vest at the end of a three-year period and have a grant date value of $28.90 per unit, based on the closing price of Cameco common shares on the day before the grant.

The expected value of the long-term compensation awards is made up of 60% options and 40% PSUs.

2010 MANAGEMENT PROXY CIRCULAR      83

			Value of
	Securities		options								Value of		Date when
	under options		on date of				Expiry		PSUs		PSUs		performance
	granted		grant1		Exercise price		date		granted2		granted3		period matures
Name	(#)		($)		($/security)		(mm/dd/yyyy)		(#)		($)		(mm/dd/yyyy)
Gerald W. Grandey		155,000		2,104,900		28.90		02/28/2018		48,000		1,387,200		12/31/2012
O. Kim Goheen		38,000		516,040		28.90		02/28/2018		12,000		346,800		12/31/2012
George B. Assie		55,000		746,900		28.90		02/28/2018		18,000		520,200		12/31/2012
Timothy S. Gitzel		60,000		814,800		28.90		02/28/2018		20,000		578,000		12/31/2012
Gary M.S. Chad		20,000		271,600		28.90		02/28/2018		6,000		173,400		12/31/2012

Notes:

1.	Value of options
	Options granted on March 1, 2010 are valued at approximately $13.58 per option using the Black-Scholes option-pricing model. The compensation consultant used the following key assumptions in the model when comparing companies:

Dividend yield	Volatility		Risk-free rate		Expected life		Exercise price
(%)	(%)		(%)		(years)		($)
0.94		44		2.81		8		28.90

In its analysis for the human resources and compensation committee, the compensation consultant estimated the expected value of Cameco’s options using the full term of the option. As this approach may not be identical to that used by other companies and is sensitive to the assumptions used, the figures may not be directly comparable across companies, but for compensation valuation purposes a consistent approach has been used. The exercise price of $28.90 per option was based on the closing price of Cameco shares on the TSX on the day immediately before the grant.

2. PSUs granted

The amounts reflect 100% of the original number of PSUs awarded and have not been adjusted to reflect performance. The actual number of PSUs earned can vary from 0 to 150% of the original number granted based on corporate performance (and 200% for exceptional performance).

3. Value of PSUs granted

The amounts represent the number of PSUs granted to each named executive, multiplied by $28.90, the closing price of Cameco shares on the TSX on the day immediately before the grant.

The PSUs granted on March 1, 2010 are for the three-year performance period from January 1, 2010 to December 31, 2012. The payout will be following the end of the performance period, pro-rated for the period during the three years he was an employee, unless the named executive leaves the organization earlier because of retirement, death or termination without cause. If the named executive leaves Cameco because of a change of control, then all of the unvested PSUs will vest and be paid out at their target value. If he resigns or is terminated with cause, all of his PSUs are cancelled and he forfeits the payout.

84      CAMECO CORPORATION

Advisory vote on our approach to executive compensation

In 2010, you will have an opportunity to vote on our approach to executive compensation as disclosed in this circular. Your vote is advisory and non-binding, and will provide the board and human resources and compensation committee with important feedback.

Please take some time to read the Executive compensation section starting on page 49. We describe our compensation philosophy, the objectives and elements of the program and the way we measure and assess performance and make compensation decisions. We explain how and why a large portion of our executives’ compensation is linked to performance and earned over the longer term, and how we manage compensation risk.

As a shareholder you have the opportunity to vote for or against our approach to executive compensation through the following resolution:

Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in Cameco’s management proxy circular delivered in advance of the 2010 annual meeting of shareholders.

We recommend that shareholders vote for the advisory resolution on our approach to executive compensation. Unless otherwise instructed, the named proxyholders will vote for the advisory resolution.

We will disclose the results of the advisory vote in our report on the 2010 annual meeting voting results.

The board believes it is important to give shareholders an effective way to provide input on our approach to executive compensation. The opportunity that shareholders will have to vote this year is one means of accomplishing this objective. Because we are committed to ensuring shareholders have an effective and timely opportunity to provide input on this matter, we continue to evaluate the most effective means of accomplishing this objective. As a result, following this year’s vote, we will examine the level of interest and nature of the comments received from shareholders, as well as evolving best practices by other companies, and consider what might be the optimum frequency and approach for shareholders to provide their input on our approach to executive compensation.

Shareholders can also write directly to the chair of the board or the chair of the human resources and compensation committee, with their views or questions on executive compensation (see Communicating with the board on page 33). The board will also consider other methods of engaging shareholders on the topic.

2010 MANAGEMENT PROXY CIRCULAR      85

Shareholder proposals

Shareholders who meet eligibility requirements under the Canada Business Corporations Act (CBCA) can submit a shareholder proposal as an item of business for our annual shareholder meeting in 2011. Shareholder proposals must be submitted to our corporate secretary by January 10, 2011 for next year’s annual meeting. Only shareholder proposals that comply with the CBCA requirements received by that date, and our responses, will be printed in the management proxy circular we send to shareholders next spring.

Other information

Information available online

A number of our documents are available on our website (www.cameco.com) and on SEDAR (www.sedar.com) including:

• 2009 annual report which includes the audited financial statements and MD&A for the most recently completed financial year

• our most recent annual information form, which has additional information on our audit committee, including the committee charter and other information required by Canadian securities regulators

Our code of conduct and ethics, our articles of incorporation and the bylaws are also available on our website.

Filings with the US Securities and Exchange Commission (SEC) can be accessed under Filings and forms on the SEC website (www.sec.gov).

Documents available in print

You can request a printed copy of the following documents at no charge from our corporate secretary:

• our 2009 annual report which includes the audited financial statements and MD&A for the most recently completed financial year

• any subsequent quarterly reports

• our most recent annual information form

• our code of conduct and ethics

86      CAMECO CORPORATION

Appendix A

Interpretation

For the purposes of this Circular:

a person is an “associate” of another person if:

i.	one is a corporation of which the other is an officer or director;
ii.	one is a corporation that is controlled by the other or by a group of persons of which the other is a member;
iii.	one is a partnership of which the other is a partner;
iv.	one is a trust of which the other is a trustee;
v.	both are corporations controlled by the same person;
vi.	both are members of a voting trust or parties to an arrangement that relates to voting securities of the Corporation; or
vii.	both are at the same time associates, within the meaning of any of (i) to (vi) above, of the same person;

provided that:

viii.	if a resident associated with a non-resident submits to the Board of Directors of the Corporation a statutory declaration stating that no voting shares of the Corporation are held, directly or indirectly, for a non-resident, that resident and non-resident are not associates of each other, provided the statutory declaration is not false;
ix.	two corporations are not associates pursuant to (vii) above by reason only that each is an associate of the same person pursuant to (i) above;
x.	if any person appears to the Board to hold voting shares to which are attached not more than the lesser of four one-hundredths of 1% of the votes that may be cast to elect Directors of the Corporation and 10,000 such votes, that person is not an associate of any other person and no other person is an associate of that person in relation to those voting shares.

“beneficial ownership” includes ownership through a trustee, legal representative, agent or other intermediary.

“control” means control in any manner that results in control in fact, whether directly through ownership of securities or indirectly through a trust, an agreement, the ownership of any body corporate or otherwise.

“non-resident” means:

i.	an individual, other than a Canadian citizen, who is not ordinarily resident in Canada;
ii.	a corporation incorporated, formed or otherwise organized outside Canada;
iii.	a foreign government or agency thereof;
iv.	a corporation that is controlled by non-residents, directly or indirectly, as defined in any of (i) to (iii) above;
v.	a trust:

a.	established by a non-resident as defined in any of (ii) to (iv) above, other than a trust for the administration of a pension fund for the benefit of individuals, a majority of whom are residents; or
b.	in which non-residents as defined in any of (i) to (iv) above have more than 50% of the beneficial interest; or

vi. a corporation that is controlled by a trust described in (v) above.

“person” includes an individual, corporation, government or agency thereof, trustee, executor, administrator, or other legal representative.

“resident” means an individual, corporation, government or agency thereof or trust that is not a non-resident.

The foregoing definitions are summaries only and are defined in their entirety by the provisions of the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) and the Articles of the Corporation.

2010 MANAGEMENT PROXY CIRCULAR      87

Appendix B

Board mandate

PURPOSE

The purpose of the board of directors (“board”) is to supervise the management of the business and affairs of the corporation. The board of directors will discharge this responsibility by developing and determining policy by which the business and affairs of the corporation are to be managed and by overseeing the management of the corporation.

COMPOSITION

The board is elected by the shareholders at the annual meeting of the shareholders of the corporation. The board shall appoint the chair annually from among its non-executive independent members. As fixed by the articles of the corporation, the board shall consist of at least three and not more than fifteen members. A majority of the directors shall be resident Canadians.

A majority of the directors shall be independent pursuant to standards for independence adopted by the board (as provided in Appendix A to this mandate).

MEETINGS

The board will schedule at least six regular meetings annually and as many additional meetings as necessary to carry out its duties effectively. The board will hold special meetings at least once a year to specifically discuss strategic planning and strategic issues.

A meeting of the board may be called by the chair, the chief executive officer or any two directors. The corporate secretary shall, upon the direction of any of the foregoing, arrange a meeting of the board. Notice of the time and place of each meeting of the board must be given to each director either by personal delivery, electronic mail, facsimile or other electronic means not less than 48 hours before the time of the meeting or by mail not less than 96 hours before the date of the meeting. Board meetings may be held at any time without notice if all of the directors have waived or are deemed to have waived notice of the meeting.

A majority of the members of the board, or such other number as the directors may by resolution determine, shall constitute a quorum. No business may be transacted by the board except at a meeting of its members at which a quorum of the board is present. Each director is expected to attend all meetings of the board. A director who is unable to attend a board meeting in person may participate by telephone or teleconference.

At board meetings, each director is entitled to one vote and questions are decided by a majority of votes of the directors present. In case of an equality of votes, the chair of the meeting does not have a second or casting vote. The corporate secretary acts as secretary to the board. In the absence of the corporate secretary, the board may appoint any other person to act as secretary.

The board may invite such officers and employees of the corporation as it may see fit from time to time to attend at meetings of the board and assist thereat in the discussion and consideration of any matter.

DUTIES AND RESPONSIBILITIES

1. The board of directors has specific responsibilities for the following, which do not, in any way, limit or comprehensively define its overall responsibility for the stewardship of the corporation:

a.	selection, appointment, evaluation and if necessary the termination of the chief executive officer;
b.	satisfying itself as to the integrity of the senior executives of the corporation and as to the culture of integrity throughout the corporation;
c.	succession planning, including appointing, counselling and monitoring the performance of executive officers;
d.	oversight of the human resources policies of the corporation and while taking into account the views and recommendations of the human resources and compensation committee, approval of the compensation of the chief executive officer and the other executive officers;
e.	adoption of an annual strategic planning process, approval of annual strategic plans and monitoring corporate performance against those plans;
f.	approval of periodic capital and operating plans and monitoring corporate performance against those plans;
g.	oversight of the policies and processes which identify the corporation’s principal business risks, and the systems in place to mitigate these risks;
h.	policies to require ethical behaviour of the corporation and its directors and employees, and compliance with laws and regulations;
i.	oversight of the policies and processes for the implementation and integrity of the corporation’s internal control and management information systems and its financial reporting;

88      CAMECO CORPORATION

j.	assessment of the effectiveness of the board and its committees and overseeing the establishment of an appropriate orientation program for new directors and an education program for all directors;
k.	definition of the duties and the limits of authority of senior management, including approving a position statement for the chief executive officer;
l.	policies for disclosure of corporate information to facilitate effective communications with shareholders, other stakeholders and the public;
m.	health and safety and environmental policies and oversight of systems to enable compliance with these policies and all relevant laws and regulations;
n.	corporate governance including the relationship of the board of directors to management and taking reasonable steps to ensure the corporation has appropriate structures and procedures in place to permit the board of directors to effectively discharge its duties and responsibilities;
o.	calling meetings of shareholders and submission to the shareholders of any question or matter requiring approval of the shareholders;
p.	approval of directors for nomination and election, and recommendation of the auditors to be appointed at shareholders’ meetings, and filling a vacancy among the directors or in the office of the auditor;
q.	issuance of securities of the corporation;
r.	declaration of dividends and establishment of the dividend policy for the corporation;
s.	approval of the annual audited financial statements, quarterly financial statements and quarterly reports, management proxy circulars, takeover bid circulars, directors’ circulars, prospectuses, annual information forms and other disclosure documents required to be approved by the directors of a corporation under securities laws, regulations or rules of any applicable stock exchange;
t.	adoption, amendment or repeal of bylaws of the corporation;
u.	review and approval of material transactions not in the ordinary course of business; and
v.	other corporate decisions required to be made by the board of directors, or as may be reserved by the board of directors, to be made by itself, from time to time and not otherwise delegated to a committee of the board of directors or to the management of the corporation.

2. Subject to the provisions of applicable law and the bylaws of the corporation, the responsibilities of the board of directors may be delegated, from time to time, to committees of the board of directors on such terms as the board of directors may consider appropriate.

ORGANIZATIONAL MATTERS

1. The procedures governing the board shall be those in Parts 6 and 7 of the General Bylaws of the corporation.

2. The board shall annually review and assess the adequacy of its mandate.

3. The board shall participate in an annual performance evaluation.

2010 MANAGEMENT PROXY CIRCULAR      89

Appendix to the Board mandate

Definition of independent director and related definitions

In these guidelines:

1. Following are the criteria for determining independence for purposes of membership on the board:

a. “independent director” means a director who has no direct or indirect material relationship with the corporation. For this purpose, a material relationship means a relationship which could, in the view of the board, reasonably interfere with the exercise of a director’s independent judgment. Despite the foregoing, the following individuals are considered to have a material relationship with the corporation:

i.	an individual who is, or has been within the last three years, an employee or executive officer of the corporation;
ii.	an individual whose immediate family member is, or has been within the last three years, an executive officer of the corporation;
iii.	an individual who:

A.	is a partner of a firm that is the corporation’s internal or external auditor;
B.	is an employee of that firm; or
C.	was within the last three years a partner or employee of that firm and personally worked on the corporation’s audit within that time;

iv. an individual whose immediate family member:

A.	is a partner of a firm that is the corporation’s internal or external auditor;
B.	is an employee of that firm and participates in its audit, assurance or tax compliance (but not tax planning) practice; or
C.	was within the last three years a partner or employee of that firm and personally worked on the corporation’s audit within that time;

v.	an individual who, or whose immediate family member, is or has been within the last three years, an executive officer of an entity if any of the corporation’s current executive officers serve or served at that same time on the entity’s compensation committee;
vi.	an individual who received, or whose immediate family member received, more than US $100,000 (or Cdn. $75,000 in the case of an immediate family member who is employed as an executive officer of Cameco Corporation) in direct compensation from the corporation during any 12 month period within the last three years, other than as remuneration for acting in his or her capacity as a member of the board or any board committee, or as a part-time chair or vice-chair of the board or any board committee, and fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the corporation if the compensation is not contingent in any way on continued service (and, for greater certainty, “direct compensation” does not include compensation received by an immediate family member for service as an employee of the corporation unless that immediate family member is an executive officer of Cameco Corporation);
vii.	an individual who is a current employee, or whose immediate family member is a current executive officer, of an entity that has made payments to, or received payments from, the corporation for property or services in an amount which, in any of the last three fiscal years, exceeds the greater amount of $1 million, or 2% of such other entity’s consolidated gross revenues; and
viii.	an individual who serves as an officer, director or trustee of a tax exempt organization, and the corporation’s discretionary charitable contributions to that organization exceed 1.5% of that organization’s total annual consolidated gross revenues within any of the last three fiscal years (providing that the corporation’s matching of employee charitable contributions will not be included in the amount of the corporation’s contributions for this purpose).

b. For purposes of section 1(a) all references to “the corporation” are deemed to include a subsidiary entity of the corporation and a parent of the corporation.

2. For purposes of this Appendix A, “immediate family member” means a person’s spouse, parent, child, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, and anyone (other than a domestic employee of a person or family member) who shares that person’s home.

90      CAMECO CORPORATION

For purposes of this Appendix A, a person or company is considered to be a subsidiary entity of another person or company if:

a. it is controlled by:

i.	that other; or
ii.	that other and one or more persons or companies each of which is controlled by that other; or
iii.	two or more persons or companies, each of which is controlled by that other; or

b. it is a subsidiary entity of a person or company that is the other’s subsidiary entity.

3. For purposes of this Appendix A, “control” means the direct or indirect power to direct or cause the direction of the management and policies of a person or company, whether through ownership of voting securities or otherwise.

4. For purposes of this Appendix A, “person” means an individual, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal representative.

5. In determining independence for purposes of the audit committee, in addition to satisfying the board independence criteria, directors who are members of the audit committee will not be considered independent for the purpose of membership on the audit committee if:

a.	the audit committee member, or the member’s spouse, minor child or stepchild, or a child or stepchild who shares the member’s home, provides personal services to the corporation or its subsidiary for compensation (other than compensation for acting as a director);
b.	the audit committee member is a partner, member or principal of a consulting, legal, accounting, investment banking or financial services firm which provides services to the corporation or its subsidiary for fees, regardless of whether the audit committee member personally provided the services for which the fees are paid; or
c.	the audit committee member is an affiliated entity of the corporation or any of its subsidiaries, where:

i. a person or company is considered to be an affiliated entity of another person or company if:

A.	one of them controls or is controlled by the other or if both persons or companies are controlled by the same person or company, or
B.	the person is an individual who is:

I.	both a director and an employee of an affiliated entity; or
II.	an executive officer, general partner or managing member of an affiliated entity;

ii. despite subparagraph (c)(i)(B) above, an individual will not be considered to be an affiliated entity of the corporation if the individual:

A.	owns, directly or indirectly, no more than ten per cent of any class of voting securities of the corporation; and is not an executive officer of the corporation.
B.	Is not an executive officer of the corporation.

2010 MANAGEMENT PROXY CIRCULAR      91

cameco.com

EX-99.3

Exhibit 99.3

Cameco Corporation
Use this proxy form to vote by proxy at our 2010 annual meeting of shareholders

This proxy is solicited by management.	When
Throughout this document, we, us, our and	Wednesday, May 26, 2010
Cameco mean Cameco Corporation and you	1:30 p.m.
and your mean the person completing this form.
	Where
	Cameco Corporation
	2121 — 11th Street West Saskatoon,
	Saskatchewan

1 Declare your residency

If you do not provide this information, we will consider the shares represented by this proxy to be owned and controlled by a non-resident, which means the vote may have less impact.

You declare that the shares represented by this proxy are held, beneficially owned or controlled, either directly or indirectly, by a resident of Canada as defined below.

If the shares are held in the names of two or more people, you declare that all of these people are residents of Canada.

o Yes

o No

When you sign this form, you are certifying that you have done whatever is reasonably possible to confirm residential status.

What do we mean by residency?

Cameco shares have restrictions on ownership and voting for residents and non- residents of Canada. You can read about residency and voting starting on page 4 of the accompanying management proxy circular.

The definitions here are summaries only. The complete definitions are in the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) and in our articles.

A resident is anyone who is not a non-resident. Residents can be individuals, corporations, trusts and governments or government agencies.

A non-resident is:

• an individual, other than a Canadian citizen, who is not ordinarily resident in Canada

• a corporation

• that was incorporated, formed or otherwise organized outside Canada, or

• that is controlled by non-residents, either directly or indirectly

• a trust

• that was established by a non-resident, other than a trust for the administration of a pension fund for individuals where the majority of the individuals are residents or

• where non-residents have more than 50% of the beneficial interest

• a foreign government or foreign government agency

Two ways to vote: in person or by proxy

Our annual meeting gives you the opportunity to vote on several items of Cameco business. It is also an opportunity to get an update on our business, meet face to face with management and interact with the board of directors.

Your vote is important, regardless of the number of shares you hold.

(A)	Vote in person
	Come to our annual meeting and vote your shares in person. Do not complete this form.
(B)	Vote by proxy
	This is the easiest way to vote. It means you give someone else — called your proxyholder — the authority to attend the meeting and vote for you.

You can vote by proxy in four ways:

• By fax — Complete, date and sign this form and fax both pages to our transfer agent, CIBC Mellon Trust Company (CIBC Mellon)

• By mail — Complete, date and sign this form and mail it to CIBC Mellon

• On the internet — Go to www.eproxyvoting.com/cameco and follow the instructions on screen. You will need your control number, which appears below your name and address on this form.

• By appointing someone else to attend the meeting for you — This person does not need to be a shareholder (see section 2). Make sure the person you are appointing is aware of it and attends the meeting for you. Your proxyholder will need to see a representative of CIBC Mellon when they arrive at the meeting.

If you are voting by proxy, please complete all five sections of this form, date and sign it, and return it right away.

Your control number:

2 Appoint a proxyholder

You can appoint Gerald W. Grandey or Gary M.S. Chad to be your proxyholder, or choose someone else to attend and vote on your behalf at the meeting. This person does not need to be a shareholder.

o You appoint Gerald W. Grandey, or in his absence, Gary M.S. Chad.

o You appoint the following person to attend the meeting and vote on your behalf:

If you do not check one of the boxes, we will assume you have appointed Gerald W. Grandey or, in his absence, Gary M.S. Chad, as your proxyholder.

3 Tell us your voting instructions

When you complete this section, you are directing your proxyholder to follow these instructions when voting.

Our board of directors and management recommend that shareholders vote For these items.

If you do not specify how you want to vote your shares:

•    the Cameco officer you appointed as your proxyholder in section 2 will vote For each of the items below •    the other proxyholder you appointed in section 2 can vote as he or she sees fit

If there are amendments or other items of business that properly come before the meeting, your proxyholder has the authority to vote at his or her discretion.

Elect the directors

(see page 8 of the management proxy circular)

	For	Withhold		For	Withhold
1. John H. Clappison	o	o	7. Nancy E. Hopkins	o	o
2. Joe F. Colvin	o	o	8. Oyvind Hushovd	o	o
3. James R. Curtiss	o	o	9. J.W. George Ivany	o	o
4. Donald H.F. Deranger	o	o	10. A. Anne McLellan	o	o
5. James K. Gowans	o	o	11. A. Neil McMillan	o	o
6. Gerald W. Grandey	o	o	12. Victor J. Zaleschuk	o	o

Appoint the auditors
(see page 23 of the management proxy circular)	For	Withhold
Appoint KPMG LLP as auditors	o	o

Advisory vote on our approach to executive compensation

(see page 85 of the management proxy circular)

As this is an advisory vote, the results will not be binding on the board.

Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in Cameco’s management proxy circular delivered in advance of the 2010 annual meeting of shareholders. For
o Against
o

4 Sign and date

When you sign here, you are:

• authorizing your proxyholder to vote according to your voting instructions at Cameco’s 2010 annual meeting of shareholders, or any postponed or adjourned meeting

• revoking any proxy that you previously gave for this meeting.

For shares registered in the name of a corporation, estate, trust or minor, an authorized officer or attorney must sign this form and state his or her position. This person may also have to provide proof that he or she is authorized to sign.

Signature
(if the shares are held in the names of two or more persons, all must sign)

Date
(if you leave this blank, we will consider the date to be the day this form was mailed to you)

Position
(complete this if you are a guardian, or signing by power of attorney on behalf of a corporation, estate or trust)

5 Mail, fax or vote online

We must receive your completed form before 1:30 p.m. CST on Tuesday, May 25, 2010. If the meeting is postponed or adjourned, we must receive it at least 24 hours before the start of that meeting.

By fax

Toll free from anywhere in North America:
1.866.781.3111

From outside North America:
416.368.2502

Remember to fax both pages of this form.

By mail

Use the envelope provided or mail to:

CIBC Mellon Trust Company
Attn: Proxy department
P.O. Box 721
Agincourt, Ontario M1S 0A1

If you prefer to vote on the internet, we need to receive your internet voting instructions before 1:30 p.m. CST on Monday, May 24, 2010.

Go to www.eproxyvoting.com/cameco and follow the instructions on screen.

EX-99.4

Exhibit 99.4

Double

Cameco aims to double uranium production by 2018.

           cameco.com > Keywords > Strategy

OUR BUSINESS STRATEGY

Today’s position of strength enables tomorrow’s path of growth. At Cameco, we are building on our base of large, high-grade uranium reserves to generate increased value for our stakeholders.

With growing global demand for energy, Cameco continues to build toward our vision of being a dominant nuclear energy company — as a supplier, partner, investment and employer of choice in the nuclear industry.

Our focus has never been more clear. With a mandate to double annual uranium production by 2018, we intend to capture greater value from our low-cost and geographically diverse asset base.

We can achieve this by increasing production at existing mines and developing new deposits under our control. In addition, we will be assessing acquisitions that could add to our asset base.

“Our strategies are designed to capitalize on our greatest strengths: the volume of high-grade uranium we can produce and the value we can provide through our fuel services activities.”

JERRY GRANDEY,
PRESIDENT & CEO

From Canada to Kazakhstan and the United States to Australia, we are exploring opportunities around the world to build on our core strengths in uranium production.

This increased production will help us meet growing demand from customers around the world.

More than Mining

Cameco’s growth strategy stretches from production to processing. As we move towards 40 million pounds of annual production, we are also investing in our fuel services business to support our overall growth in the nuclear energy industry.

Fuel services enables us to serve customers and capture synergies in the uranium fuel cycle. With a focus on cost competitiveness, we strive to optimize production and search for innovation — including laser enrichment technology — to support the continuing development of our business.

cameco.com > Keywords > Financial Results

FINANCIAL SUMMARY

Five-Year Financial Summary

Dollars are expressed in $Cdn millions
except prices and per share amounts.	2009			2008			2007			2006			2005
Operations
Revenue	$	2,315.0		$	2,182.6		$	1,904.8		$	1,417.6		$	900.6
Adjusted net earnings1,2		582.0			589.2			572.1			273.7			208.5
Net earnings1		1,099.4			450.1			416.1			375.7			215.5
EBITDA		1,136.7			929.1			586.2			447.7			376.8
Cash provided by operations		690.1			529.6			755.9			326.8			176.1
Capital expenditures		392.7			531.1			362.1			338.9			243.5
Financial Position
Total assets	$	7,342.1		$	7,010.6		$	5,371.4		$	5,140.4		$	4,772.8
Total debt		1,041.2			1,313.0			725.9			704.6			858.8
Shareholders’ equity		4,843.8			3,513.6			2,743.9			2,741.4			2,363.6
Financial Ratios
Current ratio (current assets/current liabilities)		3.3:1			1.5:1			1.9:1			2.7:1			2.4:1
Return on common shareholders’ equity		26	%		14	%		15	%		15	%		10	%
Net debt to capitalization		n/a3			26	%		18	%		12	%		9	%
Cash from operations/total net debt		n/a3			42	%		127	%		88	%		75	%
Production (Cameco’s Share)
Uranium production (million lbs U3 O8)		20.8			17.0			19.8			21.0			21.2
Fuel services (million kgU)		12.3			8.3			12.9			15.4			11.4
Production (100% Basis)
Electricity generation (terawatt hours)4		24.6			24.7			25.3			25.8			30.8

1	Attributable to common shares.
2	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.
3	Not applicable.
4	Represents 100% of output from Bruce Power Limited Partnership (Cameco has a 31.6% interest in Bruce Power).

cameco.com > Keywords > Mining cameco.com > Keywords > Exploration

URANIUM PRODUCTION

Cameco has a plan for growth —

Fuelled from diverse sources.

With 479 million pounds of proven and probable U3O8 reserves, Cameco has the potential to “Double U” by 2018.

To achieve this, we have undertaken a number of long-term projects, recognizing that the work we complete today will prepare us for the growth in demand that is anticipated in the years ahead.

Our project timelines will vary according to location, but each project will follow a clear development plan with measurable milestones that will demonstrate our progress toward our long-term goal.

McArthur River Mine
Northern Saskatchewan, Canada

McArthur River, the world’s largest, high-grade uranium mine, with an average ore grade of 19.5% — more than 100 times the world average — is transitioning from the current mining area to new orebodies that promise to sustain mining and milling at Key Lake for years to come.

Cigar Lake Project
Northern Saskatchewan, Canada

Cigar Lake, with an average ore grade of 17%, is expected to add an additional nine million pounds of uranium production for Cameco, once remediation and construction efforts are complete.

Inkai Project
Republic of Kazakhstan

Inkai in Kazakhstan boosted Cameco’s production by more than one million pounds in 2009. We are targeting our share of future production to increase to 5.7 million pounds from blocks one and two.

Rabbit Lake Operation
Northern Saskatchewan, Canada

Rabbit Lake, which has been producing uranium for three decades, has seen its reserve base expanded, providing two additional years of production. The Rabbit Lake mill is also expected to process about half of the uranium mined from Cigar Lake.

 Existing production    Under development    Potential

cameco.com > Keywords > Fuel and Power

FUEL SERVICES AND ELECTRICITY

Proven & Probable U₃O₈ Reserves

479 million lbs

Smith Ranch-Highland Operation
Wyoming, US

Crow Butte Operation
Nebraska, US

Smith Ranch-Highland and Crow Butte are long-established in situ recovery uranium mining facilities; both are slated for expansion.

Kintyre Project
Western Australia

Kintyre, 70% owned by Cameco, represents an advanced uranium exploration project in Western Australia that further expands the company’s portfolio of quality uranium assets, adding potential for low-cost production and diversifying geographic reach and deposit types.

Millennium Project
Northern Saskatchewan, Canada

The Millennium project represents a potential new uranium mine that could take advantage of milling capacity at Key Lake.

Port Hope Conversion Facility
Ontario, Canada

Cameco’s Port Hope conversion facility produces both UF₆ and UO₂, which, after further processing, is used exclusively for the generation of clean electricity by nuclear power plants around the world.

Beyond uranium mining and milling, Cameco has assembled a portfolio of vertically integrated operations, including about 35% of the western world’s uranium fuel conversion capacity, Candu fuel manufacturing capacity and a 31.6% interest in nuclear electricity generation through the Bruce Power Limited Partnership in Ontario.

cameco.com > Keywords > Customers cameco.com > Keywords > Careers cameco.com > Keywords > Sustainability

RELIABLE REVENUE STREAMS

Cameco’s customers, utilities that provide baseload electricity, continue consuming uranium through good times and bad.

Our customers have solid credit ratings, are located in stable countries where plants are often government-owned or where rate structures are regulated, and are often looking to increase their capacity to generate clean electricity. Many Cameco contracts include floor price protection against decreases in market price, while retaining exposure to future price increases. The result is relatively predictable revenue with significant upside.

PURSUING EXCELLENCE

Cameco is focused on safety, operational excellence and environmental leadership as strategic imperatives in doubling annual uranium production. Our success in these areas is closely connected to our ability to deliver strong and sustainable financial performance.

Cameco’s Four Measures of Success

• A Safe, Healthy and Rewarding Workplace

• A Clean Environment

• Supportive Communities

• Outstanding Financial Performance

The safety of people and protection of the environment are the foundation of our corporate values.

Initiatives such as the Cameco Environmental Leadership Awards unleash the creative potential of our employees to drive advances in environmental performance.

Cameco values the contribution of every employee, with a realization that recruiting and retaining the best people drives Cameco’s success.

Through personal and professional integrity, we lead by example, earn trust, honour our commitments and conduct our business ethically. That includes sharing the benefits of resource production and building enduring and sustaining partnerships. Cameco is one of Canada’s leading employers of First Nations and Metis people, bringing employment and economic opportunity to growing communities.

Giving back through community investment is demonstrated through a variety of initiatives. Cameco is committed to donating 1% of after-tax net earnings to projects related to youth, education and literacy, health and wellness and community development.

INVESTOR INFORMATION

Common Shares

Toronto (CCO) | New York (CCJ)

Transfer Agents and Registrars

For information on common share holdings, dividend cheques, lost share certificates and address changes, contact:

In Canada:	In the United States:
CIBC Mellon Trust Company	BNY Mellon Shareowner Services
P.O. Box 7010	480 Washington Blvd.
Adelaide Street Postal Station	Jersey City, New Jersey 07310
Toronto, Ontario M5C 2W9	U.S.A.
Canada

Telephone:

1-800-387-0825 (toll-free within Canada and the United States)

OR

1-416-643-5500 (from any country other than Canada and the United States)

Fax:

1-416-643-5501 (all countries)

cibcmellon.com/investorinquiry

Annual Meeting

The annual meeting of shareholders of Cameco Corporation is scheduled to be held on Wednesday, May 26, 2010, at 1:30 p.m. at Cameco’s head office in Saskatoon, Saskatchewan.

Dividend Policy

The board of directors has established a policy of paying a quarterly dividend of $0.07 ($0.28 per year) per common share. This policy will be reviewed from time to time in light of the company’s cash flow, earnings, financial position and other relevant factors. Inquiries

Cameco Corporation

2121 — 11th Street West
Saskatoon, Saskatchewan S7M 1J3
Phone: 306-956-6200          Fax: 306-956-6201

We are making statements and providing information about our expectations for the future which are considered to be forward-looking information or forward-looking statements under Canadian and United States securities laws. These include our statements about our aim to double our annual uranium production by 2018 and how we expect to achieve this goal, our statement that our customers and contracting strategy provide relatively predictable revenue with significant upside, and other statements using words such as “intend”, “can”, “will”, “strive”, “slated”, “potential”, “could”, “promise”, “expected” and “targeting”. It is important to understand that these statements represent our current views, and can change significantly. We are presenting this information to help you understand management’s current views of our future prospects, and it may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by securities laws. This information is based on a number of material assumptions, and is subject to a number of material risks, which are discussed in our current annual MD&A, including under the heading “About forward-looking information”. In particular, we have made assumptions about 2018 production levels at our existing mines, and assumptions about the development of mines that are not operating yet and their 2018 production levels. If an assumption about one or more mines proves to be incorrect, we will not reach our 2018 target production level unless the shortfall can be made up by additional production at another mine. The material risks that could prevent us from reaching our target include the risks that we may not be able to maintain or increase production levels at McArthur River or Inkai, there are further delays in reaching full production levels at Cigar Lake, development of Kintyre is delayed because of political, regulatory or Aboriginal issues, we cannot move ahead with production at the Kintyre or Millennium projects, lack of milling capacity, uranium prices or development and operating costs make it uneconomical to develop projects under consideration and disruption in production or development due to natural phenomena, labour disputes, political risks or other development and operating risks. Information of a scientific and technical nature concerning Cigar Lake, McArthur River and Inkai was prepared under the supervision of Alain Mainville, P. Geo., Cameco’s director, mineral resources management, who is a qualified person for the purpose of NI 43-101.

cameco.com

EX-99.5

Exhibit 99.5

Focused on

Cameco
2009 Annual Report

Cameco’s vision is to be a dominant nuclear
energy company producing uranium fuel
and generating clean electricity. Our goal
is to be the supplier, partner, investment
and employer of choice.

We are making statements and providing information about our expectations for the future which are considered to be forward-looking information or forward-looking statements under Canadian and United States securities laws. These include statements about our aim to double our annual uranium production to 40 million pounds by 2018 and how we expect to achieve that goal, our expectation that Cigar Lake will begin production mid 2013, and our expectation that demand for uranium will grow and there will a shortage of uranium supply. We are presenting this information to help you understand management’s current views of our future prospects, and it may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by securities laws. This information is based on a number of material assumptions, and is subject to a number of material risks, which are discussed in our annual MD&A contained in this document, including under the heading “About forward-looking information”.

URANIUM

1	Mining
	There are three ways to mine uranium, depending on the depth of the orebody and the deposit’s geological characteristics:

• Open pit mining is used if the ore is near the surface. The ore is usually mined using drilling and blasting.

• Underground mining is used if the ore is too deep to make surface mining economical. Tunnels and shafts provide access to the ore.

• In situ recovery (ISR) does not require excavation. Instead, holes are drilled into the ore and a solution is used to dissolve the uranium. The solution is pumped to the surface where the uranium is recovered.

1	Milling
	Ore from open pit and underground mines is processed to extract the uranium and package it as a powder typically referred to as uranium concentrate
	(U3O8) or yellowcake. The leftover ground rock and other solid waste (tailings) is placed in an engineered tailings facility.

FUEL SERVICES

2	Refining
	Refining removes the impurities from the uranium concentrate and changes its chemical form to uranium trioxide (UO3).
3	Conversion
	For light water reactors, the UO3 is converted to uranium hexafluoride (UF6) gas to prepare it for the next stage of processing. For heavy water reactors like the Candu reactor, the UO3 is converted into powdered uranium dioxide (UO2).
4	Enrichment
	Uranium is made up of two main isotopes: U- 238 and U-235. Only U-235 atoms, which make up 0.7% of natural uranium, are involved in the nuclear reaction (fission).
	The enrichment process increases the concentration of U-235 to between 3% and 5% by separating U-235 atoms from the U-238. Enriched UF6 gas is then converted to powdered UO2.
5	Fuel manufacturing
	Natural or enriched UO2 is pressed into pellets, which are baked at a high temperature. These are packed into zircaloy or stainless steel tubes, sealed and then assembled into fuel bundles.

ELECTRICITY

6	Generation
	Nuclear reactors are used to generate electricity. Fission of U-235 atoms in the reactor fuel creates heat that generates steam to drive turbines. The fuel bundles in the reactor need to be replaced as the U-235 atoms are depleted, typically after one or two years depending upon the reactor type.
	The used — or spent — fuel is stored or reprocessed.
	Spent fuel management
	The majority of spent fuel is safely stored at the reactor site. A small amount of spent fuel is reprocessed. The reprocessed fuel is used in some European, Japanese and Russian reactors.

Message from the Chair

Dear Shareholder,

There has never been a better time to invest in Cameco. The company’s fundamentals are strong, world demand for electricity continues to grow and there is a ready and growing market for uranium as more and more countries recognize the benefits of nuclear power as a source of clean electricity.

Your board of directors is charged with overseeing management to ensure the company stays on course to achieve its strategy and deliver value to you, the shareholder. Our primary responsibility is ensuring sound governance, strictly adhering to our high standards of integrity and ethics, and being steadfast in our compliance with corporate governance standards as a publicly listed company in both Canada and the U.S.

The board is actively engaged in monitoring the key risks Cameco faces. This is especially important as the company focuses on achieving growth by doubling production by 2018 and tapping the full potential of the nuclear fuel cycle. Cameco’s enterprise risk management system helps management identify, assess, manage, and report on risks in a systematic way, following principles that help identify and mitigate any uncertainties that could have a negative impact on its business activities. And while the company faces many kinds of risk — financial, operational, environmental, compensation, reputational — the board is well aware of the growing world attention on executive compensation. The human resources and compensation committee continued its review of compensation risk as part of our ongoing focus on sound governance.

Board renewal is an important aspect of our ability to effectively carry out our duties on behalf of shareholders.

This year we welcomed James Gowans and Donald Deranger to the board. As chief operating officer and chief technical officer of DeBeers SA, president and CEO of DeBeers Canada Inc., chair of the Mining Association of Canada, and past president of the Canadian Institute on Mining Metallurgy and Petroleum for 2008-2009, Mr. Gowans brings considerable mining expertise to the board. Mr. Deranger is a northern Saskatchewan aboriginal leader and Athabasca vice-chief of the Prince Albert Grand Council, and has won a number of awards for his initiatives in employment, training and economic development for members of the Athabasca sector of northern Saskatchewan. On behalf of the board, I would also like to thank George Dembroski and Robert Peterson for their contributions and dedication. Both have reached our retirement age for directors and will be leaving the board as of the annual meeting of shareholders in May.

Also this year, the board revised our skills matrix to align it more closely with our strategic focus, and reviewed the diversity of the board to ensure an effective mix of directors. We will use the new matrix to enhance the skills of the current board and to recruit new directors in the future.

We are proud of Cameco’s accomplishments in 2009 and we look forward to 2010.

Victor J. Zaleschuk
Chair of the Board

February 23, 2010

Message from the President and CEO

Dear Shareholder,

Cameco is a unique company with a very bright future.

We are among the world’s largest players in a market where demand is growing and it is clear there will be a shortage of supply. We have a world-class body of assets to draw from, and the financial strength, expertise and discipline we need to grow. We believe strongly in our values, and apply them consistently in our operations and business dealings. We have planted our flag from one end of the nuclear fuel cycle to the other, and are recognized around the world as a reliable supplier and business partner, strong community supporter, international problem solver and employer of choice.

2009: a year of successes

This year, we sold our interest in Centerra under very favourable terms. This put us in an excellent financial position, and turned us into pure-play nuclear energy investment with enormous potential.

We delivered the highest net earnings ever, at $1.1 billion (an increase of 144% over last year), increased cash from continuing operations by 30%, and ended the year with $1.3 billion in cash on hand. We increased production in our uranium segment by 20%, and accomplished a mining first, reaching a new mining zone at McArthur River/Key Lake through the water-saturated Athabasca sandstone, largely because of our innovative freezewall design. We completed dewatering the underground development at Cigar Lake in February 2010, and based on current information, expect production to begin in mid-2013. We resumed UF₆ production at Port Hope and operations returned to normal. And our share of earnings before taxes from our electricity segment increased by 59% to $224 million.

A growing market

According to the OECD, population growth and industrial development will lead to a near doubling of electricity consumption by 2030. At the same time, governments, media and consumers are becoming more aware of the dangers and effects of air pollution and climate change, and the importance of low-emission sources of electricity.

Customers need electricity regardless of world economic conditions, and nuclear power is an affordable and sustainable source of clean, renewable energy. The demand for uranium is expected to continue to grow, and along with it, the need for new supply to meet future customer requirements. Turn to page 10 to read more about the nuclear energy industry and our expectations for demand and supply.

A clear view ahead

Our strategy is to double uranium production to 40 million pounds by 2018, which we plan to accomplish with our existing operating and development properties, and projects we are currently evaluating. Our fuel services segment is helping to support this growth by broadening our business relationships and expanding our uranium market share. And our investment in the Bruce Power Limited Partnership is an excellent source of cash flow and a logical fit with our other businesses. Turn to page 15 to read more about our growth plans.

While doubling production is an ambitious target, we believe we have the assets, expertise and focus to achieve it. Our strong financial position, developed over many years, combined with a commitment to operational excellence, position us well to deliver on our strategy. We have clearly defined objectives and a reward system designed to support them within our tolerance for risk. Disciplined processes are in place to manage our portfolio, control risk, improve operations and reduce costs. And we have an unwavering commitment to safety, sustainable development and building supportive communities. You’ll learn more about what makes our company strong starting on page 18.

A long-term approach

We believe that sustainability means thinking about the long-term viability of the work we do, and not just meeting minimum standards.

It means being innovative about making our impact on the environment as small and as temporary as we can. And it means promoting safety and providing benefits to the communities we operate in no matter where they are, so future generations can advance and prosper in the way we have. For example, in 2009, over half of the employees at our mines in northern Saskatchewan were from local communities, and about $220 million in mine spending went to northern businesses.

Actions like these build shareholder value and ensure we retain our social licence to deliver the significant benefits of nuclear energy to people around the world. They are, in fact, an investment in the future of our industry.

A strong culture

Corporations really are a group of people working to accomplish objectives they all agree on. Our company is filled with people of strong character and solid individual values for doing good. They have established an equally strong corporate culture with well defined values. They are committed to advancing our strategies following our principles of sustainable development. And this year I’m happy to say that they told us they’re satisfied with their work: Cameco was included in the Financial Post’s 10 Best Companies to Work For in Canada for 2010, for our employee policies, programs and role in the community, and in November 2009, Mediacorp named us one of Canada’s Top 100 Employers.

I’m proud to have such a capable, creative and committed team, and look forward to the many accomplishments ahead.

Jerry Grandey
President & CEO

February 23, 2010

Management’s discussion and analysis
2009 Highlights		6
About Cameco		8
About the nuclear energy industry		10
Our strategy		15
Financial results		24
Our operations and development projects		49
Reserves and resources		77
Additional information		81
2009 consolidated financial statements
Report of management’s accountability		87
Auditor’s report		88
Consolidated financial statements		89
Notes to consolidated financial statements		94
Investor information	inside back cover

Throughout this document, the terms we, us, our and Cameco mean Cameco Corporation and its subsidiaries.

Management’s discussion and analysis

This management’s discussion and analysis (MD&A) includes information that will help you understand management’s perspective of our audited consolidated financial statements and notes for the year ended December 31, 2009. The information is based on what we knew as of February 23, 2010.

We encourage you to read our audited consolidated financial statements as you review the MD&A. You can find more information about Cameco, including our audited consolidated financial statements and our most recent annual information form, on our website at cameco.com, on SEDAR at sedar.com or on EDGAR at sec.gov. You should also read our annual information form before making a decision to invest in our securities.

Unless we have specified otherwise, all dollar amounts are in Canadian dollars.

The financial information in this MD&A and in our financial statements and notes are prepared according to Canadian generally accepted accounting principles (Canadian GAAP), unless otherwise indicated. We also prepare a reconciliation of our annual financial statements to US GAAP, which is filed with securities regulatory authorities.

We present our mineral reserve and resource estimates as required by Canadian securities law. See Important information for US investors on page 78.

About forward-looking information

Our MD&A includes statements and information about our expectations for the future. When we discuss our strategy, plans and future financial and operating performance, or other things that have not yet taken place, we are making statements considered to be forward-looking information or forward-looking statements under Canadian and United States securities laws. We refer to them in this MD&A as forward-looking information.

Key things to understand about the forward-looking information in this MD&A:

• It typically includes words and phrases about the future, such as: anticipate, expect, plan, intend, predict, goal, target, project, potential, strategy and outlook (see examples on page 5).

• It represents our current views, and can change significantly.

• It is based on a number of material assumptions, including those we’ve listed below, which may prove to be incorrect.

• Actual results and events may be significantly different from what we currently expect, because of the risks associated with our business. We list a number of these material risks below. We recommend you also review our annual information form, which includes a discussion of other material risks that could cause actual results to differ significantly from our current expectations.

Forward-looking information is designed to help you understand management’s current views of our near and longer term prospects, and it may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by securities laws.

4

Examples of forward-looking information in this MD&A

• our expectations about future worldwide uranium supply and demand

• production at our uranium operations from 2010 to 2014 and our target for doubling annual production by 2018

• our ability to maintain expected annual production at McArthur River and Key Lake within the time frames we have set, to complete remediation and begin production at Cigar Lake within the time frames we have set and at the estimated cost, and to achieve our annual production targets at Inkai

• our expectations that our existing cash balances and operating cash flows will be sufficient to meet our anticipated requirements over the next several years without the need for any significant additional financing

• future production at our fuel services operations

• the likely terms and volumes to be covered by long-term delivery contracts that we enter into in 2010 and future years

• future royalty and tax payments and rates

• our long-term uranium price sensitivity analysis

• our 2010 objectives

• the outlook for each of our operating segments for 2010, and our consolidated outlook for the year

Material risks

• actual sales volumes or market prices for any of our products or services are lower than we expect for any reason, including changes in market prices or loss of market share to a competitor

• we are adversely affected by changes in foreign currency exchange rates, interest rates or tax rates

• production costs are higher than planned, or necessary supplies are not available, or not available on commercially reasonable terms

• our estimates of production, decommissioning or reclamation expenses, or our tax expense estimates, prove to be inaccurate

• we are unable to enforce our legal rights, or are subject to litigation or arbitration that has an adverse outcome

• there are defects in title to our properties

• our reserve and resource estimates are inaccurate, or we face unexpected or challenging geological, hydrological or mining conditions

• we are affected by environmental, safety and regulatory risks, including increased regulatory burdens

• we cannot obtain or maintain necessary permits or approvals from government authorities

• we are affected by political risks in a developing country where we operate (like Kazakhstan)

• we are affected by terrorism, sabotage, accident or a deterioration in political support for, or demand for, nuclear energy

• there are changes to government regulations or policies, including tax and trade laws and policies

• our uranium and conversion suppliers fail to fulfil delivery commitments

• we are affected by natural phenomena, including inclement weather, fire, flood, underground floods, earthquakes, pitwall failure and cave-ins

• our operations are disrupted due to problems with our own or our customers’ facilities, the unavailability of reagents, equipment, operating parts and supplies critical to production, labour relations issues, strikes or lockouts and other developments and operating risks

Material assumptions

• sales and purchase volumes and prices for uranium, fuel services and electricity

• expected production costs

• expected spot prices and realized prices for uranium, and other factors discussed on page 39, Long-term price sensitivity analysis: uranium

• tax rates, foreign currency exchange rates and interest rates

• decommissioning and reclamation expenses

• reserve and resource estimates

• the geological, hydrological and other conditions at our mines, including the accuracy of our expectations about the condition of underground workings at Cigar Lake

• our ability to continue to supply our products and services in the expected quantities and at the expected times

• our ability to comply with current and future environmental, safety and other regulatory requirements, and to obtain and maintain required regulatory approvals

• our operations are not significantly disrupted as a result of political instability, nationalization, terrorism, sabotage, natural disasters, governmental or political actions, litigation or arbitration proceedings, labour relations issues, or other development or operating risks

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2009 Highlights

Cameco is one of the world’s largest uranium producers, with uranium assets on three continents. Nuclear energy plants around the world use our uranium products to generate one of the cleanest sources of electricity available today.

Our vision is to be a dominant nuclear energy company producing uranium fuel and generating clean electricity. Our goal is to be the supplier, partner, investment and employer of choice in the nuclear industry.

We have long-term objectives for each of our three business segments:

• uranium — double our annual production to 40 million pounds by 2018 from existing assets

• fuel services — invest in our fuel services business to support our overall growth in the nuclear business

• electricity — maintain steady cash flow while gaining exposure to new opportunities

We made significant progress this year both financially and at our operations.

Strong financial performance

2009 was a record financial year for us.

We delivered the highest net earnings ever, at $1.1 billion (144% higher than last year) and increased cash from continuing operations by 30%, to $690 million. Cash on hand increased to $1.3 billion at year end. We intend to use these funds to advance our growth strategy.

Highlights
December 31 ($ millions except where indicated)		2009		2008		change
Revenue			2,315		2,183		6	%
Gross profit			750		829		(10	)%
Net earnings			1,099		450		144	%
$  per common share (diluted)			2.82		1.28		120	%
Adjusted net earnings (non-GAAP, see page 27)			582		589		(1	)%
$  per common share (adjusted and diluted)			1.49		1.67		(11	)%
Cash provided by continuing operations			690		530		30	%
Average realized prices	$US/lb		38.25		39.52		(3	)%
Uranium	$Cdn/lb		45.12		43.91		3	%
Fuel services	$Cdn/kgU		17.84		15.85		13	%
Electricity	$Cdn/MWh		64		57		12	%

Shares and stock options outstanding

At February 22, 2010, we had:

• 392,853,733 common shares and one Class B share outstanding

• 7,939,833 stock options outstanding, with exercise prices ranging from $5.75 to $55.00

Dividend policy

Our board of directors has established a policy of paying a quarterly dividend of $0.07 ($0.28 per year) per common share. This policy will be reviewed from time to time based on our cash flow, earnings, financial position, strategy and other relevant factors.

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Excellent progress at our operations

In our uranium segment this year we increased production by 20%. Key highlights:

• Successfully moved to a new mining zone at McArthur River/Key Lake, through the water-saturated Athabasca sandstone — a mining first, and largely as a result of our innovative freezewall design. We also reduced the amount of molybdenum and selenium released to the environment.

• Extended Rabbit Lake’s expected production life by two years to 2015.

• Commissioned Inkai’s main processing plant, and started commissioning the first satellite plant.

• Completed dewatering the underground development at Cigar Lake in February 2010, and based on current information, expect initial production in mid-2013.

In our fuel services segment, we resumed UF₆ production at Port Hope and operations returned to normal.

In our electricity segment, BPLP generated 24.6 million terawatt hours (TWh) of electricity, at a capacity factor of 87%. Our share of earnings before taxes went up by 59% to $224 million.

We continued to invest in our exploration activities, spending $23 million in six brownfield and advanced exploration projects, including $11 million for delineation drilling at Kintyre, plus about $31 million in regional exploration programs. Saskatchewan was the largest single region, followed by Australia, northern Canada and the rest of the global program.

Highlights		2009		2008		change
Uranium	Production volume (million lbs)		20.8		17.3		20	%
	Revenue ($millions)		1,551		1,512		3	%
Fuel services	Production volume (million kgU)		12.3		8.3		48	%
	Revenue ($millions)		276		252		10	%
Electricity	Output (100%) (TWh)		24.6		24.7		—
	Revenue (100%)		1,640		1,409		16	%
	Our share of earnings before taxes		224		141		59	%

Key market facts

Demand for electricity is expected to nearly double by 2030, driven mainly by growth in the developing world as it seeks to diversify sources of energy and provide supply security.

• The world is increasingly recognizing the benefits of nuclear energy as it searches for alternatives to carbon-based electricity generation and security of supply.

• There are 436 commercial nuclear power reactors operating in 30 countries, providing about 15% of the world’s electricity.

• There are 53 reactors currently under construction and, by 2019, 91 new reactors (net) are forecast to come on line.

• Most of this new build is being driven by rapidly developing countries like China and India, which have severe energy deficits and want clean sources of electricity to improve their environment and sustain economic growth.

• Over the next decade, demand for uranium to fuel existing and new reactors is expected to grow by an average of 3% per year.

• To meet global demand over the next 10 years, we expect that about 67% of uranium supply will come from mines that are currently in operation, 21% from finite sources of secondary supply (mainly government inventories and limited recycling), and 12% will have to come from new sources of primary production.

• Cameco – with uranium assets on three continents, including high-grade reserves and low-cost mining operations in Canada, and investments that cover the nuclear fuel cycle – is ideally positioned to benefit from the world’s growing need for clean, reliable energy.

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About Cameco

Cameco, with its head office in Saskatoon, Saskatchewan, is one of the world’s largest uranium producers, with uranium assets on three continents. Nuclear energy plants around the world use our uranium products to generate one of the cleanest sources of electricity available today.

Uranium

We are one of the world’s largest uranium producers, and in 2009 accounted for about 16% of the world’s production. We have controlling ownership of the world’s largest high-grade reserves, with ore grades up to 100 times the world average, and low-cost operations.

Product

• uranium concentrates (U₃O₈)

Reserves and resources

Reserves

• approximately 480 million pounds proven and probable

Resources

• approximately 140 million pounds measured and indicated and 355 million pounds inferred

Global exploration

• focused on four continents

Operating properties

• McArthur River and Key Lake, Saskatchewan

• Rabbit Lake, Saskatchewan

• Smith Ranch-Highland, Wyoming

• Crow Butte, Nebraska

• Inkai, Kazakhstan

Development project

• Cigar Lake, Saskatchewan

Projects under evaluation

• Inkai blocks 1 and 2 production increase, Kazakhstan

• Inkai block 3, Kazakhstan

• McArthur River expansion, Saskatchewan

• Kintyre, Australia

• Millennium, Saskatchewan

Fuel services

We are an integrated uranium fuel supplier, offering refining, conversion and fuel manufacturing services.

Products

• uranium trioxide (UO₃)

• uranium hexafluoride (UF₆) (control 35% of western world capacity)

• uranium dioxide (UO₂) (the world’s only commercial producer of natural UO₂)

• fuel bundles, reactor components and monitoring equipment used by Candu reactors

Operations

• Blind River refinery, Ontario (refines U₃O₈ to UO₃)

• Port Hope conversion facility, Ontario (converts UO₃ to UF₆ or UO₂)

• Cameco Fuel Manufacturing Inc., Ontario (manufactures fuel bundles and reactor components)

• 10-year toll conversion agreement with Springfields Fuels Ltd. (SFL), Lancashire, United Kingdom (UK) (to convert UO₃ to UF₆ — expires in 2016)

We also have a 24% interest in GE-Hitachi Global Laser Enrichment LLC (GLE) in North Carolina, with General Electric (51%) and Hitachi Ltd. (25%). GLE is testing a third-generation technology that, if successful, will use lasers to commercially enrich uranium.

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Electricity

We generate clean electricity through our 31.6% interest in the Bruce Power Limited Partnership (BPLP), which operates four nuclear reactors and manages the overall site in southern Ontario.

Capacity

• 3,260 megawatts (MW) (100% basis) (about 15% of Ontario’s electricity)

We also have agreements to manage the procurement of fuel and fuel services for BPLP, including:

• uranium concentrates

• conversion services

• fuel fabrication services

Global presence

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About the nuclear energy industry

According to the World Energy Outlook for 2009 (OECD/International Energy Agency), population growth and industrial development will lead to a near doubling of electricity consumption by 2030. Most of this energy will be used by developing (non-OECD) countries as their populations increase and gross domestic products grow.

Nuclear power is a clean source of electricity, and generation capacity is growing

As the demand for energy increases, governments, media and consumers are becoming increasingly aware of the dangers and effects of air pollution and climate change, and the importance of low-emission sources of electricity.

Nuclear power can generate electricity with no toxic air pollutants and very low carbon dioxide (CO₂) or other greenhouse gas emissions. It has the capacity to produce enough electricity on a global scale to meet our growing needs, and while it isn’t the only solution, it is an affordable and sustainable source of clean, renewable energy. In a carbon-constrained world, nuclear energy will be an even more important part of the future energy mix.

There are 436 commercial nuclear power reactors operating in 30 countries. Sixteen of these countries use nuclear energy for most of their electricity. Countries around the world are increasing their capacity to generate nuclear power by refurbishing or upgrading nuclear reactors and building new ones.

China is expected to lead the world in the construction of nuclear power plants as electricity demand continues its rapid growth. India is also moving forward with ambitious growth plans to diversify its sources of energy and obtain a secure source of electricity:

• China is currently operating 11 reactors, building 20 and planning more. We expect it to have a net increase of 42 reactors by 2019.

• India is currently operating 18 reactors and has several under construction. We expect it to have a net increase of 13 reactors by 2019.

The US government announced in January 2010 that the success of a leading global economy is tied to a clean energy economy, and that building a new generation of safe, clean nuclear power plants is an integral component. It is considering tripling its initial commitment of $18.5 billion (US) in loan guarantees to $54 billion (US), and is providing other incentives to revitalize its nuclear industry after three decades of stagnation. It also plans to pass a

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comprehensive energy and climate bill with incentives to make clean energy profitable. However, it may be a few more years before significant orders for new nuclear power plants are placed.

In the UK, government commitment to the future of nuclear energy is strong as a result of the need to limit CO₂ emissions, and because of concerns about energy security as current reactors approach the end of their operating lives.

Several non-nuclear countries, like Italy, Vietnam and United Arab Emirates, are also laying the groundwork to proceed with nuclear power development.

Demand for uranium is growing

We forecast that the world will consume just over 2 billion pounds of U₃O₈ over the next 10 years.

During this period, we expect about 67% of uranium supply to come from existing primary production sources — production from mines that are currently in commercial operation.

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We expect about 21% to come from existing secondary supply sources. Most of these sources are finite and will not meet long-term needs. One of the largest current sources of secondary supply is uranium derived from Russian highly enriched uranium (HEU). All deliveries from this source are expected to be made by 2013, when the Russian HEU commercial agreement expires. The US government also makes some of its inventories available to the market, although in much smaller quantities.

We expect that the remaining 12% will come from new sources of primary production.

In 2009, seven producers of uranium concentrates marketed 83% of world production and there were only three commercial providers of UF₆ conversion services in the western world. Barriers to entry for new competitors are high, and the lead time for uranium production can be as long as 10 years or more, depending on the deposit type and location.

Given our extensive base of reserves and resources, diversified sources of supply, global exploration program and vertical integration, we are well positioned to capitalize on the growing interest in nuclear energy.

Despite this growth, challenges remain

Many countries face major obstacles to new nuclear plants, including significant upfront capital costs, political opposition and uncertain regulatory environments. In some locations, nuclear energy may not be competitive with other sources of electricity. A country’s first new-generation nuclear plants will face significant business risks, including first-time costs, financing, licensing, schedule and construction costs.

While several countries are making progress on the management of used fuel and other radioactive waste from the nuclear fuel cycle, it is still a controversial issue. Many environmental groups continue to oppose the nuclear power industry. There are nuclear plant phase-out programs in a number of European countries, however Belgium and Spain are reconsidering. And nuclear power still does not qualify internationally for greenhouse gas emission credits, even though it has been recognized as a non-emitting technology in US energy legislation.

The long-term outlook is positive

Over the long term, we expect that the benefits of nuclear energy will prevail over the challenges, and market fundamentals for uranium and fuel services will remain positive as:

• we expect demand to continue to exceed worldwide production

• secondary supplies are finite

• primary production needs to increase to meet future reactor requirements

Over the next 10 years, we anticipate demand for uranium and conversion services to increase moderately, with potential for more rapid growth toward the end of the period, as the construction of nuclear plants accelerates.

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The industry in 2009

World consumption and production

Consumption in 2009 was 7% lower than our forecast due to the delayed startup of three reactors. Capacity factors were also lower, mainly due to the lower demand for electricity resulting from the global economic crisis.

We expect consumption to increase to about 180 million pounds in 2010, and production to be between 140 million and 145 million pounds. Secondary supplies should continue to bridge the gap. By 2019, we expect world uranium consumption to be 233 million pounds per year, an average annual growth rate of about 3%.

We expect world demand for UF₆ and natural UO₂ conversion services to increase by about 5% in 2010.

Industry prices

Utilities are well covered under existing contracts and have been building up inventory levels of U₃O₈ since 2004, so we expect uranium demand in the near term to be very discretionary. Spot prices in 2010 are expected to be volatile.

	2009		2008		change
Uranium ($US/lb U3O8) 1
Average spot market price		46.06		61.58		(25	)%
Average long-term price		65.50		82.50		(21	)%
Fuel services
($US/kgU UF6)1
Average spot market price
•  North America		7.16		9.03		(21	)%
•  Europe		8.82		10.28		(14	)%
Average long-term price
•  North America		11.91		12.25		(3	)%
•  Europe		13.20		13.22		—
Note: the industry does not publish UO2 prices.
Electricity ($/MWh)
Average Ontario electricity spot price		30		49		(39	)%

¹ Average of prices reported by TradeTech and Ux Consulting (Ux)

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Contract volumes

In 2009, spot market sales were at a record high, with utilities responsible for 55% of the purchases. China accounted for more than 20%, or about 12 million pounds. Most of these purchases were opportunistic as utilities and others took advantage of price volatility.

We expect long-term contracting volumes in 2010 to be similar to 2009, depending on supply, market expectations and market prices.

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Our strategy

Our vision is to be a dominant nuclear energy company producing uranium fuel and generating clean electricity. Our goal is to be the supplier, partner, investment and employer of choice in the nuclear industry.

We are a pure-play nuclear investment with a proven track record and the strengths to take advantage of the world’s rising demand for clean, safe and reliable energy:

• a large portfolio of low-cost mining operations and geographically diverse uranium assets

• controlling interests in the world’s largest high-grade uranium reserves

• multiple sources of conversion and the ability to increase production

• excellent growth potential from existing assets, combined with a global exploration program

• a strong customer base and a worldwide marketing presence

• an extensive portfolio of long-term sales contracts

• innovative technology and experience operating in technically challenging environments

• an enterprise-wide risk management system tied directly to our strategy and objectives

• conservative financial management and the financial strength to support our growth

Over the past four years, we’ve made significant progress in becoming a more vertically integrated business, adding conversion capacity, buying fuel manufacturing facilities and investing in the development of a third-generation enrichment process.

The focus of our growth strategy is on our uranium segment. We plan to concentrate on increasing production to meet rising demand, while managing our fuel services segment to better service our customers and expand our market share. We plan to use the cash we have available to sustain and increase our production from existing assets. We will consider other uranium production opportunities as they arise.

We have long-term objectives for each of our three business segments:

• uranium — double our annual production to 40 million pounds by 2018 from existing assets

• fuel services — invest in our fuel services business to support our overall growth in the nuclear business

• electricity — maintain steady cash flow while gaining exposure to new opportunities

These are supported by annual objectives, which you’ll find starting on page 22.

Uranium: doubling production by 2018

We have a strategy and process in place to double our annual production by 2018, which we expect to come from three sources:

• operating properties

• development projects

• projects under evaluation

Our strategy is flexible enough to respond to both positive and negative developments in the nuclear industry.

Operating properties

Our existing sources of production are McArthur River/Key Lake, Rabbit Lake, Smith Ranch-Highland, Crow Butte and Inkai.

We plan to maintain the base of our current production at these operations, and to expand production where we can by developing new mining zones. We will also be upgrading the mills at Key Lake and Rabbit Lake to support our growing production.

Inkai blocks 1 and 2, in Kazakhstan, have the potential to significantly increase production. Based on current reserves, we expect Rabbit Lake to produce until 2015, although work is ongoing to extend its mine life even further.

Development projects

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Cigar Lake is our main project in development. It is a superior, world-class deposit that we expect to generate 9 million pounds of uranium per year for Cameco (18 million pounds per year in total) after we finish remediation and construction, and ramp up to full production. Based on current information, we are targeting initial production in mid-2013.

Projects under evaluation

We are evaluating several potential sources of production, including expanding McArthur River, increasing production at Inkai blocks 1 and 2, and advancing Inkai block 3, Kintyre and Millennium.

• The McArthur River expansion is an extension of our existing mining area, which is part of the most prolific high-grade uranium system in the world.

• Under the terms of a memorandum of understanding with our Inkai partner, National Atomic Company Kazatomprom Joint Stock Company (Kazatomprom), we are in discussions to increase our share of annual production from blocks 1 and 2 to 5.7 million pounds.

• Inkai block 3, in Kazakhstan, has the potential to become a significant source of production.

• Our acquisition in 2008 of a 70% interest in Kintyre, in Australia, adds potential for low-cost production and diversifies our production by geography and deposit type.

• Millennium is a uranium deposit in northern Saskatchewan that we expect will take advantage of the mill at Key Lake.

Our strategy is to advance these projects by investing in environmental studies, reserve delineation and feasibility studies to build a pipeline of projects ready for a production decision.

Growth beyond 2018

Our active global exploration program, combined with our disciplined acquisition strategy, will add to our pipeline of future production sources, replacing our reserves and resources and helping to ensure our growth beyond 2018.

Exploration

We have maintained an active exploration program throughout the uranium price cycle, which has helped us secure land with exploration and development prospects that are among the best in the world. We now have direct interests in almost 70 active exploration projects in six countries, over 100 experienced professionals who are searching for the next generation of deposits, and ownership interests in approximately 4.2 million hectares (10.4 million acres) of land mainly in Canada, Australia, Kazakhstan, the US, Mongolia and Peru. Many of these projects are advanced through joint ventures with both junior and major uranium companies.

We also partner, through strategic alliances and equity holdings, with smaller companies holding properties that meet our investment criteria. Our leadership position and industry expertise in exploration make us a partner of choice. In return for our investment, we usually have the right to own a majority stake in a successful discovery.

Acquisition

We have a dedicated team looking for opportunities to acquire companies that are already producing or are nearing that stage. We will invest when an opportunity is available at the right time and the right price. Our acquisition strategy complements our exploration strategy, and together they are building a development pipeline of prospective uranium projects.

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This discussion of our strategy, our process to double our annual uranium production by 2018, and our growth beyond that date is forward-looking information. It is based on the assumptions and subject to the material risks discussed on page 5, and specifically on the assumptions and risks listed here.

Assumptions

Our statements about doubling annual production by 2018 reflect our current production target for 2018. Although we are confident in our efforts to reach that target, we cannot guarantee that we will. We have made assumptions about 2018 production levels at each of our existing operating mines, except those that we do not expect will still be operating then. We have also made assumptions about the development of mines that are not operating yet and their 2018 production levels. We believe these assumptions are reasonable, individually and together, but if an assumption about one or more mines proves to be incorrect, we will not reach our 2018 target production level unless the shortfall can be made up by additional production at another mine.

Material risks that could prevent us from reaching our target

• we may not be able to locate additional reserves and identify appropriate methods of mining to maintain production levels at McArthur River

• we may not be able to increase production to the expected level at Inkai if we can’t add reserves at block 3, the feasibility study isn’t favourable or we can’t secure regulatory approval

• if our partner or the Kazakh government does not support an increase in production to the expected level at Inkai, remediation and development at Cigar Lake is not completed on schedule, or we don’t reach full production levels as quickly as we expect

• development of Kintyre is delayed due to political, regulatory or aboriginal issues

• we cannot obtain a favourable feasibility study for the Kintyre or Millennium project, or we cannot reach agreement with our project partners to move ahead with production

• the Key Lake mill does not have enough capacity to handle anticipated production increases, and we aren’t able to expand its capacity or to identify alternative milling arrangements

• the projects under consideration do not proceed or, if they do, are not completed on schedule or don’t reach full production levels as quickly as we expect

• uranium prices and development and operating costs make it uneconomical to develop projects under consideration

• disruption in production or development due to natural phenomena, labour disputes, political risks or other development and operation risks

Fuel services: capturing synergies

We made a strategic decision to invest in infrastructure in our fuel services business, and now have a world-class facility. We are one of only three commercial suppliers of UF₆ in the western world.

Our fuel services segment helps support the growth of the uranium segment by allowing us to offer a range of products and services to customers. This helps us broaden our business relationships and expand our uranium market share.

We’re focused on capturing synergies where we can, servicing our customers more effectively, improving cost-competitiveness and operational efficiency, and expanding into innovative areas like laser enrichment technology to broaden our services.

Electricity: capturing added value

Our investment in the Bruce Power Limited Partnership is an excellent source of cash flow and a logical fit with our other businesses. Our focus is on maintaining steady cash flow, building synergies with our other segments, looking at options to extend the operating life of the four Bruce B units, and gaining exposure to new generation opportunities.

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Building on our strengths

World-class assets

We have a large portfolio of low-cost mining operations and geographically diverse uranium assets, and controlling interests in the world’s largest high-grade uranium reserves.

Strong customer relationships

We have large, reliable customers that need uranium regardless of world economic conditions, and we expect the uranium contract portfolio we’ve built to provide a solid revenue stream for years to come.

Uranium price leverage

Our plans to increase our production of uranium, combined with our contracting strategy, are designed to give us increasing leverage when uranium prices go up, and to protect us when prices decline.

Financial strength

Uncertainty in the global financial markets has prevented many companies from ready access to capital markets. We are in a strong financial position to proceed with our growth plans.

Disciplined portfolio management

We have a disciplined portfolio management process that incorporates all capital projects into a single capital plan. This ensures our capital projects are aligned with our strategic objectives, and that business benefits are measurable and attainable.

Focused risk management

We have a formal enterprise-wide risk management process that we apply consistently and systematically across our organization. Risk management is a core element of our strategy and our objectives, and we use it to continuously improve our organization. It will underpin decisions we make as we move ahead with our growth strategy.

Innovation

We are always looking for ways to improve processes, to increase safety and environmental performance, and reduce costs. We are currently working on projects in all aspects of operations, including upgrading the Key Lake and Rabbit Lake mills.

Reputation

We believe strongly in our values and apply them consistently in our operations and business dealings. We are recognized as a reliable supplier and business partner, strong community supporter, international problem solver and employer of choice.

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Managing our growth

Our ability to grow is a function of our people, processes, assets and reputation, and the ability to enhance and leverage these strengths to add value.

We use four categories to define what we are committed to deliver, and how we will measure our results:

• outstanding financial performance

• a safe, healthy and rewarding workplace

• a clean environment

• supportive communities

We introduced these ‘measures of success’ in 2002, to proactively address the financial, social and environmental aspects of our business. We believe that each is integral to the company’s overall success and that, together, they will ensure our long-term sustainability.

Outstanding financial performance

Our financial results depend heavily on the prices we realize in our uranium and fuel services segments, on the cost of supply, and on sales and production volumes.

Managing contracts

We sell uranium and fuel services directly to nuclear utilities around the world, as uranium concentrates, UO₂, UF₆, conversion services or fuel fabrication.

Uranium is not traded in meaningful quantities on a commodity exchange. Utilities buy the majority of their uranium and fuel services products under long-term contracts with suppliers, and meet the rest of their needs on the spot market.

Our extensive portfolio of long-term sales contracts — and the long-term, trusting relationships we have with our customers — are core strengths for Cameco.

Because we sell large volumes of uranium every year, our net earnings and operating cash flows are affected by changes in the uranium price. Our contracting strategy is to secure a solid base of earnings and cash flow by maintaining a balanced contract portfolio that maximizes our realized price. Market prices are influenced by the fundamentals of supply and demand, geopolitical events, disruptions in planned supply and other market factors. Contract terms usually reflect market conditions at the time the contract is accepted, with delivery beginning several years in the future.

Our current uranium contracting strategy is to sign contracts with terms of 10 years or more that include mechanisms to protect us when market prices decline, and allow us to benefit when market prices go up. Our portfolio includes a mix of fixed-price and market-related contracts, which we generally target at a 40:60 ratio. Fixed-price contracts are typically based on the industry long-term price indicator at the time the contract is accepted, adjusted for inflation to the time of delivery. Market-related contracts may be based on either the spot price or the long-term price at the time of delivery, often include floor prices adjusted for inflation and, recently, some have begun to include ceiling prices in excess of $100 (US) per pound.

This is a balanced approach that reduces the volatility of our future earnings and cash flow, and that we believe delivers the best value to shareholders over the long term. It is also consistent with the contracting strategy of our customers. This strategy has allowed us to add increasingly favourable contracts to our portfolio that will enable us to benefit from higher market prices in the future.

Our contracts generally include a supply interruption clause that gives us the right to reduce, on a prorata basis, defer or cancel deliveries if there is a shortfall in planned production or in deliveries under the Russian HEU commercial agreement.

We are heavily committed under long-term uranium contracts until 2016, so we are becoming increasingly selective when considering new commitments.

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The majority of our fuel services contracts are at a fixed price per kgU, adjusted for inflation, and reflect the market at the time the contract is accepted.

Managing our supply

• We sell more uranium than we produce every year. We meet our delivery commitments using uranium we obtain:

• from our own production

• by purchasing uranium under long-term purchase agreements — mostly under the Russian HEU commercial agreement

• from our existing inventory — we target inventories of about six months of forward sales of uranium concentrates and UF₆

We participate in the uranium spot market from time to time, including making spot purchases to take advantage of opportunities to place the material into higher priced contracts. In addition to being a source of profit, this activity can provide insight into the underlying market fundamentals and supports our sales activities.

Managing our costs

Like all mining companies, our uranium segment is affected by the rising price of inputs like labour and fuel. In 2009, labour, production supplies and contracted services made up 88% of the production costs at our uranium mines. Labour (34%) was the largest component. Production supplies (28%) included fuels, reagents and other items. Contracted services (26%) included mining and maintenance contractors, air charters, security and ground freight.

Operating costs in our fuel services segment are mainly fixed. In 2009, labour accounted for about 57% of the total. The largest variable operating cost is for anhydrous hydrogen fluoride, followed by energy (natural gas and electricity).

Our costs are also affected by the mix of products we produce and those we buy. We have long-term contracts to buy uranium and conversion services at fixed prices that are lower than the current published spot and long-term prices. As noted above, we also buy on the spot market, which, while profitable, can be at prices that are much higher than our other sources of supply.

To help us operate efficiently and cost-effectively as we grow, we manage operating costs and improve plant reliability by prudently investing in production infrastructure, new technology and business process improvements.

A safe, healthy and rewarding workplace

We strive to foster a safe, healthy and rewarding workplace at all of our facilities, and measure our progress against key indicators, such as employee sentiment toward the company, conventional and radiation safety statistics and employment creation.

To achieve our growth objectives, we need to build an engaged, qualified and diverse organization capable of leading and implementing our strategies. Our challenge is to retain our current workforce and compete for the limited number of people available, both to replace retiring employees and to support our growth. Our long-term people strategy includes identifying critical segments and planning our workforce to meet this challenge.

Our approach seems to be working: we were included in the Financial Post’s 10 Best Companies to Work For in Canada for 2010, for our employee policies, programs and role in the community, and in November 2009, Mediacorp named us one of Canada’s Top 100 Employers.

20

A clean environment

We are committed to integrating environmental leadership into everything we do. In 2005, we launched a formal environmental leadership initiative, and set objectives and performance indicators to measure our progress in protecting the air, water and land near our operations, and in reducing the amount of waste we generate and energy we use.

We have developed new water treatment technologies that have improved the quality of the water released from our Saskatchewan uranium milling operations, and are working on many other projects to reduce waste, improve the reclamation process and manage waste rock more effectively.

We have also completed an energy assessment at each of our North American operations, and developed management plans for reducing our energy intensity and greenhouse gas emissions.

Supportive communities

To maintain public support for our operations (our social licence to operate) and our global reputation, we need the respect and support of communities, indigenous people, governments and regulators affected by our operations.

We build and sustain the trust of local communities by being a leader in corporate social responsibility (CSR). Through our CSR initiatives, we educate, engage, employ and invest in the people in the regions where we operate.

For example, in northern Saskatchewan in 2009:

• 50% of the employees at our mines were local residents

• 71% of services to our northern minesites — approximately $220 million — went to northern businesses

• we engaged in project discussions with communities near Cigar Lake, Millennium and Key Lake, visited 11 communities throughout the north, and met with communities where we’re exploring to give them information and garner grassroots support early in the process

• we donated over $1 million to northern and aboriginal initiatives for youth, education, culture and recreation

Our operations are closely regulated to give the public comfort that we are operating in a safe and environmentally responsible way. Regulators approve the construction, startup, continued operation and any significant changes to our operations. Our operations are also subject to laws and regulations related to safety and the environment, including the management of hazardous wastes and materials.

Our objectives are consistent with those of our regulators — to keep people safe and to protect the environment. We pursue these goals through open and co-operative relationships with all of our regulators. We work to earn their trust and that of other stakeholders by continually striving to protect people and the environment.

21

Measuring our results

We set corporate, business unit and departmental objectives every year under our four measures of success, and these become the foundation for a portion of annual employee compensation.

		2010 objectives
		This is forward-looking information.
2009 objectives	results	See page 4 for more information.
Outstanding financial performance
Produce 20.1 million pounds of U3O8 and 8 to 12 million kgU from fuel services.	Exceeded •   Our share of U3O8 production was 20.8 million pounds, or 103% of plan. •   We produced 12.3 million kgU at fuel services.	Production •   Produce 21.5 million pounds of U3O8 and between 14 million and 16 million kgU from fuel services. Financial measures Corporate performance •   Achieve budgeted net earnings and cash flow from operations (before working capital changes). Costs Strive for unit costs below budget. Growth Cigar Lake •   Access and secure underground workings and continue with remediation work on schedule. Reinitiate Shaft 2 development •   Update the technical report. Inkai •   Advance Inkai block 3 delineation and begin a feasibility study. •   Initiate a feasibility study to increase production at Inkai blocks 1 and 2, and secure necessary regulatory approvals. Kintyre •   Advance project evaluation to allow a production decision as soon as possible. Exploration and innovation •   Replace mineral reserves and resources at the rate of annual U3O8 production based on a three-year rolling average. •   Continue to advance expansion of McArthur River and the Millennium project to provide future sources of production. •   Support production growth and improved operating efficiencies through targeted research, development and technological innovation. Management •   Continue integrating portfolio management into our management, planning and budgeting processes. •   Deliver planned capital projects within 10% of budget.
Achieve combined unit-operating costs within budget.	Exceeded •   Unit costs were 10% below budget.
Pursue future additional tailings capacity at Rabbit Lake and Key Lake by submitting to regulators a project description, completing prefeasibility study work, conducting environmental baseline studies and community consultations, and initiating the environmental assessment process.	Partially achieved Key Lake: •   Completed all planned activities except the project description for the environmental assessment, which was filed later than planned. Rabbit Lake •   Completed some early work, including the initial draft prefeasibility study and preliminary community consultations, but decided to refocus resources on Key Lake.
Advance Cigar Lake mine remediation, including sealing of the August 2008 water inflow area.	Achieved •   Dewatering resumed in the fourth quarter and is complete.
Advance development of Kintyre by initiating environmental baseline work and conducting confirmatory drilling.	Achieved •   Drilling began in late September. •   Work on the environmental study began in October.
Achieve an average mineral reserve and resource replacement rate through brownfield or greenfield exploration programs, joint ventures and acquisitions that is, over the last three years, at least equal to total annual U3O8 production from all facilities.	Exceeded Our additions to reserves and resources exceeded production by an average of 15 million pounds per year in each of the last three years (2007 to 2009).
Identify, develop and evaluate opportunities for economic growth in uranium supply within the three- to eight-year time frame.	Achieved •   We identified and evaluated several opportunities. •   We acquired 10.6% of UFP Investments, LLC, which is developing uranium-from-phosphate technology.

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2009 objectives	results	2010 objectives
Safe, healthy and rewarding workplace
Strive for no lost-time injuries at all Cameco-operated sites and at a minimum, maintain a long-term downward trend in the combined (employee and contractor) injury frequency and severity, and radiation doses.	Exceeded •   Overall, strong safety performance demonstrated in 2009. •   Lost-time incident frequency for employees and contractors was 0.4 per 200,000 hours worked compared to a target of 0.8 — the best performance in Cameco’s history. Medical aid frequency and severity were also better than target.	•   Strive for no lost-time injuries at all Cameco-operated sites and, at a minimum, maintain a long-term downward trend in combined employee and contractor injury frequency and severity, and radiation doses. •   Develop a formal implementation plan for the risk standard and begin implementation.
Implement Cameco’s systematic approach to training by the end of 2009.	Achieved •   All operations met or exceeded their 2009 implementation milestones.
Clean environment
Strive to achieve zero reportable environmental incidents in all jurisdictions where we operate. Reduce the frequency of environmental incidents and incur no significant incidents at all Cameco-operated sites.	Partially achieved •   There were 27 environmental incidents, which is a small improvement over 2008 (29 incidents), but is above our long-term average of 22. There were no significant environmental incidents.	•   Strive for zero reportable environmental incidents, reduce the frequency of incidents and have no significant incidents at Cameco-operated sites. •   Improve year-over-year performance in corporate environmental leadership indicators.
With the goal of reducing energy consumption at all Cameco business locations, develop and begin to implement energy management action plans at all Canadian mining and milling operations, and complete energy assessments at all remaining North American operations.	Achieved •   We completed energy assessments and developed energy management plans for all but one of our operations. •   We completed a study on renewable energy opportunities at McArthur River/Key Lake, led by the Pembina Institute. •   We implemented almost all of the energy reduction actions at our operations in northern Saskatchewan.
Supportive communities
Build awareness and support for Cameco in the communities impacted by our company through community investment, business development and public relations, and improve levels of support in these jurisdictions.	Achieved •   We received positive feedback from our annual polls in Port Hope and Saskatchewan. •   We were named one of Canada’s Top 100 employers, and one of the top 10 companies to work for in Canada.	•   Build awareness and support for Cameco through community investment, business development programs and public relations. •   Advance our projects by securing support from indigenous communities affected by our operations.
Finalize and begin implementation of an enhanced northern Saskatchewan strategy focused on workforce development, business development, community relations, and government and regulatory affairs.	Achieved •   We completed the Northern Saskatchewan Strategy Review in June and, by the end of the year, had made significant headway in all four categories. •   We visited every impact community in the north, invested over $1 million in community programs, developed our relationships with local suppliers and met our target for local employees.

23

Financial results

This section of our MD&A discusses our performance, our financial condition and our outlook for the future.

2009 consolidated financial results	24
Outlook for 2010	31
Liquidity and capital resources	32
2009 financial results by segment	38
Uranium	38
Fuel services	41
Electricity	42
Fourth quarter results	44
Fourth quarter consolidated results	44
Quarterly trends	45
Fourth quarter results by segment	46

2009 consolidated financial results

In 2009, we sold all of our shares of Centerra Gold Inc. (Centerra), the gold segment of our business.

Under Canadian GAAP, we are required to report the results of discontinued operations separately from continuing operations. We have included our operating earnings from Centerra, and the financial impact of our disposition of Centerra shares, in discontinued operations.

We recast our consolidated financial results for 2008 and 2007 for comparison purposes to show the impact of Centerra as a discontinued operation. The change affected a number of financial measures, including revenue, gross profit, administration costs and income tax expense. See note 25 to the financial statements for more information.

Highlights							change from
December 31 ($ millions except per share amounts)	2009		2008		2007		2008 to 2009
Revenue		2,315		2,183		1,905		6	%
Gross profit		750		829		765		(10	)%
Net earnings		1,099		450		416		144	%
$  per common share (basic)		2.83		1.29		1.18		119	%
$  per common share (diluted)		2.82		1.28		1.13		120	%
Adjusted net earnings (non-GAAP, see page 27)		582		589		572		(1	)%
$  per common share (adjusted and diluted)		1.49		1.67		1.54		(11	)%
Cash provided by operations (from continuing operations)		690		530		756		30	%

24

Revenue 6% higher

($ millions)
Revenue — 2008	2,183
Changes:
Uranium business — higher realized prices	39
Fuel services business — higher realized prices	25
Electricity business — higher realized prices	73
Other	(5	)
Revenue — 2009	2,315

See 2009 financial results by segment for more information.

Three-year trend

Revenue has risen by 22% over the past three years, to a record $2.3 billion in 2009, mainly due to higher realized selling prices for uranium. Our average realized price for uranium was $45.12/lb in 2009, compared to $41.68/lb in 2007. Electricity revenue in 2009 was $100 million higher than 2007 as a result of higher realized prices, which increased from $52/MWh to $64/MWh.

Average realized prices

								change from
		2009		2008		2007		2008 to 2009
Uranium	$US/lb		38.25		39.52		37.47		(3	)%
	$Cdn/lb		45.12		43.91		41.68		3	%
Fuel services	$Cdn/kgU		17.84		15.85		14.04		13	%
Electricity	$Cdn/MWh		64		57		52		12	%

Outlook for 2010

We expect consolidated revenue to be 5% to 10% lower in 2010 as:

• We expect lower trading volumes in uranium, so uranium sales volumes are likely to decline by 5% to 10%.

• We expect realized prices for electricity to be lower, so revenue from our electricity business is likely to decline.

Our customers have the discretion to choose when in the year to receive deliveries of our uranium and fuel services products, so our quarterly delivery patterns, and therefore our sales volumes and revenue, can vary significantly. For 2010, the trend in delivery patterns is expected to be similar to 2009 with deliveries being more heavily weighted to the second and fourth quarters.

25

Gross profit down 10%

We calculate gross profit by deducting the cost of products and services sold, and depreciation, depletion and reclamation (DDR), from revenue.

($ millions)
Gross profit — 2008	829
Changes:
Uranium business — higher costs for purchased uranium; higher royalties	(177	)
Fuel services business — higher realized prices; higher production	42
Electricity business — higher realized prices	65
Other	(9	)
Gross profit — 2009	750

See 2009 financial results by segment for more detailed discussion.

Three-year trend

After increasing in 2008 due primarily to higher realized prices in the uranium and fuel services businesses, our gross profit declined in 2009 mainly due to an increase in the cost of product sold for uranium. This increase was largely related to more purchases at near-market prices, which pushed our average cost of uranium higher. These purchases were made to take advantage of trading opportunities in current and future years and, while profitable, are at margins much lower than our average.

Net earnings up 144%

Our net earnings were $649 million higher than last year primarily as a result of:

• selling our interest in Centerra and recording an after tax gain of $374 million

• recording an after-tax profit of $179 million relating to mark-to-market gains on financial instruments, compared to a loss of $148 million in 2008

Three-year trend

Our net earnings normally trend with revenue, but in recent years have been significantly influenced by unusual items.

In 2007, we recorded charges of $153 million after tax for the restructuring of Centerra, $65 million after tax for a cash settlement feature for the stock option plan, and a $25 million recovery of future income taxes due to changes in tax legislation.

In 2008, we stopped applying hedge accounting to our portfolio of foreign exchange contracts and, due to the decline in the Canadian dollar relative to the US dollar, recorded $148 million in unrealized mark-to-market losses. We also recorded $30 million in charges to reduce the carrying value of certain investments.

26

Adjusted net earnings down 1%

(non-GAAP, see below)

($ millions)
Adjusted net earnings — 2008	589
Changes:
Uranium business — higher costs for purchased uranium; higher royalties	(177	)
Fuel services business — higher realized prices; higher production	42
Electricity business — higher realized prices	65
Gold business — lower output and higher costs	(12	)
Realized gains on financial instruments	63
Income tax expense	32
All other	(20	)
Adjusted net earnings — 2009	582

Three-year trend

Our adjusted net earnings have been relatively stable over the past three years.

The 3% increase in 2008 was largely the result of stronger results in gold.

The 1% decrease in 2009 resulted from:

• lower profits in our uranium business, which were impacted by higher unit costs

• lower profits in gold resulting from lower sales volumes

• higher profits from our electricity business, relating to a higher realized selling price, which partially offset our uranium and gold results

A note about non-GAAP measures

We use adjusted net earnings, a non-GAAP measure, as a more meaningful way to compare our financial performance from period to period. Adjusted net earnings is our GAAP-based net earnings adjusted for one-time costs, writedowns, gains and unrealized mark-to-market losses on our financial instruments, which we believe do not reflect underlying performance.

Adjusted net earnings is non-standard supplemental information, and not a substitute for financial information prepared according to GAAP. Other companies may calculate this measure differently. The table below reconciles adjusted net earnings with our net earnings.

($ millions)	2009			2008
Net earnings (GAAP measure)		1,099			450
Adjustments (after tax)
Restructuring the gold business		46			(20	)
Gain on sale of Centerra		(374	)		—
Unrealized losses (gains) on financial instruments		(189	)		166
Stock option expense (recovery)		—			(33	)
Investment writedowns		—			26
Adjusted net earnings1 (non-GAAP measure)		582			589

¹ Adjusted net earnings includes our share of Centerra’s operating earnings for the periods presented.

27

Discontinued operations

On December 30, 2009, we disposed of our entire interest in Centerra in two steps:

• We sold 88,618,472 common shares of Centerra through a public offering, at a price of $10.25 per share, for net proceeds of approximately $871 million.

• We transferred another 25,300,000 common shares of Centerra to Kyrgyzaltyn JSC (Kyrgyzaltyn), under our April 24, 2009 agreement with them and the Government of the Kyrgyz Republic.

The table below includes our share of Centerra’s operating results, the net gain on the disposition and the restructuring charges related to the agreement with Kyrgyzaltyn. See note 25 to the financial statements for more information.

($ millions)	2009			2008		change
Results from operations		54			64		(10	)
Agreement with Kyrgyzaltyn		(46	)		20		(66	)
Gain on disposal of interest		374			—		374
Earnings from discontinued operations		382			84		298

Corporate expenses

Administration

($ millions)	2009		2008			change
Direct administration		122		147			(17	)%
Stock-based compensation		14		(61	)		123	%
Total administration		136		86			58	%

Direct administration costs in 2009 were lower than 2008 as we curtailed certain activities in response to the global financial crisis, and spent less on enhancing system technology and recruitment. The rate of growth in the workforce has slowed since the third quarter of 2008.

We recorded $14 million in stock-based compensation expenses this year under our stock option, deferred share unit, performance share unit and phantom stock option plans, compared to a recovery of $61 million in 2008. See note 22 to the financial statements.

Outlook for 2010

We expect administration costs (not including stock-based compensation) to be about 25% to 30% higher than they were in 2009 due to planned higher spending in support of our growth strategy.

Exploration

In 2009, uranium exploration expenses were $49 million compared to $53 million in 2008. The decline in 2009 reflects $6 million in recoveries under investment tax credit programs. Our exploration efforts in 2009 focused on Canada, the United States, Mongolia, Kazakhstan, Australia and South America.

Outlook for 2010

We expect exploration expenses to be about 80% to 90% higher than they were in 2009 due to evaluation activities at Kintyre and Inkai block 3. Our policy is to expense costs for properties that do not have established reserves or operating history. See Our operations — Uranium exploration for more information.

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Interest and other charges

Interest and other charges were $106 million lower than last year mainly as a result of recording $21 million in foreign exchange gains compared to losses of $83 million in 2008. Gross interest charges this year were $13 million lower than last year attributable to our lower average debt level. See note 11 to the financial statements.

Gains and losses on derivatives

In 2009, we recorded $244 million in mark-to-market gains on our financial instruments compared to losses of $203 million in 2008. Unrealized gains on financial instruments were much higher in 2009 than 2008 due to the significant increase in the value of the Canadian dollar against the US dollar. We voluntarily removed the hedging designation on our foreign currency forward sales contracts effective August 1, 2008, and have since recognized unrealized mark-to-market gains and losses in earnings. See note 27 to the financial statements.

Income taxes

We recorded an income tax expense of $53 million in 2009 compared to a recovery of $24 million in 2008. This was mainly due to a $425 million increase in pretax earnings in 2009, which was largely attributable to the recognition of $244 million in gains on derivatives, compared to $203 million in losses in 2008.

On an adjusted net earnings basis, our effective tax rate in 2009 was 3%, or 4% lower than 2008 as:

• A higher proportion of taxable income was earned in jurisdictions with favourable tax rates.

• Certain future tax liabilities recognized in prior years were reduced.

• The statutory income tax rate in Canada was reduced, allowing us to reduce our provision for future income taxes.

On an adjusted net earnings basis, our tax expense was $18 million in 2009, compared to $50 million in 2008.

Since 2008, Canada Revenue Agency (CRA) has disputed the transfer pricing methodology we used for certain uranium sale and purchase agreements and issued notices of reassessment for our 2003 and 2004 tax returns. We believe it is likely that CRA will reassess our tax returns for 2005 through 2009 on a similar basis. Our view is that CRA is incorrect, and we are contesting its position. In July 2009, we filed a Notice of Appeal relating to the 2003 reassessment with the Tax Court of Canada. However, to reflect the uncertainties of CRA’s appeals process and litigation, we increased our reserve for uncertain tax positions by $9 million in 2009. We believe that the ultimate resolution of this matter will not be material to our financial position, results of operations or liquidity over the period. However, an unfavourable outcome for the years 2003 to 2009 could be material to our financial position, results of operations or cash flows in the year(s) of resolution. See note 18 to the financial statements.

Outlook for 2010

We expect our effective tax rate for 2010 to be less than 5%.

Foreign exchange

The exchange rate between the Canadian dollar and US dollar affects the financial results of our uranium and fuel services segments.

Sales of uranium and fuel services are routinely denominated in US dollars while production costs are largely denominated in Canadian dollars. We use planned hedging to try to protect net inflows (total uranium and fuel services sales less US dollar cash expenses and product purchases) from the uranium and fuel services segments against declines in the US dollar in the shorter term. Our strategy is to hedge net inflows over a rolling 60-month period. Our target for the first 12 months is to hedge 35% to 100% of net inflows. The target range declines every year until it reaches 0% to 10% of our net inflows (from 48 and 60 months).

We also have a natural hedge against US currency fluctuations as a portion of our annual cash outlays, including purchases of uranium and fuel services, is denominated in US dollars. The earnings impact of this natural hedge is more difficult to identify because inventory includes material added over more than one fiscal period.

29

At December 31, 2009:

• The value of the US dollar relative to the Canadian dollar was $1.00 (US) for $1.05 (Cdn), down from $1.00 (US) for $1.22 (Cdn) at December 31, 2008. The exchange rate averaged $1.00 (US) for $1.14 (Cdn) over the year.

• Our effective exchange rate for the year, after allowing for hedging, was about $1.18, compared to $1.11 in 2008.

• We had foreign currency contracts of $1.5 billion (US) and EUR 34 million at December 31, 2009. The US currency contracts had an average exchange rate of $1.00 (US) for $1.09 (Cdn).

• The mark-to-market gain on all foreign exchange contracts was $67 million compared to a $105 million loss at December 31, 2008.

Timing differences between the maturity dates and designation dates on previously closed hedge contracts can result in deferred gains or charges. At December 31, 2009, we had net deferred gains of $39 million. The table below shows when these will be recognized in earnings.

$ millions (Cdn)	2010		2011
Deferred gains (charges)		34		5

We manage counterparty risk associated with hedging by dealing with highly rated counterparties and limiting our exposure. At December 31, 2009, all counterparties to foreign exchange hedging contracts had a Standard & Poor’s credit rating of A or better.

Sensitivity analysis

At December 31, 2009, every one-cent change in the value of the Canadian dollar versus the US dollar would change our 2010 net earnings by about $10 million (Cdn). This sensitivity is based on an exchange rate of $1.00 (US) for $1.05 (Cdn).

30

Outlook for 2010

Over the next several years, we expect to make significant investments to expand production at existing mines and to advance projects as we pursue our growth strategy. The projects are at various stages of development, from exploration and evaluation to construction.

We expect our existing cash balances and operating cash flows, based on current uranium spot prices, will meet our anticipated requirements over the next several years, without the need for significant additional funding. Our cash balances will gradually decline as we use the funds to pursue our growth plans.

Our outlook for 2010 reflects the growth expenditures necessary to help us achieve our strategy. Please note that we do not include an outlook for the items in the table that are marked with a dash.

See 2009 financial results by segment for details.

	Consolidated	Uranium	Fuel services	Electricity
Production	—	21.5 million lbs	14 to 16 million kgU	—
Sales volume	—	31 to 33 million lbs	Increase 15% to 20%	—
Capacity factor	—	—	—	About 90%
Revenue compared to 2009	Decrease	Decrease	Increase	Decrease
	5% to 10%	5% to 10%1	5% to 10%	5% to 10%
Unit cost of product sold (including DDR)	—	Decrease	—	Increase
		5% to 10%2		10% to 15%
Direct administration costs compared to 20093	Increase	—	—	—
	25% to 30%
Exploration costs compared to 2009	—	Increase	—	—
		80% to 90%
Tax rate	Less than 5%	—	—	—
Capital expenditures	$552 million4	—	—	$41 million

1	Based on a uranium spot price of $41.75 (US) per pound (the Ux spot price as of February 22, 2010) and an exchange rate of $1.00 (US) for $1.05 (Cdn).
2	Assumes the unit cost of sale for produced material will decline by 2% to 5% and the unit cost of sale for purchased material will decline by 15% to 20%.
3	Direct administration costs do not include stock-based compensation expenses.
4	Does not include our share of capital expenditures at BPLP.

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Liquidity and capital resources

At the end of 2009, we had cash and short-term investments of $1.3 billion in a mix of short-term deposits and treasury bills, while our total debt amounted to $1 billion.

We have large, reliable customers that need uranium regardless of world economic conditions, and we expect the uranium contract portfolio we’ve built to provide a solid revenue stream for years to come.

Our financial objective is to make sure we have the cash and debt capacity to fund our operating activities, investments, and growth. We have several alternatives to fund future capital needs, including our significant cash position, credit facilities, future operating cash flow and debt or equity financing, and are continually evaluating these options to make sure we have the best mix of capital resources to meet our needs.

Continued uncertainty in the global financial markets has prevented many companies from ready access to capital markets. Our strong financial position enables us to rely on operating cash flows and existing bank credit facilities to provide liquidity. This gives us the flexibility to fund longer term requirements until the balance accumulates to the point where it makes sense to refinance in the capital markets.

Financial condition

	2009		2008
Cash position ($ millions) (cash, cash equivalents, short-term investments)		1,304		64
Cash provided by operations ($ millions) (net cash flow generated by our operating activities after changes in working capital)		690		530
Cash provided by operations/net debt (net debt is total consolidated debt, less cash and cash equivalents)		n/a		42	%
Net debt/total capitalization (total capitalization is total long-term debt and equity)		n/a		26	%

Credit ratings

Third-party ratings for our commercial paper and senior debt as of December 31, 2009:

Security	DBRS	S&P
Commercial paper	R-1 (low)	A-1 (low)1
Senior unsecured debentures	A (low)	BBB+

¹ Canadian National Scale Rating. The Global Scale Rating is A-2.

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Liquidity

($ millions)	2009			2008
Cash and cash equivalents at beginning of year		64			28
Cash from operations		690			530
Investment activities
Additions to property, plant and equipment		(393	)		(531	)
Dispositions		871			—
Acquisitions		—			(503	)
Other investing activities		(36	)		(13	)
Financing activities
Change in debt		(231	)		629
Issue of shares		442			1
Dividends		(93	)		(81	)
Exchange rate changes on foreign currency cash balances		(10	)		4
Cash and short-term investments at end of year		1,304			64

Cash from operations

Cash from operations was 30% higher than in 2008 as cash margins were higher in the electricity and fuel services businesses, mainly due to higher realized prices. Working capital requirements, primarily an increase in product inventories, used $84 million in cash in 2009. In 2008, working capital consumed $91 million as a result of an increase in trade receivables during the year. See note 19 to the financial statements.

Investing activities

Cash used in investing includes acquisitions and capital spending.

Acquisitions and divestitures

In December 2009, we sold our interest in Centerra for net proceeds of $871 million. We concluded no significant acquisitions in the year. In 2008, we spent $503 million to acquire an interest in Kintyre ($351 million), GLE ($124 million) and GoviEx Uranium Inc. ($28 million). In addition to the cash invested in GLE, we issued a promissory note in the amount of $73 million (US) in support of future development of the business.

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Capital spending

We classify capital spending as growth or sustaining. Growth capital is money we invest to generate incremental production, and for business development. Sustaining capital is the money we spend to keep our operations at current production levels.

(Cameco’s share in $ millions)	2010 plan		2009 actual		2009 plan
Growth capital
Cigar Lake		111		42		48
Inkai		4		10		9
Total growth capital		115		52		57
Sustaining capital
McArthur River/Key Lake		220		115		106
US ISR		53		32		54
Rabbit Lake		56		43		38
Inkai		18		17		18
Fuel services		29		18		23
Other		9		20		21
Total sustaining capital		385		245		260
Capitalized interest		52		37		50
Total uranium & fuel services		552		334		367
Electricity (our 31.6% share of BPLP)		41		39		38

Capital expenditures were 8% below our plan for 2009 mainly as a result of reduced activity at our US ISR uranium operations, where poor weather and regulatory issues delayed wellfield construction. We do not expect future production to be affected by these delays.

Outlook for investing activities

We expect total capital expenditures for uranium and fuel services to be 65% higher in 2010, as a result of higher spending for:

• growth capital at Cigar Lake

• sustaining capital at Key Lake and McArthur River

Major sustaining expenditures in 2010 include:

• McArthur River/Key Lake — At McArthur River, the largest component is mine development at about $47 million. Other projects include installing freezing and distribution systems, and work on dewatering equipment and mine ventilation. At Key Lake, construction of a new acid plant is the largest project at approximately $87 million.

• US in situ recovery (ISR) — Wellfield construction and well installation is the largest project at approximately $28 million. We also plan to work on the Reynolds Ranch satellite operation and infrastructure.

• Rabbit Lake — Mine development at Eagle Point is the largest project at about $17 million. Other projects include dewatering systems, continued work on mine ventilation expansion and replacement of components of the acid plant.

In 2010, we expect to fund our capital expenditures with cash on hand and cash generated by our operating activities.

34

Financing activities

Cash from financing includes borrowing and repaying debt, and other financial transactions including paying dividends and providing financial assurance.

2009 was a very active year for us. We carried out six separate transactions to build on our already strong financial position, and to support our corporate strategy:

• In the first quarter, we issued approximately 26.7 million common shares, netting $440 million, and put in place or renewed $600 million in revolving lines of credit.

• In the third quarter, we issued 10-year debentures bearing interest at a rate of 5.67%, netting $495 million. At the same time, we cancelled a $500 million revolving credit facility that was to mature in June 2010.

• In the fourth quarter, we renewed a $100 million revolving credit facility until February 2011, and sold our interest in Centerra, netting $871 million.

We used the net proceeds from these transactions to strengthen our cash balances and repay short-term debt. Our intention as we move ahead is to use this cash to advance our growth strategy and for general corporate purposes.

Long-term contractual obligations

December 31, 2009			2011		2013		2015 and
($ millions)	2010		and 2012		and 2014		beyond		Total
Long-term debt		12		28		34		890		964
Interest on long-term debt		54		107		102		162		425
Reclamation costs		14		16		16		449		495
Other liabilities		—		1		—		248		249
Total		80		152		152		1,749		2,133

We now have unsecured lines of credit of about $1.2 billion, which include the following:

• A $500 million, unsecured revolving credit facility that matures November 30, 2012. On mutual agreement between the lenders and Cameco, the facility can be extended for an additional year on the 2010 and 2011 anniversary dates. In addition to borrowing directly from this facility, we can use up to $100 million of it to issue letters of credit, and we keep up to $400 million available to provide liquidity for our commercial paper program, as necessary. The facility ranks equally with all of our other senior debt. At December 31, 2009, there was nothing outstanding under this credit facility, and nothing outstanding under our commercial paper program.

• A $100 million, unsecured revolving credit facility that matures on February 4, 2011. This facility can be extended for one additional 364-day term on mutual agreement with the lender. At December 31, 2009, there was nothing outstanding under this credit facility.

• Approximately $600 million in short-term borrowing and letters of credit provided by various financial institutions. We use these facilities mainly to provide financial assurance for future decommissioning and reclamation of our operating sites, and as overdraft protection. At December 31, 2009, we had approximately $592 million outstanding in letters of credit.

We have $800 million in senior unsecured debentures:

• $300 million bearing interest at 4.7% per year, maturing on September 16, 2015

• $500 million bearing interest at 5.67% per year, maturing on September 2, 2019

We have issued a $73 million (US) promissory note to GLE to support future development of its business. In 2010, GLE expects to have enough data from the test loop phase to be able to decide whether to proceed to commercial feasibility. We do not expect any amounts to be drawn on this note until 2011.

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Product loan facilities

We have a standby product loan facility with one of our customers. The facility, which became effective April 1, 2008, allows us to borrow up to 2.4 million pounds U₃O₈ equivalent from April 1, 2008, to December 31, 2011, and to repay it from 2012 to 2014. We pay standby fees of 2.0% of the U₃O₈ long-term market value at the time the facility was signed, and 5.0% interest on any amounts we draw. Borrowings must be repaid in kind. As at December 31, 2009, there was nothing outstanding under this facility. Revenue from deliveries to this customer, up to the limit of the loan facility, will be deferred until the loan facility has been terminated or, if drawn upon, when the loans are repaid. Revenues deferred to date have not had a material impact on our revenues or earnings.

Debt covenants

Our revolving credit facilities include the following financial covenants:

• our funded debt to tangible net worth ratio must be 1:1 or less

• our tangible net worth must be more than $1.25 billion

• other customary covenants and events of default

Funded debt is total consolidated debt less the following: non-recourse debt, $100 million in letters of credit, cash and short-term investments.

Not complying with any of these covenants could result in accelerated payment and termination of our revolving credit facilities. At December 31, 2009, we complied with all covenants, and we expect to continue to comply in 2010.

Off-balance sheet arrangements

We had two kinds of off-balance sheet arrangements at the end of 2009:

• purchase commitments

• financial assurances

Purchase commitments

December 31, 2009			2011		2013		2015 and
($ millions)	2010		and 2012		and 2014		beyond		Total
Purchase commitments1		140		334		370		35		879

¹ Denominated in US dollars, converted to Canadian dollars as of December 31, 2009 at the rate of $1.0466.

Nearly all of these are commitments to buy uranium and fuel services products under long-term, fixed-price arrangements.

At the end of 2009, we had committed to $840 million (US) for the following:

• About 31 million pounds U₃O₈ equivalent from 2010 to 2013. Of these, an average of 7 million pounds a year until 2013 are from our agreement with Techsnabexport Joint Stock Company (Tenex) to buy uranium from dismantled Russian weapons (the Russian HEU commercial agreement).

• Almost 43 million kgU as UF₆ in conversion services from 2010 to 2016 under our agreements with Springfields Fuels Ltd. (SFL) and Tenex.

Non-delivery by a supplier under these two agreements could have a material adverse effect on our financial condition, liquidity and results of operations.

These two suppliers do not have the right to terminate their agreements other than pursuant to customary event of default provisions.

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Financial assurances

December 31
($ millions)	2009		2008		change
Standby letters of credit		592		429		38	%
BPLP guarantees		87		82		6	%
Total		679		511		33	%

Standby letters of credit mainly provide financial assurance for the decommissioning and reclamation of our mining and conversion facilities. We are required to provide the letters of credit to various regulatory agencies until decommissioning and reclamation activities are complete. Letters of credit are issued by financial institutions for a one-year term.

Our total commitment for financial guarantees on behalf of BPLP was an estimated $87 million at the end of the year. See note 26 to the financial statements.

Balance sheet

December 31							change from
($ millions except per share amounts)	2009		2008		2007		2008 to 2009
Inventory		453		398		393		14	%
Total assets		7,342		7,011		4,582		5	%
Long-term financial liabilities		1,583		1,800		1,512		(12	)%
Dividends per common share	$	0.24	$	0.24	$	0.20		0	%

Total product inventories increased by 14% to $453 million this year due to the higher average carrying cost for uranium and higher fuel services inventory. The average cost of uranium was higher as a result of increased purchasing at near-market prices.

At the end of 2009, our total assets amounted to $7.3 billion, an increase of $2.8 billion compared to 2007. In 2008, the total asset balance increased by $2.4 billion as a result of acquisitions and a temporary increase in accounts receivable. In 2009, the increase was largely attributable to a higher cash balance.

The major components of long-term financial liabilities are long-term debt, future income taxes and the provision for reclamation. In 2009, our balance declined by $217 million primarily due to the repayment of debt during the year. In 2008, the balance increased by $288 million as a result of higher debt levels and increased provision for reclamation resulting from higher estimates for reclamation costs.

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2009 financial results by segment

Uranium

Highlights	2009		2008		change
Production volume (million lbs)		20.8		17.3		20	%
Sales volume (million lbs)		33.9		34.1		(1	)%
Average spot price ($US/lb)		46.06		61.58		(25	)%
Average realized price
($US/lb)		38.25		39.52		(3	)%
($Cdn/lb)		45.12		43.91		3	%
Cost of sales ($Cdn/lb U3O8) (including DDR)		30.59		24.27		26	%
Revenue ($ millions)		1,551		1,512		3	%
Gross profit ($ millions)		488		665		(27	)%
Gross profit (%)		31		44		(30	)%

Production volume in 2009 was 20% higher than 2008 due to higher production at McArthur River, Rabbit Lake, Smith Ranch-Highland, and the rampup of production at Inkai.

Our average realized selling price in $US was 3% lower than 2008 due to lower spot prices. In $Cdn, our realized price was 3% higher as a result of a weaker Canadian dollar in 2009. This was the primary reason for a 3% increase in total revenues as sales volumes were slightly lower than in 2008.

Our total cash cost of sales (excluding DDR) increased by 27% to $901 million ($26.33 per pound U₃O₈) in 2009. This was mainly the result of the following:

• Our unit cost for purchased uranium was significantly higher due to higher purchases at near-market prices to take advantage of profitable trading opportunities.

• We recorded royalty expenses of $117 million (compared to $82 million in 2008) due to higher realized prices and royalty adjustments.

For produced material, our cash cost of sales per unit rose by $4.44 per pound in 2009. Higher royalty costs represented 38% of the increase (higher realized prices resulted in a $1.30 per pound increase in royalties), and incremental production from Inkai added $0.83 per pound (19%). During the rampup stage, Inkai`s cash costs will be significantly higher than our overall average.

The following table shows our cash cost of sales per unit for produced and purchased material, including royalty charges on produced material, as well as the amounts of produced and purchased uranium sold.

	Unit cost of sale						Quantity sold
	($Cdn/lb U3O8)						(million lbs)
	2009		2008		change		2009		2008		change
Produced		23.86		19.42		4.44		20.9		23.2		(2.3	)
Purchased		30.22		24.57		5.65		13.0		10.9		2.1
Total		26.33		20.67		5.66		33.9		34.1		(0.2	)

The net effect was a 27% decrease in gross profit.

In the third quarter of 2009, we forecast a 5% to 10% increase in uranium revenues and expected sales volumes in the range of 34 million to 36 million pounds. Our actual results for 2009 fell slightly short of forecast due to logistical issues that delayed delivery of approximately 1 million pounds of uranium until the first quarter of 2010.

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Outlook for 2010

We expect to produce 21.5 million pounds of U₃O₈, or 3% more than 2009. This increase is driven by our plan to double production at Inkai.

Based on the contracts we have in place, we expect to sell between 31 million and 33 million pounds U₃O₈ in 2010. We expect the unit cost of sale for produced material to be 2% to 5% lower than 2009 due to higher production, and the unit cost of sale for purchased material to be 15% to 20% lower as we expect to make fewer purchases on the spot market.

Based on current spot prices, revenue should be about 5% to 10% lower than it was in 2009 as a result of lower expected sales volumes.

Sensitivity analysis

For 2010, a change of $5 (US) from the Ux spot price on February 22, 2010 ($41.75 (US) per pound) would change revenue by $64 million and net earnings by $39 million.

Long-term price sensitivity analysis: uranium

The table below is not a forecast of prices we expect to receive. The prices we actually realize will be different from the prices shown in the table.

The table is designed to indicate how the portfolio of long-term contracts we had in place on December 31, 2009 would respond to different spot prices. In other words, we would realize these prices only if the contract portfolio remained the same as it was on December 31, 2009, and none of the assumptions we list below change.

Expected realized uranium price sensitivity under various spot price assumptions (rounded to the nearest $1.00)

($US/lb U3O8)
Spot prices	$20		$40		$60		$80		$100		$120		$140
2010		33		39		47		53		60		67		74
2011		33		38		47		54		63		71		79
2012		36		39		49		58		68		77		86
2013		43		45		55		65		75		85		94
2014		42		46		56		66		76		87		96

In the table, our average realized price increases over time under all spot price scenarios. This illustrates the mix of long-term contracts in our December 31, 2009 portfolio, and is consistent with our contracting strategy.

Our contracts usually include a mix of fixed-price and market-price components, which we target at a 40:60 ratio. We signed many of our current contracts in 2003 to 2005, when market prices were low ($11 to $31 (US)). Those that are fixed at lower prices or have low ceilings will yield prices that are lower than current market prices. These older contracts are beginning to expire, and we are starting to deliver into contracts signed since 2004 (when market prices began to increase).

See page 19 for more information about our contracting strategy.

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Our portfolio is affected by more than just the spot price. We made the following assumptions to create the table:

Sales

• sales volume of 32 million pounds in 2010 (the midpoint of our outlook for the year)

• sales volume of 30 million pounds for 2011 and every year following

Deliveries

• customers take the maximum quantity allowed under each contract (unless they have already provided a delivery notice indicating they will take less)

• we defer a portion of deliveries under existing contracts for 2010, 2011 and 2012

Prices

• the average long-term price indicator is the same as the average spot price for the entire year (a simplified approach for this purpose only)

• we deliver all volumes that we don’t have contracts for at the spot price for each scenario

Inflation

• is 2.0% per year

Tiered royalties

As sales of material we produce at our Saskatchewan properties increase, so do the tiered royalties we pay. The table below indicates what we would pay in tiered royalties at various realized prices. We record tiered royalties as a cost of sales.

This table assumes that we sell 100,000 pounds U₃O₈ and that there is no capital allowance available to reduce royalties, and is based on 2009 rates. The index value to calculate rates for 2010 is not available until April 2010.

	Tier 1 royalty		Tier 2 royalty		Tier 3 royalty
Realized price	6% x		4% x		5% x
($Cdn)	(sales price - $17.82)		(sales price - $26.74)		(sales price - $35.65)		Total royalties
25		43,080		—		—		43,080
35		103,080		33,040		—		136,120
45		163,080		73,040		46,750		282,870
55		223,080		113,040		96,750		432,870
65		283,080		153,040		146,750		582,870
75		343,080		193,040		196,750		732,870
85		403,080		233,040		246,750		882,870

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Fuel services

(includes results for UF₆, UO₂ and fuel fabrication)

Highlights	2009		2008		change
Production volume (million kgU)		12.3		8.3		48	%
Sales volume (million kgU)		14.9		14.8		1	%
Realized price ($Cdn/kgU)		17.84		15.85		13	%
Cost of sales ($Cdn/kgU) (including DDR)		14.47		15.46		(6	)%
Revenue ($ millions)		276		252		10	%
Gross profit ($ millions)		50		8		525	%
Gross profit (%)		18		3		500	%

The shutdown of the Port Hope UF₆ conversion plant reduced production in our fuel services division in 2009 and 2008. The UF₆ plant resumed operations in June, reducing the impact in 2009, and resulting in a 48% increase in total production.

Revenue rose by 10% as a result of a 13% increase in the average realized selling price for fuel service products, reflecting improved prices under UF₆ sales contracts.

The unit cost of products and services sold (including DDR) was 6% lower this year, mainly due to higher production volumes and allocating operating costs to inventory rather than expensing them directly. In 2009, we expensed $18 million in standby charges compared to $43 million in 2008.

The net effect was a $42 million increase in gross profit.

Outlook for 2010

We expect to produce 14 million to 16 million kgU in our fuel services business in 2010, a significant improvement over 2009 due largely to stronger anticipated performance at the Port Hope UF₆ conversion plant.

We expect the average realized selling price for our fuel services products to decline by 5% to 10%, sales volumes to increase by 15% to 20%, and revenue to be 5% to 10% higher.

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Electricity

BPLP

(100% — not prorated to reflect our 31.6% interest)

Highlights
($ millions except where indicated)	2009			2008			change
Output — terawatt hours (TWh)		24.6			24.7			—
Capacity factor (the amount of electricity the plants actually produced for sale as a percentage of the amount they were capable of producing)		87	%		87	%		—
Realized price ($/MWh)		64	1		57			12	%
Average Ontario electricity spot price ($/MWh)		30			49			(39	)%
Revenue		1,640			1,409			16	%
Operating costs (net of cost recoveries)		905			900			1	%
Cash costs		770			779			(1	)%
Non-cash costs		135			121			12	%
Income before interest and finance charges		735			509			44	%
Interest and finance charges		4			41			(90	)%
Cash from operations		754			547			38	%
Capital expenditures		123			85			45	%
Distributions2		610			329			85	%
Operating costs ($/MWh)		35	1		36			(3	)%

1	Based on actual generation of 24.6 TWh plus deemed generation of 1.2 TWh.
2	Does not include the full repayment of the partner loans of $225 million in 2008 (our share was $75 million).

Our earnings from BPLP

($ millions)	2009			2008			change
BPLP’s earnings before taxes (100%)		731			468			56	%
Cameco’s share of pretax earnings before adjustments (31.6%)		231			148			56	%
Proprietary adjustments		(7	)		(7	)		—
Earnings before taxes from BPLP		224			141			59	%

BPLP’s improved results in 2009 are largely the result of higher revenues, which were 16% higher than 2008 due to a 12% increase in realized prices. BPLP’s average realized price reflects spot sales, revenue recognized under BPLP’s agreement with the Ontario Power Authority (OPA) and revenue from financial contracts.

BPLP has an agreement with the OPA that extends to 2019. Under the agreement, output from the B reactors is supported by a floor price (currently $48.76/MWh) that is adjusted annually for inflation. Revenue is recognized monthly, based on the positive difference between the floor price and the spot price. BPLP does not have to repay the revenue to the extent that the floor price exceeds the average spot price for the year.

The agreement also provides for payment if the Independent Electricity System Operator reduces BPLP’s generation because Ontario baseload generation is higher than required. The amount of the reduction is considered ‘deemed generation’, and BPLP is paid either the spot price or the floor price — whichever is higher.

During 2009, BPLP recognized revenue of $514 million under the agreement with the OPA.

BPLP also has financial contracts in place that reflect market conditions at the time they were signed. Contracts signed in 2006 to 2008, when the spot price was higher than the floor price, reflected the strong forward market at the

42

time. BPLP receives or pays the difference between the contract price and the spot price. Since the electricity market in Ontario has weakened, BPLP has been putting fewer contracts in place.

BPLP sold the equivalent of about 57% of its output under financial contracts in 2009, compared to 67% in 2008.

BPLP’s operating costs were $905 million this year compared to $900 million in 2008.

The net effect was an increase in our share of earnings before taxes of 59%.

BPLP distributed $610 million to the partners in 2009. Our share was $193 million. The partners have agreed that BPLP will distribute excess cash monthly, and will make separate cash calls for major capital projects.

BPLP’s adjusted capacity factor was 91% in 2009 (including actual generation of 24.6 TWh and deemed generation of 1.2 TWh). Excluding deemed generation, the capacity factor was 87% — unchanged from 2008.

Outlook for 2010

We expect the average capacity factor for the four Bruce B reactors to be approximately 90% in 2010, and actual output to be about 4% higher than it was in 2009. The 2010 realized price for electricity is projected to be about 5% to 10% lower than 2009 as BPLP has fewer financial contracts in place for 2010. At December 31, 2009, BPLP had about 6.5 TWh under financial contracts, which is equivalent to about 25% of Bruce B generation at its planned capacity factor. We expect that revenue will decline by a corresponding 5% to 10% as a result.

We expect the average unit cost (net of cost recoveries) to be 10% to 15% higher in 2010, and total operating costs to rise by about 10% to 15%, mainly due to higher costs for planned outages and maintaining the workforce.

Sensitivity analysis

A change of $1 in the electricity spot price in 2010 would change our 2010 net earnings by $3 million, based on the assumption that the spot price will remain below the floor price provided for under BPLP’s agreement with the OPA.

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Fourth quarter results

Fourth quarter consolidated results

	Three months ended
Highlights	December 31
($ millions except per share amounts)	2009		2008		change
Revenue		659		640		3	%
Net earnings		598		31		1,829	%
$  per common share (basic)		1.52		0.08		1,800	%
$  per common share (diluted)		1.52		0.08		1,800	%
Adjusted net earnings (non-GAAP, see page 27)		248		179		39	%
$  per common share (adjusted and diluted)		0.63		0.49		29	%
Cash provided by operations (after working capital changes)		188		224		(16	)%

In the fourth quarter of 2009, our net earnings were $598 million ($1.52 per share diluted), an increase of $567 million compared to $31 million ($0.08 per share diluted) in 2008. The results for 2009 reflect a $374 million net gain related to the sale of our interest in Centerra. In 2008, we recorded an unrealized after tax loss of $148 million on financial instruments.

The 39% increase in adjusted net earnings in the quarter was from higher profits in gold relating to a higher realized selling price, averaging $1,129 (US) per ounce in 2009 compared to $806 (US) in 2008.

We use adjusted net earnings, a non-GAAP measure, as a more meaningful way to compare our financial performance from period to period. See page 27 for more information. The table below reconciles adjusted net earnings with our net earnings.

	Three months ended
	December 31
($ millions)	2009			2008
Net earnings (GAAP measure)		598			31
Adjustments (after tax)
Restructuring the gold business		28			10
Gain on sale of Centerra		(374	)		—
Unrealized losses (gains) on financial instruments		(4	)		130
Stock option expense (recovery)		—			2
Investment write downs		—			6
Adjusted net earnings1 (non-GAAP measure)		248			179

¹ Adjusted net earnings includes our share of Centerra’s operating earnings for the periods presented.

We recorded an income tax expense of $20 million this quarter, based on adjusted earnings, compared to a $31 million expense in 2008. Our effective income tax rate was 6% in the fourth quarter of 2009 compared to 13% in 2008.

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Direct administration costs were $39 million in the quarter, or $18 million lower than the same period last year. The decrease reflects lower costs for BPLP business development activities as well as reduced spending on system technology. Stock-based compensation expenses were $3 million in the quarter, compared to a recovery of $10 million in the fourth quarter of 2008. The 2008 amount reflects recoveries recorded before we amended our stock option plan in November 2008. See note 22 to the financial statements.

	Three months ended December 31
($ millions)	2009		2008
Direct administration		39		57
Stock-based compensation		3		(10	)
Total administration		42		47

Quarterly trends

Highlights
($ millions except per share amounts)	2009								2008
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Revenue		659		518		645		493		640		329		620		594
Net earnings		598		172		247		82		31		136		150		133
$  per common share (basic)		1.52		0.44		0.64		0.23		0.08		0.39		0.44		0.38
$  per common share (diluted)		1.52		0.44		0.64		0.22		0.08		0.39		0.43		0.38
Adjusted net earnings (non-GAAP, see page 44)		248		104		140		90		179		128		139		143
$  per share diluted		0.63		0.26		0.36		0.24		0.49		0.37		0.39		0.42
Earnings from continuing operations		174		195		269		79		5		124		108		129
$  per common share (basic)		0.44		0.49		0.68		0.23		0.01		0.37		0.31		0.36
$  per common share (diluted)		0.44		0.49		0.68		0.23		0.01		0.37		0.30		0.36
Cash provided by operations		188		175		161		166		224		87		100		119

Key things to note:

• Our financial results are strongly influenced by the performance of our uranium segment, which accounted for 66% of annual consolidated revenues in 2009.

• The timing of customer requirements, which tend to vary from quarter to quarter, drives revenue in the uranium and fuel services segments. In 2009, uranium sales volumes were most heavily weighted to the second and fourth quarters — similar to 2008.

• Net earnings do not trend directly with revenue due to unusual items and transactions that occur from time to time. We use adjusted net earnings, a non-GAAP measure, as a more meaningful way to compare our results from period to period (see page 44 for more information).

• Cash from operations tends to fluctuate as a result of the timing of deliveries and product purchases in our uranium and fuel services segments (see page 33 for more information).

• Quarterly results are not necessarily a good indication of annual results due to the variability in customer requirements noted above.

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Fourth quarter results by segment

Uranium

	Three months ended
	December 31
Highlights	2009		2008		change
Production volume (million lbs)		6.7		5.5		22	%
Sales volume (million lbs)		10.0		10.5		(5	)%
Average spot price ($US/lb)		45.96		51.00		(10	)%
Average realized price:
($US/lb)		40.64		35.31		15	%
($Cdn/lb)		43.51		42.77		2	%
Cost of sales ($Cdn/lb U3O8) (including DDR)		30.29		24.16		25	%
Revenue ($ millions)		443		450		(2	)%
Gross profit ($ millions)		132		193		(32	)%
Gross profit (%)		30		43		(30	)%

Production volumes were 22% higher in the fourth quarter of 2009 compared to the fourth quarter of 2008, as a result of higher production at McArthur River/Key Lake, Smith-Ranch Highland and Inkai.

Uranium revenues for the quarter were down 2% compared to 2008, as a 5% decline in sales volumes was partially offset by a 2% increase in our $Cdn realized price. In $US, our realized price for the quarter was 15% higher than in 2008 mainly due to stronger prices under fixed-price sales contracts. The Canadian dollar was much stronger in the fourth quarter of 2009, with our exchange rate averaging $1.07 compared to $1.21 a year ago.

The total cost of products and services sold, including DDR, was 21% higher than 2008 ($311 million compared to $257 million in 2008) mainly related to higher unit costs for purchased uranium. The average unit cost of product and services sold was $30.29/lb, or 25% higher than it was in the fourth quarter of 2008 as we purchased uranium at near-market prices during the year.

The net effect was a 32% decrease in gross profit.

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Fuel services

(includes results for UF₆, UO₂ and fuel fabrication)

	Three months ended
	December 31
Highlights	2009		2008		change
Production volume (million kgU)		3.9		2.6		50	%
Sales volume (million kgU)		6.0		4.6		30	%
Realized price ($Cdn/kgU)		14.89		13.81		8	%
Cost of sales ($Cdn/kgU) (including DDR)		12.92		11.26		15	%
Revenue ($ millions)		91		70		30	%
Gross profit ($ millions)		13		14		(7	)%
Gross profit (%)		14		20		(30	)%

Our results in the fourth quarter of 2009 were adversely affected by a labour strike at our fuel manufacturing facility. In addition, delivery dates are at the discretion of customers, so our quarterly delivery patterns, and therefore our sales volumes and revenue, can vary significantly.

Total revenue rose by 30% and the cost of products and services sold (including DDR) went up by 38% ($78 million compared to $56 million in the fourth quarter of 2008). The increases are a result of sales volumes being 30% higher than in the fourth quarter of 2008. Our cost of sales per unit was 15% higher, mainly due to the labour strike. Our cost of sales for the quarter included $9 million in standby costs incurred during the strike.

The net effect was a 7% decrease in gross profit.

47

Electricity

BPLP
(100% — not prorated to reflect our 31.6% interest)

	Three months ended
Highlights	December 31
($ millions except where indicated)	2009			2008			change
Output — terawatt hours (TWh)		6.4			7.0			(9	)%
Capacity factor		89	%		97	%		(8	)%
Realized price ($/MWh)		62	1		57			9	%
Average Ontario electricity spot price ($/Mwh)		30			49			(39	)%
Revenue		422			399			6	%
Operating costs (net of cost recoveries)		218			207			5	%
Cash costs		183			176			4	%
Non-cash costs		35			31			13	%
Income before interest and finance charges		204			192			6	%
Interest and finance charges		1			11			(91	)%
Cash from operations		229			176			30	%
Capital expenditures		40			19			111	%
Distributions		220			205			7	%
Operating costs ($/MWh)		33	1		30			10	%

¹ Based on actual generation of 6.4 TWh plus deemed generation of 0.4 TWh in the fourth quarter.

Our earnings from BPLP

($ millions)	2009			2008			change
BPLP’s earnings before taxes (100%)		203			181			12	%
Cameco’s share of pretax earnings before adjustments (31.6%)		64			57			12	%
Proprietary adjustments		(2	)		(2	)		—
Earnings before taxes from BPLP		62			55			13	%

Total electricity revenue increased by 6%. BPLP’s results this quarter are higher mainly due to higher realized prices. BPLP’s average realized price reflects spot sales, revenue recognized under BPLP’s agreement with the OPA and financial contract revenue. During the fourth quarter of 2009, BPLP recognized revenue of $137 million under the agreement with the OPA.

BPLP’s adjusted capacity factor was 95% in the fourth quarter of 2009 (includes actual generation of 6.4 TWh and deemed generation of 0.4 TWh). Excluding deemed generation, the capacity factor was 89%, down from 97% in the fourth quarter of 2008.

The equivalent of about 54% of BPLP’s output was sold under financial contracts in the fourth quarter of 2009 compared to 76% in the fourth quarter of 2008.

The net effect was a 13% increase in our share of earnings before taxes.

BPLP distributed $220 million to the partners in the fourth quarter. Our share was $70 million. The partners have agreed that BPLP will distribute excess cash monthly, and will make separate cash calls for major capital projects.

48

Our operations and development projects

This section of our MD&A is an overview of each of our operations, what we accomplished this year, our plans for the future and how we manage risk.

Uranium Production overview	51
Operating properties
McArthur River and Key Lake	53
Rabbit Lake	58
Smith Ranch-Highland	60
Crow Butte	62
Inkai	63
Development project
Cigar Lake	66
Projects under evaluation
Inkai blocks 1 and 2 production increase (see Inkai, above)	63
Inkai block 3 (see Inkai, above)	63
McArthur River expansion (see McArthur River, above)	53
Kintyre	70
Millennium	71
Exploration	72
Fuel services
Refining
Blind River refinery	73
Conversion and fuel manufacturing
Port Hope conversion services	74
Fuel Manufacturing	74
Springfields Fuels	74
Electricity
Bruce Power Limited Partnership	76

49

Managing the risks

The nature of our operations means we face many potential risks and hazards that could have a significant impact on our business.

This page lists the regulatory, environmental and operational risks that generally apply to all of our operations, development projects, and projects under evaluation. We also talk about how we manage specific risks in each operation or project update. These risks could have a material impact on our business in the near term.

We recommend you also review our annual information form, which includes a discussion of other material risks that could have an impact on our business.

Regulatory risks

A significant part of our economic value depends on our ability to obtain and renew the licences and other approvals we need to operate. If we do not receive the regulatory approvals we need, or do not receive them at the right time, we may have to delay or modify a project, which could increase our costs and delay or prevent us from generating revenue from the project.

Environmental regulations also impose very strict standards and controls on almost every aspect of our operations, and are becoming more stringent in Canada and the US. For example, making changes to our operational processes increasingly requires regulatory approval.

Some of the sites we own or operate have been under ongoing investigation and/or remediation and planning as a result of historic soil and groundwater conditions. For example, we are addressing issues related to historic soil and groundwater contamination at Port Hope and Rabbit Lake.

Environmental risks

We have the health, safety and environmental risks associated with any mining and chemical processing company. All three segments face unique risks associated with radiation.

Operational risks

Other operational risks and hazards include:

• environmental incidents and pollution

• accidents

• social or political activism, including blockades

• non-compliance with laws and licences

• fire

• natural phenomena, including underground floods, cave-ins and pitwall failures

• unusual, unexpected or adverse mining or geological conditions

• technological failure of mining methods

• risks from the transportation of our products and chemicals

We have insurance to cover some of these risks and hazards, but not all of them, and not to the full amount of losses or liabilities that could potentially arise.

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Uranium — production overview

We had a number of successes at our mining operations in 2009.

At McArthur River/Key Lake:

• We accomplished a mining first by successfully developing through the unconformity into the Athabasca sandstone, and exceeded our production target by 2%.

• We successfully reduced the release of both molybdenum and selenium to the environment.

At Rabbit Lake:

• We added mineral reserves, extending the expected life of reserves by two years to 2015 and exceeded our production target by 6%.

At Inkai:

• We commissioned Inkai’s main processing plant and started commissioning the first satellite plant, and exceeded our production target by 22%.

Uranium production

	Three months ended				Year ended
Cameco’s share	December 31				December 31
(million lbs U3O8)	2009		2008		2009		2008		2009 plan
McArthur River/Key Lake		4.0		3.1		13.3		11.6		13.1
Rabbit Lake		1.4		1.8		3.8		3.6		3.6
Smith Ranch-Highland		0.5		0.3		1.8		1.2		1.8
Crow Butte		0.2		0.2		0.8		0.6		0.8
Inkai		0.6		0.1		1.1		0.3		0.9
Total		6.7		5.5		20.8		17.3		20.2

Outlook

We have geographically diversified sources of production. Based on our mines currently in production, we expect to produce 112.9 million pounds of U₃O₈ over the next five years. Our strategy is to double our annual production to 40 million pounds by 2018, which we expect will come from our operating properties, development projects and projects under evaluation. These sources are discussed in the following section.

Cameco’s share of production — annual forecast to 2014

Current forecast
(million lbs U3O8)	2010		2011		2012		2013		2014
McArthur River/Key Lake		13.1		13.1		13.1		13.1		13.1
Rabbit Lake		3.6		3.6		3.6		3.6		3.0
US ISR		2.5		2.6		3.0		3.4		3.8
Inkai		2.3		3.1		3.1		3.1		3.1
Total		21.5		22.4		22.8		23.2		23.0

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We expect Cigar Lake to begin production in mid-2013, based on current information, and will update our production outlook for Cigar Lake in the technical report, which we plan to file at the end of the first quarter of 2010.

By 2011, Inkai is expected to reach production of 5.2 million pounds of U₃O₈ per year (our share 3.1 million pounds). Inkai has regulatory approval to produce 2.6 million pounds (100% basis) and, in 2005, applied for regulatory approval to increase production to 5.2 million pounds per year (100% basis). We need regulatory approval to increase production to the level necessary to achieve our annual production forecast, and expect to receive it in 2010.

This forecast is forward-looking information. It is based on the assumptions and subject to the material risks discussed on page 5, and specifically on the assumptions and risks listed here. Actual production may be significantly different from this forecast.

Assumptions

• we achieve our forecast production for each operation, which requires, among other things, that our mining plans succeed, processing plants function and our reserve estimates are accurate

• we obtain or maintain the necessary permits and approvals from government authorities

• our production is not disrupted or reduced as a result of natural phenomena, labour disputes, political risks, shortage or lack of supplies critical to production, equipment failures or other development and operation risks

Material risks that could cause actual results to differ materially

• we do not achieve forecast production levels for each operation because of a change in our mining plans, processing plant availability, lack of tailings capacity or for other reasons

• we cannot obtain or maintain necessary permits or government approvals

• natural phenomena, labour disputes, political risks, shortage or lack of supplies critical to production, equipment failures or other development and operation risks disrupt or reduce our production

52

Uranium — operating properties

McArthur River/Key Lake

McArthur River is the world’s largest, high-grade uranium mine, and Key Lake is the largest uranium mill in the world.

Ore grades at the McArthur River mine are 100 times the world average, which means it can produce more than 18 million pounds per year by mining only 150 to 200 tonnes of ore per day. We are the operator.

Location		Saskatchewan, Canada
Ownership		69.805% — McArthur River 83.33% — Key Lake
End product		U3O8
ISO certification		ISO 14001 certified
Deposit type		underground
Estimated reserves (Cameco’s share)		234 million pounds — proven and probable
Average reserve grade		U3O8 — 19.5%
Estimated resources		21.1 million pounds (measured and indicated) (Cameco’s share) 111.3 million pounds (inferred)
Mining methods		currently: raiseboring under development: boxhole boring
Licensed capacity		mine and mill: 18.7 million pounds per year (can be exceeded — see Licencing below)
Total production	2000 to 2009	171.2 million pounds (McArthur River/Key Lake)
	1983 to 2002	209.8 million pounds (Key Lake)
2009 production		13.3 million pounds (Cameco’s share)
2010 forecast production		13.1 million pounds (Cameco’s share)

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Background

Mining of the McArthur River deposit poses a number of challenges including control of groundwater, stabilizing weak rock formations, and radiation protection from very high grade uranium ores. To address these challenges we use a number of innovative methods and techniques:

Ground freezing

The sandstones that overlay the deposit and basement rocks are water-bearing, with large volumes of water under significant pressure. We use ground freezing to form an impermeable freezewall. This prevents water from entering the mine, and helps stabilize weak rock formations.

Raisebore mining

Raisebore mining is an innovative non-entry approach that we adapted to meet the unique challenges at McArthur River. From a raisebore chamber in waste rock above the ore, we drill a series of overlapping holes through the ore zone and collect the ore using remote-controlled scoop trams at the bottom of the raises. Once each raisebore hole is complete, we fill it with concrete. We have successfully used the raisebore mining method to extract more than 170 million pounds since we began mining in 1999.

McArthur River currently has four zones with delineated mineral reserves (zones 1 to 4). Zones A and B are categorized as inferred mineral resources. Parts of zones 1, 2, 3 and 4 also have mineral resources.

We have mined only zone 2 since the mine started production. To sustain our production levels, we need to move to new mining areas.

Zone 2 is divided into four panels (panels 1, 2, 3 and 5). Panel 5 represents the upper portion of zone 2, overlying a portion of the other panels. Until late 2009, all mine production was from panels 1, 2 and 3, and there are still limited reserves that we will extract from these panels in the next few years. We expect to mine a total of approximately 85 million pounds of uranium from panel 5.

As mining of zone 2 progresses, we are also bringing the lower mining area of zone 4 into production later in 2010.

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2009 update

Production on target

Our share of production in 2009 was 13.3 million pounds U₃O₈ compared to our target of 13.1 million pounds U₃O₈, and a 15% increase over 2008. Production in 2008 was lower than planned due to operating challenges at the Key Lake mill.

We exceeded our target as a result of strong results at both McArthur River and Key Lake, and the amendment to the Key Lake operating licence (see Licensing below).

New mining areas

Zone 2, panel 5 — We completed a new freezewall around this area, developed the initial raisebore chamber and began production in the fourth quarter. This is the first time development has been accomplished through the unconformity into the Athabasca sandstone.

Lower zone 4 — We completed the raisebore chamber on the 530 metre level, completed all freezehole drilling and began freezing the ground.

Mill revitalization

The Key Lake mill began operating in 1983. We are renewing the mill to help maintain and increase our uranium production capability, and this year focused on three areas:

• operational upgrades

• treatment of effluent

• tailings capacity

Operational upgrades

The Key Lake revitalization plan includes upgrading circuits with new technology to simplify operations, increasing annual production capacity and improving environmental performance. As part of this plan, we are replacing the acid, steam and oxygen plants. We received regulatory approval to proceed with these projects and have begun work.

Treatment of effluent

Our operating licence includes a condition that the Key Lake mill reduce the levels of molybdenum and selenium discharged to the environment. Based on work this year, release of both metals to the environment is now controlled at reduced concentrations.

Tailings capacity

The Key Lake mill deposits the milling tailings in the Deilmann tailings management facility (TMF). This year we received regulatory approval to increase the capacity of the Deilmann TMF. This now gives us approximately six years of capacity at current production rates.

Licensing

The CNSC approved an amendment to our operating licence for Key Lake, giving us flexibility in the annual licensed production limit.

Under certain conditions, the Key Lake mill can produce up to 20.4 million pounds U₃O₈ per year as long as average annual production does not exceed 18.7 million pounds. If production is lower than 18.7 million pounds in any year, we can produce more in future years (up to 20.4 million pounds) until we recover the shortfall. The amendment allows us to recover shortfalls going back to 2003.

We have applied for regulatory approval for similar production flexibility at the McArthur River mine.

After the mill is revitalized, annual production will depend mainly on mine production. We are continuing to plan for annual production of 18.7 million pounds (100% basis) for the next few years.

55

Exploration

We continued our underground exploration drilling and development this year, focusing on evaluating mineral resources at the south of the mine. We successfully converted 14 million pounds of measured resources in zone 4 to mineral reserves.

Surface drilling on zone B increased inferred mineral resources by 14 million pounds.

Reserves grade

The estimated average ore grade of the mineral reserves at McArthur River has declined from 21% U₃O₈ to 19.5% as a result of new reserves in zone 4 that average 10.3% U₃O_8. We do not expect to be producing from this area for a number of years.

Planning for the future

Production

We expect our share of production to be 13.1 million pounds U₃O₈ in 2010.

New mining zones

Zone 2, panel 5 — In 2010, we expect to develop two additional raisebore chambers. This area is planned to account for approximately two-thirds of McArthur River mine production in 2010.

Lower zone 4

We began freezing in January 2010. Once the freezewall is in place and development complete, we expect initial production will begin late in 2010.

Exploration

In 2010, we plan to initiate a multi-year project, the McArthur River expansion, to advance the underground exploration drifts on the 530 metre level to the north and to the south of the existing mine. This work is expected to further delineate zone A and B inferred resources to the north as well as resources to the south. As part of the project, we will also initiate a preliminary assessment to determine the potential options and feasibility for mining these resources.

Surface exploration will focus on historically known but under tested targets south of the mine.

Managing near-term risks

Labour relations

The collective agreement covering unionized employees at the McArthur River and Key Lake operations expired on December 31, 2009. Negotiations are in progress. There is risk to production if we are unable to reach an agreement and employees go on strike.

Transition to new mining areas

Portions of the new production raises for zone 2, panel 5 will intersect with the freezewall originally developed for zone 2, panels 1, 2 and 3. This original freezewall is now redundant. The steel freezepipes from this freezewall are being removed. Timely removal represents the largest remaining schedule risk that could impact production rates.

Managing ongoing risks

Production at McArthur River/Key Lake poses many challenges: control of groundwater, weak ground formations, radiation protection, water inflow, mining method uncertainty and changes to productivity, mine transitioning, regulatory approvals, tailings capacity, reliability of facilities at Key Lake, surface and underground fires. Operational experience gained since the start of production has resulted in a significant reduction in risk.

Water inflow risk

The greatest risk is production interruption from water inflows. A 2003 water inflow resulted in a three-month suspension of production. We also had a small water inflow in 2008 that did not impact production.

The consequences of another water inflow at McArthur River would depend on its magnitude, location and timing, but could include a significant reduction in production, a material increase in costs and a loss of mineral reserves.

We take the following steps to reduce the risk of inflows, but there is no guarantee that these will be successful:

56

• Ground freezing — Before mining an ore zone, we drill freeze holes and freeze the ground to form an impermeable freezewall around the ore zone. Ground freezing reduces but does not eliminate the risk of water inflows.

• Mine development — We carry out extensive grouting and careful placement of mine development away from known groundwater sources whenever possible. In addition, we assess all planned mine development for relative risk, and apply extensive additional technical and operating controls for all higher risk development.

• Pumping capacity and treatment limits — The total installed pumping capacity from the McArthur River mine is currently more than 1,850 m³/hr. On the surface, we have water treatment capacity of 1,500 m³/hr and approximately 50,000 m³ of surface storage. We have regulatory approval to treat and release 1,500 m³/hr in non-routine circumstances. In our view, this is sufficient capacity to handle an estimated maximum inflow. We review our dewatering system and requirements at least once a year and before beginning work on any new zone.

Key Lake tailings capacity risk

Tailings from processing McArthur River ore are deposited in the Deilmann TMF. At current production rates, the capacity of the Deilmann TMF is six years, assuming only minor storage capacity losses due to sloughing from pitwalls. Significant sloughing would constrain McArthur River production.

Sloughing of material from the pitwalls has occurred in the past and resulted in the loss of capacity. Technical studies show that stabilizing and reducing water levels in the pit enhances the stability of the pitwalls, thereby reducing the risk of pitwall sloughing. In recent years, we doubled dewatering treatment capacity, allowing us to stabilize the water level in the pit, and have recently begun to reduce this water level.

In 2009, we completed and received regulatory approval for an action plan for the long-term stabilization of the Deilmann TMF pitwalls. We are now carrying out engineering required to implement this action plan. We expect it will take approximately five years to complete the work.

We also completed prefeasibility work to assess options for long-term storage of tailings at Key Lake. We are proceeding with technical studies and environmental assessment work to support an application for regulatory approval to deposit tailings in the Deilmann TMF to a significantly higher elevation. This would provide enough tailings capacity for many years of mill production at Key Lake.

We also manage the risks listed on page 50.

57

Uranium — operating properties

Rabbit Lake

The Rabbit Lake operation, which opened in 1975, is the longest operating uranium production facility in North America, and the second largest uranium mill in the world.

Location	Saskatchewan, Canada
Ownership	100%
End product	U3O8
ISO certification	not certified
Deposit type	underground
Estimated reserves	21.3 million pounds (proven and probable)
Average reserve grade	U3O8 - 0.88%
Estimated resources	10.4 million pounds (measured and indicated) 0.9 million pounds (inferred)
Mining method	vertical blast-hole stoping
Licensed capacity	mill: 16 million pounds per year
Total production 1975 to 2009	178.7 million pounds
2009 production	3.8 million pounds
2010 forecast production	3.6 million pounds

2009 update

Production on target

Rabbit Lake’s production this year was 3.8 million pounds U₃O₈, just over our target, and 6% higher than 2008. Higher tonnage made up for grades that were lower than expected.

Continued to upgrade the mill and expand the tailings facility

We replaced selected plant equipment and process vessels, and commissioned and began operating the new circuit to reduce concentrations of molybdenum in mill effluent.

We completed the tailings management facility expansion in 2009.

Advanced reclamation planning

The CNSC approved our multi-year site-wide reclamation plan. It will serve as the foundation for future reclamation activities, with area-specific plans to be approved on a case-by-case basis.

58

Worked to extend the mine life

We added mineral reserves, extending the expected production life by two years to 2015. We are conducting exploration drilling near the mine and have found new mineralization.

Planning for the future

Production

We expect to produce 3.6 million pounds in 2010.

Milling

We expect the mill to have the capacity to handle tailings from milling ore from Rabbit Lake until 2015 (based upon expected ore grades and milling rates). After production at Cigar Lake ramps up to full capacity, we expect to ship a portion of the uranium solution from milling of Cigar Lake ore to the Rabbit Lake mill for processing. To support this level of production, we will be replacing major components of the acid plant and working to increase tailings capacity.

Exploration

We have extended our underground drilling reserve replacement program into 2010. We plan to test and evaluate areas east and northeast of the mine where we have had good results. Drilling will also continue on other parts of the property.

Reclamation

As part of our multi-year site-wide reclamation plan, we expect to spend $5 million in 2010 to reclaim facilities that are no longer in use.

Managing our risks

We manage the risks listed on page 50.

59

Uranium — operating properties

Smith Ranch-Highland

We operate Smith Ranch and Highland as a combined operation. Each has its own processing facility; however, the Smith Ranch mill processes all the uranium. The Highland mill is currently idle.

Together, they form the largest uranium production facility in the United States.

Location	Wyoming, US
Ownership	100%
End product	U3O8
ISO certification	ISO 14001 certified
Estimated reserves	5.9 million pounds (proven and probable)
Average reserve grade	U3O8 — 0.10%
Estimated resources	23.0 million pounds (measured and indicated) 6.6 million pounds (inferred)
Mining method	in situ recovery (ISR)
Licensed capacity	mine: 2 million pounds per year mill: 4 million pounds per year including Highland mill
Total production 2002 to 2009	11.8 million pounds
2009 production	1.8 million pounds
2010 forecast production	1.8 million pounds

2009 update

Production on target

We produced 1.8 million pounds at Smith Ranch-Highland in 2009, meeting our target for the year.

Upgrades

We built and began operating a selenium removal plant. We also started construction on five deep disposal wells. Construction will continue through 2010. These upgrades will allow us to operate and restore groundwater more efficiently.

Planning for the future

Production

We expect to produce 1.8 million pounds in 2010.

Reynolds Ranch expansion

We are seeking regulatory approval to proceed with our Reynolds Ranch expansion, which is expected in the second half of 2010. Reynolds Ranch is adjacent to the Smith Ranch-Highland property.

60

Reserves and resources for Reynolds Ranch and Northwest Unit have been included in the totals for Smith Ranch-Highland reserves and resources.

Exploration

Additional exploration is under way with the objective of extending the mine life.

Managing our risks

The operating environment is becoming more complex as public interest and regulatory oversight increase. This may have a negative impact on our plans to increase production. We also manage the risks listed on page 50.

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Uranium — operating properties

Crow Butte

Crow Butte was discovered in 1980 and began production in 1991. It is the first uranium mine in Nebraska, and is a significant contributor to the economy of northwest Nebraska.

Location	Nebraska, US
Ownership	100%
End product	U3O8
ISO certification	ISO 14001 certified
Estimated reserves	4.1 million pounds (proven and probable)
Average reserve grade	U3O8 — 0.13%
Estimated resources	10.4 million pounds (measured and indicated) 6.7 million pounds (inferred)
Mining method	in situ recovery (ISR)
Licensed capacity (mine and mill)	1 million pounds per year
Total production 2002 to 2009	6.1 million pounds
2009 production	0.8 million pounds
2010 forecast production	0.7 million pounds

2009 update

Production on target

2009 production was 0.8 million pounds, in line with our forecast.

Licensing

The regulators continued their review of our applications to expand and re-license Crow Butte. There will be public hearings once the reviews are completed.

Planning for the future

Production

In 2010, we expect to produce 0.7 million pounds.

Managing our risks

The operating environment is becoming more complex as public interest and regulatory oversight increase. This may have a negative impact on our plans to increase production. We also manage the risks listed on page 50.

62

Uranium — operating properties

Inkai

Inkai is a very significant uranium deposit, located in Kazakhstan. There are two production areas (blocks 1 and 2) and an exploration area (block 3). The operator is Joint Venture Inkai Limited Liability Partnership, which we jointly own (60%) with Kazatomprom (40%).

Location	central Kazakhstan
Ownership	60%
End product	U3O8
ISO certification	BSI OHSAS 18001 ISO 14001 certified
Estimated reserves (Cameco’s share)	80.9 million pounds (proven and probable)
Average reserve grade	U3O8 - 0.07%
Estimated resources (Cameco’s share)	13.1 million pounds (measured and indicated) 153.0 million pounds (inferred)
Mining method	In situ recovery (ISR)
Licensed capacity (mine and mill)	Approved: 2.6 million pounds per year (Cameco’s share 1.6 million pounds per year)
	Application: 5.2 million pounds per year (Cameco’s share 3.1 million pounds per year)
2009 production	1.1 million pounds (Cameco’s share)
2010 forecast production	2.3 million pounds (Cameco’s share)

2009 update

Production

Our share of production this year was 1.1 million pounds U₃O₈ or 22% higher than our forecast of 0.9 million pounds.

Operations

We completed commissioning of the main processing plant and began commissioning the first satellite plant in 2009.

Supply of sulphuric acid

Inkai has increased the number of suppliers of sulphuric acid from two to four, but the shortage of sulphuric acid has delayed production in the past and its future availability remains a concern.

Project funding

We have agreed with Kazatomprom, a state-owned entity of the Kazakhstan government, to provide funding, by way of a loan, of up to $370 million (US) for project development. Further funding may be required. As of December 31, 2009, the amount outstanding under the loan, including accrued interest, was $337 million (US). Of the cash available for distribution each year, 80% is used to repay the loan until it is repaid in full.

63

We have agreed with our partner to provide all funds required by Inkai in connection with work on block 3 until completion of a feasibility study.

We have also invested approximately $4 million (US) over the past several years on sustainable development activities.

Taxes

A new tax code became law on January 1, 2009, and our Resource Use Contract was amended to adopt it. We do not expect the new tax code to have a material impact at this time, but the elimination of tax stabilization under the new tax code could be material in the future. We are also not certain how the Kazakh government will interpret and apply the new code.

Licensing and Resource Use Contract amendments

We received final approval for the block 2 mining licence after the Resource Use Contract was amended. The mining licence for block 1 expires in 2024 and for block 2 expires in 2030.

Block 3 exploration

Regulators extended the term of the block 3 exploration licence to the end of July 2010 after the Resource Use Contract was amended. Under Kazakh law, we have to achieve a commercial discovery to extend our licence beyond July 2010. We spent $3 million (US) (our share) on exploration drilling at block 3 in 2009.

Profits from block 3 production are to be shared on a 50:50 basis with our partner, instead of based on our ownership interests.

Planning for the future

Production

We expect our share of production to be 2.3 million pounds in 2010.

Doubling production

As part of our strategy to double production by 2018, we are working with our partner, Kazatomprom, to implement our 2007 non-binding memorandum of understanding. The memorandum:

• Targets future annual production capacity at 10.4 million pounds (our share 5.7 million pounds). While the existing project ownership would not change, our share of the additional capacity under the memorandum would be 50%.

• Contemplates studying the feasibility of constructing a uranium conversion facility as well as other potential collaborations in uranium conversion.

Both partners approved the production increase at a board meeting in 2008. To implement the increase, we need a binding agreement to finalize the terms of the memorandum, and various government approvals. We are currently in discussions with Kazatomprom regarding these initiatives.

Block 3 exploration

To support a commercial discovery, we are:

• spending $19 million (US) (our share) on exploration drilling in 2010

• preparing an application to file with regulators in the first half of 2010, declaring that we have made a commercial discovery

Technical report

We plan to file our first technical report for this property by the end of the first quarter of 2010.

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Managing our risks

Regulatory approvals

Our 2010 production forecast and reserve estimates assume that we will receive regulatory approval to produce 5.2 million pounds per year (our share: 3.1 million pounds). We believe it is reasonably likely we will receive this approval but, if we do not, we will be unable to meet our 2010 production target and will have to recategorize half of Inkai’s mineral reserves as resources. We also need the regulators to approve our application to declare a commercial discovery in order to extend the term of the block 3 exploration licence beyond July 2010.

Supply of sulphuric acid

Although we have increased our sources of supply, availability of sulphuric acid remains a concern and our production may be less than forecast if there is a shortage.

Political risk

Kazakhstan declared itself independent in 1991 after the dissolution of the Soviet Union. Our Inkai investment, and our plans to increase production, are subject to the risks associated with doing business in developing countries, which have significant potential for social, economic, political, legal, and fiscal instability. Kazakh laws and regulations are still developing and their application can be difficult to predict. To maintain and increase Inkai production, we need ongoing support, agreement and co-operation from our partner and the government.

Amendments to the subsoil law in 2007 allow the government to reopen subsoil use agreements in certain circumstances. This may increase its ability to expropriate our properties under certain circumstances. In 2009, we amended the Resource Use Contract to adopt a new tax code, at the request of the Kazakh government, even though the government had agreed to the tax stabilization provisions in the original contract. A new subsoil use law has also been proposed. We do not know if the new law will be adopted or what it will contain. It is premature to make any assessment, but further changes to the subsoil law could increase our risk. These developments are illustrative of increased political risk in Kazakhstan.

We also manage the risks listed on page 50.

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Uranium — development project

Cigar Lake

Cigar Lake is the world’s second largest high-grade uranium deposit, with grades that are 100 times the world average. We are a 50% owner, and the mine operator, and expect the operation to use available capacity at our Rabbit Lake mill.

Location	Saskatchewan, Canada
Ownership	50.025%
End product	U3O8
Deposit type	underground
Estimated reserves (Cameco’s share)	104.7 million pounds (proven and probable)
Average reserve grade	U3O8 — 17.0%
Estimated resources (Cameco’s share)	0.6 million pounds (measured and indicated) 66.8 million pounds (inferred)
Mining method	jet boring
Target production date	mid-2013 (based on current information)
Target annual production (Cameco’s share)	9 million pounds after rampup

Background

Development

We began developing the Cigar Lake underground mine in 2005, but development has been delayed due to water inflows (two in 2006 and one in 2008). The first inflow flooded shaft 2, while it was under construction. The second inflow flooded the underground development and we began remediation late in 2006. In 2008, another inflow interrupted the dewatering of the underground development. We sealed the source of that inflow in 2009, and continued remediation and dewatering shafts 1 and 2. In February 2010, we completed dewatering the underground development, and we expect work to secure the underground to be complete before October 2010, depending on the condition of the mine.

Mining method

Mining the Cigar Lake deposit poses a number of challenges, including groundwater control, weak rock formations, and protection from radiation from very high-grade uranium ores. Cigar Lake’s mining plan uses several innovative techniques to mitigate these challenges, including bulk freezing and jet boring:

• Bulk freezing — The sandstones that overlay the deposit and basement rocks are water-bearing, with large volumes of water under significant pressure. We will freeze the orebody and surrounding rock to prevent water from entering the mine, and to help stabilize weak rock formations.

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• Jet boring— The jet boring mining method is new to the uranium mining industry. We have conducted an initial test mine program and, overall, the program was a success and met all initial objectives. As we ramp up production, however, there may be some technical challenges.

We are confident we will be able to solve challenges that may arise as we ramp up production, but failure to do so would have a significant impact on our business.

Milling

For approximately two years after mining begins, we expect all Cigar Lake ore to be processed at AREVA’s McClean Lake JEB mill. After production ramps up to planned full capacity, the JEB mill is expected to ship a portion of the uranium solution from milling of Cigar Lake ore to the Rabbit Lake mill for processing.

2009 update

We remediated the 2008 inflow that forced us to temporarily suspend dewatering of the mine. We remotely placed an inflatable seal between the shaft and the source of the inflow then backfilled and sealed the entire area with concrete and grout.

Dewatering and mine re-entry

We completed dewatering shaft 2 in April and remediation of the shaft in May. We resumed dewatering shaft 1 in October and crews entered the shaft in November. Work focused on refurbishing shaft 1 — installing the ladderway, replacing mechanical and electrical components and extending the in-shaft pumping system.

In February 2010, we completed dewatering the underground development. Crews re-entered the main working level of the mine 480 metres below the surface. Safe access to the 480 metre level has been established and work to inspect, assess and secure the underground development has begun. This work will be followed by restoration of underground mine systems and infrastructure in preparation for resumed construction activities.

Licensing

Cigar Lake’s construction licence was amended effective January 1, 2010, to extend the term for four years and to cover dewatering, remediation and construction activities, including completion of shaft 2 and surface construction.

Costs

As of December 31, 2009, we had:

• invested $470 million in capital to develop Cigar Lake

• expensed $64 million in remediation expenses, including $18 million in 2009

Planning for the future

In 2010, we expect to:

• complete work to secure the underground before October 2010, depending on the condition of the mine

• determine if additional remedial work is needed

• file an updated technical report for the Cigar Lake project by the end of the first quarter

• begin to restore the underground mine systems and infrastructure to prepare to resume construction

Cost update

The preliminary estimate of our share of the total capital costs to complete the Cigar Lake project is between $450 million and $550 million. This includes completing underground development and surface construction, and completing modifications at Rabbit Lake and McClean Lake mills.

Taking into account the $470 million that had been spent as at December 31, 2009, and assuming our estimate does not change, our share of total capital costs for Cigar Lake is between $920 million and $1.0 billion. Our capital cost estimate has increased primarily as a result of the longer period over which remediation and development will occur, additional costs for inflow abatement, increases in surface capital costs and improvements to the mine plan and water management systems. The technical report we plan to file at the end of the first quarter of 2010 will include our updated capital cost estimate.

Remediation

In addition to capital costs, our share of the remaining remediation expenses is now expected to be $29 million. In 2010, we expect to spend $25 million on remediation expenses.

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Production

We are now targeting initial production to begin in mid-2013, based on current information.

Reserves and resources

We updated our reserve and resource estimates in 2009 as required by industry standards based on information gathered to the end of the year.

Cameco’s share
(million lbs)	2009		2008		change
Proven reserves		36.9		113.2		(76.3	)
Probable reserves		67.8		—		67.8
Total		104.7		113.2		(8.5	)
Measured resources		0.2		—		0.2
Indicated resources		0.4		3.3		(2.9	)
Total		0.6		3.3		(2.7	)
Inferred resources		66.8		59.1		7.7

The changes are mainly from:

• re-interpretation of the mineralized envelopes on the east end of the deposit

• block modelling in 3D (we used a 2D model in 2007)

• revised mine layout and dilution assumptions

• recategorization of the resources and reserves

These factors contributed to the decreases in total contained pounds of U₃O₈ in the reserves and in the estimated average grade.

Our share of reserves went from 113 million pounds in 2008 to 105 million pounds, due to a 12% increase in tonnes of diluted ore and an 18% reduction in average grades. Our review of the mineral resource and reserve classification resulted in 35% of reserves being classified as proven, compared to 100% previously. The classification is based on drill hole spacing, geological continuity, grade continuity, estimation confidence and the anticipated ability to successfully recover all of the ore.

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The costs to complete Cigar Lake and our target dates for securing the underground and for initial production are forward-looking information. They are based on the assumptions and subject to the material risks discussed on page 5, and specifically on the assumptions and risks listed here.

Assumptions

• natural phenomena or an equipment failure do not cause a material delay or disrupt our plans

• there are no additional water inflows

• the seals used for previous water inflows do not fail

• there are no labour disputes

• we obtain contractors, equipment, operating parts and supplies, and regulatory permits and approvals when we need them

Material risks

• an unexpected geological, hydrological or underground condition, such as an additional water inflow, further delays our progress

• we cannot obtain or maintain the necessary regulatory permits or approvals

• natural phenomena, labour disputes, equipment failure, delay in obtaining the required contractors, equipment, operating parts or supplies, or other reasons cause a material delay or disruption in our plans

Managing our risks

Cigar Lake is a challenging deposit to develop and mine. These challenges include control of groundwater, weak ground formations, radiation protection, water inflow, mining method uncertainty, regulatory approvals, tailings capacity, surface and underground fires and other mining-related challenges. To reduce this risk, we are applying our operational experience and the lessons we’ve learned about water inflows from McArthur River and Cigar Lake.

The greatest risk to development and production is from water inflows. The 2006 and 2008 water inflows were significant setbacks.

The consequences of another water inflow at Cigar Lake would depend on its magnitude, location and timing, but could include a significant delay in Cigar Lake’s remediation, development or production, a material increase in costs and a loss of mineral reserves. Although we take the following steps to mitigate the risks of water inflow, there can be no guarantee that these will be successful:

Bulk freezing

Two of the primary challenges in mining the deposit are control of groundwater and ground support. Bulk freezing reduces but does not eliminate the risk of water inflows.

Mine development

Our approach is to carry out extensive grouting and careful placement of mine development away from known groundwater sources whenever possible. In addition, we assess all planned mine development for relative risk, and apply extensive additional technical and operating controls for all higher risk development.

Pumping capacity and treatment limits

The total installed pumping capacity from the Cigar Lake mine is currently 1,550 m³/hr. On the surface, we have water treatment capacity of 2,550 m³/hr and approximately 100,000 m³ of surface storage. We have regulatory approval to release 1,100 m³/hr of treated water in non-routine circumstances. In our view, we have sufficient capacity to handle an estimated maximum inflow, and we intend to install additional capacity to assure the long-term success of the project.

In addition to the above, our main risks in 2010 include:

• uncertainty about the condition of the underground development, which we will know once the crews have assessed the underground

• delay or lack of success in implementing our remediation plan

We also manage the risks listed on page 50.

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Uranium — projects under evaluation

Kintyre

Kintyre, which we acquired with a partner in 2008, adds potential for low-cost production and diversifies our geographic reach and deposit types. We are the operator.

Location	Western Australia
Ownership	70%
End product	U3O8
Deposit type	open pit

Background

In August 2008, we paid $346 million (US) to acquire a 70% interest in Kintyre. Mitsubishi Development Pty Ltd. owns the remaining 30%.

2009 update

This year we:

• opened an office in Perth to manage the project through the evaluation and prefeasibility stages

• received permits and established a camp to support ongoing diamond drilling

• continued to hire professional and support staff

• began environmental studies and confirmatory drilling

• continued our dialogue with the Martu, the native land title holders for this property

Planning for the future

Our plan for 2010 is to keep moving the project towards a production decision. We expect to:

• negotiate a mine development agreement with the Martu

• complete delineation drilling of the deposit

• estimate a resource

• conduct metallurgical testing to define the milling process

• continue the environmental assessment for the environmental impact statement we plan to submit to regulators in 2011

• begin a prefeasibility study

• build a temporary construction camp

Managing the risks

To successfully develop this project, we need a positive feasibility study, regulatory approval and an agreement with the Martu. We also manage the risks listed on page 50.

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Uranium — projects under evaluation

Millennium

Millennium is a uranium deposit in northern Saskatchewan that we expect will use the mill at Key Lake. We are the operator.

Location	Saskatchewan, Canada
Ownership	42%
End product	U3O8
Deposit type	underground
Estimated resources	19.6 million pounds (indicated)
(Cameco’s share)	4.1 million pounds (inferred)

Background

The Millennium deposit was discovered in 2000. The deposit was delineated through geophysical survey and drilling work between 2000 and 2007.

2009 update

We submitted our project description for an environmental assessment and we continued consultation activities. The environmental assessment and feasibility study are under way.

Planning for the future

Our plan for 2010 is to keep moving the project towards a production decision. We expect to:

• complete the feasibility study

• continue our environmental assessment process

• continue with our community consultation

Managing the risks

The English River First Nation (ERFN) has selected surface lands covering the Millennium deposit in a claim for Treaty Land Entitlement (TLE). The Saskatchewan government has rejected the selection, but the ERFN has challenged the government’s decision in the courts. The TLE process does not affect our mineral rights, but it could have an impact on the surface rights and benefits we ultimately negotiate as part of the development of this deposit.

We also manage the risks listed on page 50.

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Uranium — exploration

Exploration is key to ensuring our long-term growth, and since 2002 we have more than tripled our annual investment.

2009 update

Brownfield exploration

Brownfield exploration is uranium exploration near our existing operations and on advanced exploration projects where uranium mineralization is being defined.

In 2009, we invested $23 million in six brownfield and advanced exploration projects. The largest investment ($11.2 million) was at Kintyre for delineation drilling. We also carried out significant programs at McArthur River, Rabbit Lake, and the Millennium deposit.

Regional exploration

In 2009, we invested about $31 million in regional exploration programs (including support costs). Saskatchewan was the largest single region, followed by Australia, northern Canada and the rest of the global program.

Plans for 2010

We plan to invest approximately $90 million to $95 million on uranium exploration in 2010 as part of our long-term strategy. This includes approximately $40 million for exploration at Kintyre and Inkai block 3 in Kazakhstan.

Brownfield exploration

Approximately 20% of the uranium exploration budget, about $11 million, will be invested in six brownfield exploration projects in the Athabasca Basin and Australia.

Regional exploration

We expect to allocate the rest of the exploration budget among 48 projects worldwide, the majority of which are at drill target stage. Among the larger investments planned are $5 million on two adjacent projects in Nunavut, a $2 million program on the Dawn Lake project in Saskatchewan, and a $3 million investment on the Wellington Range project in Northern Territory, Australia.

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Fuel services — refining

Blind River refinery

Blind River is the world’s largest commercial uranium refinery, refining U₃O₈ from mines around the world into UO₃.

Location	Ontario, Canada
Ownership	100%
End product	UO3
ISO certification	ISO 14001 certified
Licensed capacity	approved: 18 million kgU as UO3 per year
	application: 24 million kgU as UO3 per year

2009 update

Production

Our Blind River refinery produced 12.9 million kgU of UO₃, which is 29% higher than our forecast. This ensured that SFL maintained its contractual inventories and Port Hope met its production requirements.

Planning for the future

We expect production in 2010 to be between 11 million and 13 million kgU as UO₃.

Once we receive regulatory approval to produce at 24 million kgU, construction to increase capacity will begin.

Managing our risks

We manage the risks listed on page 50.

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Fuel services — conversion and fuel manufacturing

Port Hope conversion services

Port Hope is the only uranium conversion facility in Canada, and one of only four in the western world. It is the only commercial supplier of UO₂ for Canadian-made Candu reactors. We control 35% of western world UF₆ capacity.

Location	Ontario, Canada
Ownership	100%
End product	UF6, UO2
ISO certification	ISO 14001 certified
Licensed capacity	12.5 million kgU as UF6 per year
	2.8 million kgU as UO2 per year

Cameco Fuel Manufacturing Inc. (CFM)

CFM produces fuel bundles and reactor components for Candu reactors.

Location	Ontario, Canada
Ownership	100%
End product	Candu fuel bundles and components
ISO certification	ISO 9001 certified
Licensed capacity	1.2 million kgU as UO2 as finished bundles

Springfields Fuels Ltd. (SFL)

SFL is the newest conversion facility in the world. We contract almost all of its capacity through a toll-processing agreement to 2016.

Location	Lancashire, UK
Toll-processing agreement	annual conversion of 5 million kgU as UO3 to UF6
Licensed capacity	6.0 million kgU as UF6 per year

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2009 update

Production

Fuel services production was 12.3 million kgU in 2009, in line with our target of 11 million to 13 million kgU.

Production at the UO₂ plant began in mid-January 2009, after it had been shut down for an extended planned maintenance period. We upgraded the floors and in-floor structures, and they now meet the standards of the UF₆ plant.

Production at the UF₆ plant began on June 17, 2009 after being suspended in December 2008 as hydrofluoric acid (HF) was not available on acceptable terms.

HF is a primary feed material for the production of UF₆. We have signed an agreement with our original supplier, and with two additional suppliers, broadening our sources of supply.

Fuel manufacturing

BPLP sales represent a substantial portion of our fuel manufacturing business.

We have an agreement with Bruce Power A Limited Partnership (BALP) to supply fuel bundles that contain slightly enriched uranium (SEU). We received regulatory approval and began construction to modify the plant to produce SEU. At BALP’s request, construction has been suspended. BALP is considering its alternatives.

Port Hope conversion facility cleanup and modernization (Vision 2010)

The federal Minister of the Environment approved the environmental assessment guidelines, and work on the environmental assessment continues.

Collective agreements

Following a strike at CFM, unionized employees ratified a new three-year collective agreement that expires on June 1, 2012.

Community outreach

We continued to strengthen our community outreach program in Port Hope by:

• holding a series of community forums

• making presentations to municipal council

• reaching out using community newsletters, newspaper advertising, public displays, open houses and a website dedicated to the Port Hope community

Public opinion research shows we have a strong level of local support.

Planning for the future

Production

We expect total production to be between 14 million and 16 million kgU in 2010.

Port Hope conversion facility cleanup and modernization (Vision 2010)

We expect to file the environmental assessment for this project in 2010.

Managing our risks

The main risk in 2010 is a potential strike by unionized employees at the Port Hope conversion facility, which would impact production. The collective agreement expires on June 30, 2010.

We also manage the risks listed on page 50.

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Electricity

Bruce Power Limited Partnership (BPLP)

BPLP leases and operates four Candu nuclear reactors that have the capacity to provide about 15% of Ontario’s electricity.

Location	Ontario, Canada
Ownership	31.6%
ISO certification	ISO 14001 certified
Expected reactor life	2017 to 2020
Term of lease	2018 — right to extend for 25 years
Generation capacity	3,260 MW
Average annual fuel	1.2 million pounds of U3O8
supplied by Cameco	600 tonnes UO2 conversion and fuel fabrication

Background

We are the fuel procurement manager for BPLP’s four nuclear reactors and for BALP’s two operating reactors.

We provide 100% of BPLP’s uranium concentrates and have agreed to supply BALP with the majority of its future uranium concentrates. Sales to BPLP and BALP are also a substantial portion of our fuel manufacturing business and an important part of our UO₂ business.

2009 update

Output

BPLP’s adjusted capacity factor was 91% this year, which included 24.6 TWh of actual generation and 1.2 TWh of deemed generation (the market operator reduced power output from the B units during a period of excess baseload generation in Ontario).

Licensing

The operating licence for the four B reactors has been extended to October 31, 2014.

Planning for the future

Output

We expect the capacity factor to be approximately 90% in 2010 and actual output to be about 4% higher than in 2009.

Managing our risks

The collective agreements for the two main unions at Bruce Power will expire in December 2010. Bruce Power is working actively towards new agreements with its union partners.

BPLP manages the unique risks associated with operating Candu reactors. The amount of electricity generated, and the cost of that generation, could vary materially from forecast if planned outages are significantly longer than planned, or there are many unplanned outages, either for maintenance, regulatory requirements, equipment malfunction or due to other causes.

BPLP also manages the risks listed on page 50.

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Reserves and resources

Our uranium reserves and resources are the foundation of our company and are fundamental to our success.

We estimate and disclose them in five categories (proven and probable reserves, and measured, indicated and inferred resources) following established industry practices and in compliance with National Instrument 43-101 (NI 43-101). We use current geological models, current or projected operating costs and mine plans to estimate our reserves, allowing for dilution and mining losses. We apply our standard data verification process for every estimate.

Changes this year

Cameco’s share of proven and probable reserves went from 495 million pounds at the end of 2008 to 478.7 million pounds at the end of 2009. The change was mostly the result of:

• mining and milling activities, which used 22 million pounds

• identifying additional reserves — 14 million pounds at McArthur River, and 8 million pounds at Rabbit Lake

• reclassifying reserves to resources — 8 million pounds at Cigar Lake and 6 million pounds at Ruby Ranch and Ruth

Measured and indicated resources increased from 127.9 million pounds at the end of 2008 to 139.6 million pounds at the end of 2009. The change was mostly the result of:

• adding 20 million pounds of resources at Tamarack, Rabbit Lake and Crow Butte

• upgrading 14 million pounds of resources to reserves at McArthur River, zone 4

• downgrading 6 million pounds of reserves to resources at Ruby Ranch and Ruth

At the end of 2009, our share of inferred resources was nearly 354 million pounds — a net gain of 18 million pounds, which came mostly from the addition of 14 million pounds from surface drilling on McArthur River zone B.

Qualified persons

The technical and scientific information discussed in this MD&A, including the reserve and resource estimates for our material properties (McArthur River/Key Lake, Cigar Lake and Inkai) were prepared by, or under the supervision of, individuals who are qualified persons for the purposes of NI 43-101.

McArthur River/Key Lake

• Alain G. Mainville, director, mineral resources management, Cameco

• David Bronkhorst, general manager, McArthur River, Cameco

• Greg Murdock, technical superintendent, McArthur River, Cameco

• Lorne D. Schwartz, chief metallurgist, mining technical services, Cameco

• Les Yesnik, general manager, Key Lake, Cameco

Inkai

• Alain G. Mainville, director, mineral resources management, Cameco

• Charles J. Foldenauer, deputy general director, operations, Inkai

Cigar Lake

• Alain G. Mainville, director, mineral resources management, Cameco

• Grant J.H. Goddard, general manager, Cigar Lake, Cameco

• C. Scott Bishop, chief mine engineer, Cigar Lake, Cameco

• Lorne D. Schwartz, chief metallurgist, mining technical services, Cameco

Alain G. Mainville, director, mineral resources management, oversees and co-ordinates the estimation of mineral reserves and resources by Cameco’s qualified persons, and reports to management and the board’s reserves oversight committee.

Estimates are based on our knowledge, mining experience, analysis of drilling results and management’s best judgment. They are, however, imprecise by nature, may change over time, and include many variables and assumptions, including:

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• geological interpretation

• extraction plans

• commodity prices

• operating and capital costs.

Important information for US investors

While the terms measured, indicated and inferred resources are recognized and required by Canadian securities regulatory authorities, the US Securities and Exchange Commission (SEC) does not recognize them. Under US standards, mineralization may not be classified as a ‘reserve’ unless it has been determined at the time of reporting that the mineralization could be economically and legally produced or extracted. US investors should not assume that:

• Any or all of a measured or indicated resource will ever be converted into proven or probable mineral reserves.

• Any or all of an inferred resource exists or is economically or legally mineable, or will ever be upgraded to a higher category. Under Canadian securities regulations, estimates of inferred resources may not form the basis of feasibility or prefeasibility studies.

The requirements of Canadian securities regulators for identification of “reserves” are also not the same as those of the SEC, and mineral reserves reported by us in accordance with Canadian requirements may not qualify as reserves under SEC standards.

Other information concerning descriptions of mineralization, reserves and resources may not be comparable to information made public by companies that comply with the SEC’s reporting and disclosure requirements for US domestic mining companies, including Industry Guide 7.

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Reserves

As at December 31, 2009 (100% — only the second last column shows Cameco’s share)

Proven and probable (tonnes in thousands; pounds in millions)

		Proven						Probable						Total reserves
																					Cameco’s
																					share of	Estimated
				Grade		Content				Grade		Content				Grade		Content		content		metallurgical
Property	Mining method	Tonnes		%U3O8		(lbs U3O8)		Tonnes		%U3O8		(lbs U3O8)		Tonnes		%U3O8		(lbs U3O8)		(lbs U3O8)		recovery (%)
McArthur River	underground		498.5		15.72		172.7		280.0		26.33		162.5		778.5		19.53		335.2		234.0		98.7
Cigar Lake	underground		130.5		25.62		73.7		426.8		14.41		135.6		557.3		17.04		209.3		104.7		98.5
Rabbit Lake	underground		37.4		0.75		0.6		1,059.0		0.89		20.7		1,096.4		0.88		21.3		21.3		96.7
Key Lake	open pit		61.9		0.52		0.7								61.9		0.52		0.7		0.6		98.7
Inkai	ISR		6,043.0		0.08		11.1		83,434.0		0.07		123.6		89,477.0		0.07		134.7		80.9		80.0
Gas Hills-Peach	ISR								6,403.8		0.13		19.0		6,403.8		0.13		19.0		19.0		72.0
North Butte-Brown Ranch	ISR								3,803.2		0.10		8.2		3,803.2		0.10		8.2		8.2		80.0
Smith Ranch-Highland	ISR		771.9		0.12		2.0		1,931.1		0.09		3.9		2,703.0		0.10		5.9		5.9		80.0
Crow Butte	ISR		968.7		0.11		2.3		493.1		0.17		1.8		1,461.8		0.13		4.1		4.1		85.0
Total			8,511.9		—		263.1		97,831.0		—		475.3		106,342.9		—		738.4		478.7

Metallurgical recovery

We report mineral reserves as the quantity of contained ore supporting our mining plans, and include an estimate of the metallurgical recovery for each uranium property. Metallurgical recovery is an estimate of the amount of valuable material that can be physically recovered by the metallurgical extraction process, and is calculated by multiplying content by the estimated metallurgical recovery percentage. Our share of uranium in the table above is before accounting for estimated metallurgical recovery.

Estimates of Inkai

Our mineral reserve estimates of Inkai assume annual production of 5.2 million pounds of U₃O₈. Inkai has regulatory approval to produce 2.6 million pounds, and applied for approval to increase production to 5.2 million pounds per year in 2005. We expect to receive all permits and approvals required for the construction and operation of the new ISR mine at Inkai in 2010, including approval to increase annual production to 5.2 million pounds. There can be no certainty, however, that we will receive these permits or approvals. If Inkai does not receive approval to increase production, we will re-categorize half of its mineral reserves as mineral resources.

Notes

Estimates in the table:

• are based on the exchange rate at December 31, 2009 ($1.00 US=$1.05 Cdn)

• use an average uranium price of $54 (US)/lb U₃O₈

Totals may not add up due to rounding.

We do not expect these estimates to be materially affected by environmental, permitting, legal, title, taxation, socio-economic, political or marketing issues.

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Resources

As at December 31, 2009 (100% — only the last column shows Cameco’s share)

Measured and indicated (tonnes in thousands; pounds in millions)

		Measured						Indicated						Total measured and indicated
																				Cameco’s
	Mining			Grade		Content				Grade		Content				Grade		Content		share
Property	method	Tonnes		% U3O8		(lbs U3O8)		Tonnes		% U3O8		(lbs U3O8)		Tonnes		% U3O8		(lbs U3O8)		(lbs U3O8)
McArthur River	underground		162.9		6.39		22.9		39.9		8.37		7.4		202.8		6.78		30.3		21.1
Cigar Lake	underground		8.4		2.07		0.4		15.6		2.35		0.8		24.0		2.27		1.2		0.6
Rabbit Lake	underground								792.5		0.59		10.4		792.5		0.59		10.4		10.4
Dawn Lake	open pit, underground								347.0		1.69		12.9		347.0		1.69		12.9		7.4
Millennium	underground								468.9		4.53		46.8		468.9		4.53		46.8		19.6
Tamarack	underground								183.8		4.42		17.9		183.8		4.42		17.9		10.3
Inkai	ISR								13,291.0		0.07		21.9		13,291.0		0.07		21.9		13.1
Gas Hills-Peach	ISR		1,964.2		0.08		3.4		1,418.2		0.07		2.3		3,382.4		0.08		5.7		5.7
North Butte-Brown Ranch	ISR		762.1		0.08		1.4		4,012.0		0.07		6.0		4,774.1		0.07		7.4		7.4
Smith Ranch-Highland	ISR		2,834.9		0.10		6.0		13,170.9		0.06		17.0		16,005.8		0.07		23.0		23.0
Crow Butte	ISR		64.3		0.23		0.3		2,322.2		0.20		10.1		2,386.5		0.20		10.4		10.4
Ruby Ranch	ISR								2,215.3		0.08		4.1		2,215.3		0.08		4.1		4.1
Ruth	ISR								1,080.5		0.09		2.1		1,080.5		0.09		2.1		2.1
Shirley Basin	ISR		89.2		0.16		0.3		1,638.2		0.11		4.1		1,727.4		0.12		4.4		4.4
Total			5,886.0		—		34.7		40,996.0		—		163.8		46,882.0		—		198.5		139.6

Inferred (tonnes in thousands; pounds in millions)

	Mining			Grade		Content		Cameco’s share
Property	method	Tonnes		% U3O8		(lbs U3O8)		(lbs U3O8)
McArthur River	underground		604.2		11.97		159.4		111.3
Cigar Lake	underground		480.4		12.61		133.5		66.8
Rabbit Lake	underground		119.8		0.36		0.9		0.9
Millennium	underground		214.3		2.06		9.7		4.1
Tamarack	underground		45.6		1.02		1.0		0.6
Inkai	ISR		254,696.0		0.05		255.1		153.0
Gas Hills-Peach	ISR		861.5		0.07		1.3		1.3
North Butte-Brown Ranch	ISR		640.6		0.06		0.9		0.9
Smith Ranch-Highland	ISR		6,370.1		0.05		6.6		6.6
Crow Butte	ISR		2,843.7		0.11		6.7		6.7
Ruby Ranch	ISR		56.2		0.14		0.2		0.2
Ruth	ISR		210.9		0.08		0.4		0.4
Shirley Basin	ISR		508.0		0.10		1.1		1.1
Total			267,651.3		—		576.8		353.9

Notes

Resources do not include amounts that have been identified as reserves. Resources do not have demonstrated economic viability. Totals may not add up due to rounding.

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Additional information

Related party transactions

We buy significant amounts of goods and services for our Saskatchewan mining operations from northern Saskatchewan suppliers, to support economic development in the region. One of these suppliers is Points Athabasca Contracting Ltd. (PACL). In 2009, we paid PACL $30.8 million for construction and contracting services (2008 — $38.5 million). These transactions were conducted in the normal course of business. A member of Cameco’s board of directors is the president of PACL.

Critical accounting estimates

Because of the nature of our business, we are required to make estimates that affect the amount of assets and liabilities, revenues and expenses, commitments and contingencies we report.

We base our estimates on our experience, our best judgment, guidelines established by the Canadian Institute of Mining, Metallurgy and Petroleum and on assumptions we believe are reasonable. We believe the following critical accounting estimates reflect the more significant judgments used in the preparation of our financial statements.

Decommissioning and reclamation

We are required to estimate the cost of decommissioning and reclamation for each operation, but we normally do not incur these costs until an asset is nearing the end of its useful life. Regulatory requirements and decommissioning methods could change during that time, making our actual costs different from our estimates. A significant change in these costs or in our mineral reserves could have a material impact on our net earnings and financial position.

Property, plant and equipment

We depreciate property, plant and equipment primarily using the unit of production method, where the carrying value is reduced as resources are depleted. A change in our mineral reserves would change our depreciation expenses, and such a change could have a material impact on amounts charged to earnings.

We assess the carrying values of property, plant and equipment and goodwill every year, or more often if necessary. If we determine that we cannot recover the carrying value of an asset or goodwill, we write off the unrecoverable amount against current earnings. We base our assessment of recoverability on assumptions and judgments we make about future prices, production costs, our requirements for sustaining capital and our ability to economically recover mineral reserves. A material change in any of these assumptions could have a significant impact on the potential impairment of these assets.

Taxes

When we are preparing our financial statements, we estimate taxes in each jurisdiction we operate in, taking into consideration different tax rates, non-deductible expenses, valuation allowances, changes in tax laws and our expectations for future results.

We base our estimates of future income taxes on temporary differences between the assets and liabilities we report in our financial statements, and the assets and liabilities determined by the tax laws in the various countries we operate in. We record future income taxes in our financial statements based on our estimated future cash flows, which includes estimates of non-deductible expenses. If these estimates are not accurate, there could be a material impact on our net earnings and financial position.

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Controls and procedures

We have evaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of December 31, 2009, as required by the rules of the US Securities and Exchange Commission and the Canadian Securities Administrators.

Management, including our president and chief executive officer and our chief financial officer, supervised and participated in the evaluation, and concluded that our disclosure controls and procedures are effective to provide a reasonable level of assurance that the information we are required to disclose in reports we file or submit under securities laws is recorded, processed, summarized and reported accurately, and within the time periods specified. It should be noted that while the CEO and CFO believe that our disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect the disclosure controls and procedures or internal control over financial reporting to be capable of preventing all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Management, including our president and chief executive officer and our chief financial officer, is responsible for establishing and maintaining internal control over financial reporting and conducted an evaluation of the effectiveness of our internal control over financial reporting based on the Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2009. We have not made any change to our internal control over financial reporting during the 2009 fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

New accounting pronouncements

International financial reporting standards (IFRS)

The Accounting Standards Board requires Canadian publicly accountable enterprises to adopt IFRS effective January 1, 2011. Although IFRS has a conceptual framework that is similar to Canadian GAAP, there are significant differences in recognition, measurement and disclosure.

We have developed a three-phase implementation plan that will ensure compliance and a smooth transition.

Senior management and the board’s audit committee are actively involved in the process. A major public accounting firm has been engaged to provide technical accounting advice and project management guidance.

Phase 1: Preliminary study and diagnostic — completed in June 2008

During this phase, we:

• completed a high-level impact assessment

• prioritized areas to evaluate in phase 2

• developed a detailed plan for convergence and implementation

• determined which information technology systems need to be modified to meet IFRS reporting requirements. Necessary systems modifications have been tested and implemented as of June 30, 2009

Phase 2: Detailed component evaluation — in progress

During this phase, we are:

• assessing the impact of the adoption of IFRS on our results of operations, financial position and financial statement disclosures

• developing a detailed, systematic gap analysis of accounting and disclosure differences between Canadian GAAP and IFRS, which will help us make final decisions about accounting policies and our overall conversion strategy

• specifying all changes we need to make to existing business processes

See the detailed status below.

Phase 3: Embedding — in progress

During this final phase, we will:

• carry out the changes to our business processes

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• receive the audit committee’s approval of our accounting policy changes

• complete the training process for our audit committee, board members and staff

• collect the financial information we need to create our 2010 and 2011 financial statements under IFRS

• receive the board’s approval of the new statements

Progress update

We are still evaluating some key accounting policy alternatives and implementation decisions, and have not yet determined the full accounting effects of adopting IFRS. We do not, however, expect that adopting IFRS will have a material impact on our consolidated financial statements.

Senior management and the audit committee have approved our IFRS accounting policies, but IFRS standards are evolving and may be different at the time of transition. The International Accounting Standards Board (IASB) has several projects underway that could affect the differences between Canadian GAAP and IFRS. For example, we expect that the standards for consolidation, liabilities, discontinued operations, financial instruments, employee benefits and joint ventures could change before we adopt IFRS, and that IFRS for income taxes may change at a later date. We have been monitoring and evaluating these changes, and our analysis incorporates the standards we expect to be in effect at the time of transition.

We currently expect IFRS to affect our consolidated financial statements in the following key areas:

Asset impairment

We use a two-step approach to test for impairment under Canadian GAAP:

• We compare the carrying value of the asset with undiscounted future cash flows to see whether there is an impairment.

• If there is an impairment, we measure it by comparing the carrying value of the asset with its fair value.

International Accounting Standard (IAS) 36, Impairment of Assets, takes a one-step approach:

• Compare the carrying value of the asset with either its fair value less costs to sell or its value in use — whichever is higher.

Value in use uses discounted future cash flows, and could result in more writedowns, but the effect of this could be lower because IAS 36 allows companies to reverse impairment losses (for everything except goodwill) if an impairment is reduced because circumstances have changed. Canadian GAAP does not allow companies to reverse impairment losses.

Employee benefits

We amortize past service costs on a straight-line basis over the expected average remaining service life of the plan participants under Canadian GAAP.

IAS 19, Employee Benefits, requires companies to expense the past service cost component of defined benefit plans on an accelerated basis. Vested past service costs must be expensed immediately. Unvested past service costs must be recognized on a straight-line basis until the benefits vest. Companies will also recognize actuarial gains and losses directly in equity rather than through profit or loss.

IFRS 1, First-Time Adoption of International Financial Reporting Standards (IFRS 1), also allows companies to recognize all cumulative actuarial gains and losses in retained earnings at the transition date.

83

Share-based payments

We measure cash-settled, share-based payments to employees based on the intrinsic value of the award under Canadian GAAP. IFRS 2, Share-Based Payments, requires companies to measure payments at the award’s fair value, both initially and at each reporting date.

We expect this difference to affect how we account for our phantom stock option plan.

Provisions (Including asset retirement obligations)

IAS 37, Provisions, Contingent Liabilities and Contingent Assets, requires companies to recognize a provision when:

• there is a present obligation because of a past transaction or event

• it is probable (i.e. more likely than not) that an outflow of resources will be required to settle the obligation, and

• the obligation can be reliably estimated

Canadian GAAP uses the term “likely” in its recognition criteria, which is a higher threshold than “probable”, so some contingent liabilities may be recognized under IFRS that were not recognized under Canadian GAAP.

IFRS also measures provisions differently. For example:

• When there is a range of equally possible outcomes, IFRS uses the midpoint of the range as the best estimate, while Canadian GAAP uses the low end of the range.

• Under IFRS, material provisions are discounted.

Joint ventures

We proportionately account for interests in jointly controlled enterprises under Canadian GAAP. The IASB has indicated that it expects to issue a new standard in 2010 that will replace IAS 31 Interests in Joint Ventures. It is considering Exposure Draft 9, Joint Arrangements (ED 9), which proposes that an entity recognize its interest in a joint controlled enterprise using the equity method.

We expect to use the equity method to account for our joint venture interests when we transition to IFRS.

Income taxes

Under Canadian GAAP, we credit (or charge) income tax directly to equity only when it relates to items that we are crediting (or charging) directly to equity in the same period. IAS 12, Income Taxes, requires companies to credit (or charge) income tax directly to equity whether or not the related item is credited (or charged) directly to equity in the same period. That means we may have to recognize some income tax effects directly in equity rather than through net income or loss.

Under Canadian GAAP, we cannot recognize deferred tax for a temporary difference that arises from intercompany transactions. We record the taxes we pay or recover in these transactions as an asset or liability, and then recognize them as a tax expense when the asset leaves the group or is otherwise used. IAS 12 requires entities to recognize deferred taxes for temporary differences that arise from intercompany transactions, and to recognize taxes paid or recovered in these transactions in the period incurred.

The IASB may address these differences from GAAP in a fundamental review of income tax accounting at some time in the future, but this review is not likely to be soon.

First-time adoption of IFRS

IFRS 1 generally requires an entity to apply the new standards retrospectively at the end of its first IFRS reporting period, but there are some mandatory exceptions and some optional exemptions.

We are analyzing the options available to us, and currently expect to use the exemptions in the table below. This is a summary of the changes we currently believe will be most significant when we transition to IFRS — it is not a complete list of changes we will be required to make. We are still working on our analysis and have not made decisions about the accounting policies that are available. At this stage, we cannot reliably quantify the expected impacts of these differences on our consolidated financial statements.

84

Business combinations	We will have the option to apply IFRS 3, Business Combinations, retrospectively or prospectively.
	We plan to apply IFRS 3 prospectively to all business combinations that occurred before the transition date, except as required under IFRS 1.
Fair value as deemed cost	We will be able to choose to use the fair value of property, plant and equipment as deemed cost at the transition date, or to use the value determined under GAAP.
	We plan to use the historical bases under Canadian GAAP as deemed cost at the transition date.
Share-based payments	We will be able to apply IFRS 2, Share-Based Payments, to all equity instruments granted on or before November 7, 2002, and to those granted after November 7, 2002 only if they had not vested by the transition date.
	We plan to apply IFRS 2 to all equity instruments granted after November 7, 2002 that had not vested as of January 1, 2010, and to all liabilities arising from share-based payment transactions that existed at January 1, 2010.
Borrowing costs	We will be able to choose to apply IAS 23 retrospectively, using a date we specify, or to capitalize borrowing costs for all qualifying assets when capitalization begins on or after January 1, 2010.
	We plan to apply IAS 23 prospectively. For all qualifying assets, we will expense the borrowing costs we were capitalizing before January 1, 2010, and capitalize the borrowing costs that take effect on or after that date.
Employee benefits	IAS 19, Employee Benefits, requires entities to defer or amortize certain actuarial gains and losses, subject to certain provisions (corridor approach), or to immediately recognize them in equity.
	We will have the option of recognizing cumulative actuarial gains and losses on benefit plans in retained earnings at the transition date.
Differences in currency translation	IAS 21, The Effects of Changes in Foreign Exchange Rates, will require us to calculate currency translation differences retrospectively, from the date we formed or acquired a subsidiary or associate.
	IFRS 1 gives us the option of resetting cumulative translation gains and losses to zero at the transition date.
	We plan to reset all cumulative translation gains and losses to zero in retained earnings at the transition date.
Decommissioning liabilities	We will have the option of applying IFRIC 1, Changes in Existing Decommissioning, Restoration and Similar Liabilities, retrospectively or prospectively.
	IFRIC 1 will require us to add or deduct a change in our obligations to dismantle, remove and restore items of property, plant and equipment, from the cost of the asset it relates to. The adjusted amount is then depreciated prospectively over the asset’s remaining useful life.
	We plan to adopt IFRIC 1 prospectively at the transition date.

As we proceed with our transition, we are also assessing the impact on our internal controls over financial reporting, and on our disclosure controls and procedures. Changes in accounting policies or business processes could require the implementation of additional controls or procedures to ensure the integrity of our financial disclosures. We plan to design and test the effectiveness of new controls in 2010.

We conducted several educational and training sessions for our audit committee and the board of directors in 2009. During these sessions, management and external advisors provided the board with detailed background information on IFRS accounting standards (including IFRS 1 elections), the implications of policy choices on our financial reporting, and a preliminary view of the expected format and content of our financial statements and notes upon transition. Management gives the audit committee quarterly project status updates and presentations.

We began training management and accounting staff in 2008. Training is being delivered mainly by external advisors, and focusing on the accounting issues most relevant to Cameco. Sessions will continue throughout 2010.

85

Our transition plan includes the need to inform key external stakeholders about the anticipated impact of the IFRS transition on our financial reporting. In 2009, we provided an information update as part of our investor day presentations. We are planning further communications with the investment community in 2010.

We are also evaluating the impact of IFRS on our business activities in general. At this stage, we do not believe the adoption of IFRS will have a material effect on our risk management practices, hedging activities, capital requirements, compensation arrangements, compliance with debt covenants or other contractual commitments.

Business combinations

CICA Handbook Section 1582, Business Combinations, is effective for business combinations with an acquisition date after January 1, 2011. This standard specifies a number of changes, including: an expanded definition of a business, a requirement to measure all business acquisitions at fair value, a requirement to measure non-controlling interests at fair value and a requirement to recognize acquisition-related costs as expenses.

Consolidated financial statements

CICA Handbook Section 1601, Consolidated Financial Statements, which replaces the existing standard, is effective for periods beginning on or after January 1, 2011. This section establishes the standards for preparing consolidated financial statements.

Non-controlling interests in consolidated financial statements

CICA Handbook Section 1602, Non-controlling Interests in Consolidated Financial Statements, is effective for periods beginning on or after January 1, 2011. This section specifies that non-controlling interests be treated as a separate component of equity, not as a liability or other item outside of equity. Section 1602 will be applied prospectively to all non-controlling interests, including any that arose before the effective date.

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REPORT OF MANAGEMENT’S ACCOUNTABILITY

The accompanying consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. Management is responsible for ensuring that these statements, which include amounts based upon estimates and judgment, are consistent with other information and operating data contained in the annual financial review and reflect the corporation’s business transactions and financial position.

Management is also responsible for the information disclosed in the management’s discussion and analysis including responsibility for the existence of appropriate information systems, procedures and controls to ensure that the information used internally by management and disclosed externally is complete and reliable in all material respects.

In addition, management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. The internal control system includes an internal audit function and a code of conduct and ethics, which is communicated to all levels in the organization and requires all employees to maintain high standards in their conduct of the corporation’s affairs. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the company’s assets are appropriately accounted for and adequately safeguarded. Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the criteria established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the company’s system of internal control over financial reporting was effective as at December 31, 2009.

KPMG LLP has audited the consolidated financial statements in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).

The board of directors annually appoints an audit committee comprised of directors who are not employees of the corporation. This committee meets regularly with management, the internal auditor and the shareholders’ auditors to review significant accounting, reporting and internal control matters. Both the internal and shareholders’ auditors have unrestricted access to the audit committee. The audit committee reviews the financial statements, the report of the shareholders’ auditors, and management’s discussion and analysis and submits its report to the board of directors for formal approval.

Original signed by Gerald W. Grandey	Original signed by O. Kim Goheen
President and Chief Executive Officer	Senior Vice-President and Chief Financial Officer
February 23, 2010	February 23, 2010

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AUDITORS’ REPORT

To the Shareholders of Cameco Corporation

We have audited the consolidated balance sheets of Cameco Corporation (“the Corporation”) as at December 31, 2009 and 2008 and the consolidated statements of earnings, shareholders’ equity, comprehensive income, accumulated other comprehensive income and cash flows for each of the years then ended. These financial statements are the responsibility of the corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the corporation as at December 31, 2009 and 2008 and the results of its operations and its cash flows for each of the years then ended in accordance with Canadian generally accepted accounting principles.

Original signed by KPMG_LLP

Chartered Accountants
Saskatoon, Canada

February 23, 2010

88

Consolidated Balance Sheets

			(Recast
note 25)
As at December 31
($Cdn thousands)	2009		2008
Assets
Current assets
Cash and cash equivalents	$	1,101,229	$	64,222
Short-term investments [note 5]		202,836		—
Accounts receivable		453,622		522,504
Inventories [note 6]		453,224		398,110
Supplies and prepaid expenses		162,105		143,020
Current portion of long-term receivables, investments and other [note 9]		154,725		49,836
Assets of discontinued operations [note 25]		—		1,176,056
		2,527,741		2,353,748
Property, plant and equipment [note 7]		4,068,103		3,932,658
Intangible assets [note 8]		97,713		101,442
Long-term receivables, investments and other [note 9]		648,545		622,753
Total assets	$	7,342,102	$	7,010,601
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	534,664	$	514,710
Short-term debt [notes 10, 24]		76,762		89,817
Dividends payable		23,570		21,943
Current portion of long-term debt [note 11]		11,629		10,175
Current portion of other liabilities [note 13]		29,297		117,222
Future income taxes [note 18]		87,135		68,857
Liabilities of discontinued operations [note 25]		—		743,323
		763,057		1,566,047
Long-term debt [note 11]		952,853		1,212,982
Provision for reclamation [note 12]		296,896		313,203
Other liabilities [note 13]		187,072		179,880
Future income taxes [note 18]		134,356		83,848
		2,334,234		3,355,960
Minority interest		164,040		141,018
Shareholders’ equity
Share capital		1,512,461		1,062,714
Contributed surplus		131,577		131,858
Retained earnings		3,158,506		2,153,315
Accumulated other comprehensive income		41,284		165,736
		4,843,828		3,513,623
Total liabilities and shareholders’ equity	$	7,342,102	$	7,010,601

Commitments and contingencies [notes 12,18,26]

See accompanying notes to consolidated financial statements.

Approved by the board of directors
Original signed by Gerald W. Grandey and John H. Clappison

89

Consolidated Statements of Earnings

				(Recast
note 25)
For the years ended December 31
($Cdn thousands, except per share amounts)	2009			2008
Revenue from
Products and services	$	2,314,985		$	2,182,553
Expenses
Products and services sold (i)		1,324,278			1,146,462
Depreciation, depletion and reclamation		240,643			207,453
Administration		135,558			86,392
Exploration		49,061			53,224
Research and development		630			4,998
Interest and other [note 15]		(12,470	)		93,281
(Gains) losses on derivatives [note 27]		(243,804	)		202,651
Cigar Lake remediation		17,884			11,369
Gain on sale of assets [note 16]		(566	)		(4,097	)
		1,511,214			1,801,733
Earnings from continuing operations		803,771			380,820
Other expense [note 17]		(36,912	)		(39,273	)
Earnings before income taxes and minority interest		766,859			341,547
Income tax expense (recovery) [note 18]		52,897			(24,357	)
Minority interest		(3,035	)		(245	)
Earnings from continuing operations	$	716,997		$	366,149
Earnings from discontinued operations [note 25]		382,425			83,968
Net earnings	$	1,099,422		$	450,117
Net earnings per share [note 28]
Basic
Continuing operations	$	1.84		$	1.05
Discontinued operations		0.99			0.24
Total basic earnings per share	$	2.83		$	1.29
Diluted
Continuing operations	$	1.84		$	1.04
Discontinued operations		0.98			0.24
Total diluted earnings per share	$	2.82		$	1.28
(i)   Excludes depreciation, depletion and reclamation expenses of:	$	228,317		$	198,594

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Shareholders’ Equity

				(Recast
				note 25)
For the years ended December 31
($Cdn thousands)	2009			2008
Share capital
Balance at beginning of year	$	1,062,714		$	819,268
Stock option plan		4,215			1,011
Debenture conversions [note 11]		—			242,435
Equity issuance [note 14]		445,532			—
Balance at end of year		1,512,461			1,062,714
Contributed surplus
Balance at beginning of year		131,858			119,531
Stock option plan amendment [note 22]		—			25,987
Stock-based compensation		641			16,821
Options exercised		(922	)		(40	)
Debenture conversions [note 11]		—			(30,441	)
Balance at end of year		131,577			131,858
Retained earnings
Balance at beginning of year		2,153,315			1,788,416
Net earnings		1,099,422			450,117
Dividends on common shares		(94,231	)		(85,218	)
Balance at end of year		3,158,506			2,153,315
Accumulated other comprehensive income (loss)
Balance at beginning of year		165,736			104,021
Other comprehensive income		(124,452	)		61,715
Balance at end of year		41,284			165,736
Total retained earnings and accumulated other comprehensive income		3,199,790			2,319,051
Shareholders’ equity at end of year	$	4,843,828		$	3,513,623

See accompanying notes to consolidated financial statements.

91

Consolidated Statements of Comprehensive Income

				(Recast
				note 25)
For the years ended December 31
($Cdn thousands)	2009			2008
Net earnings	$	1,099,422		$	450,117
Other comprehensive income (loss), net of taxes [note 18]
Unrealized foreign currency translation (losses) gains		(115,739	)		137,689
Gains on derivatives designated as cash flow hedges		101,162			23,976
Gains on derivatives designated as cash flow hedges transferred to net earnings		(113,360	)		(105,056	)
Unrealized gains (losses) on available-for-sale securities		3,011			(14,271	)
Losses on available-for-sale securities transferred to net earnings		474			19,377
Other comprehensive income		(124,452	)		61,715
Total comprehensive income	$	974,970		$	511,832

Consolidated Statement of Accumulated Other Comprehensive Income

	Currency
	Translation			Cash Flow			Available-For-
($Cdn thousands)(net of related income taxes)[note 18]	Adjustment			Hedges			Sale Assets			Total
Balance at December 31, 2007	$	(72,347	)	$	182,734		$	(6,366	)	$	104,021
Unrealized foreign currency translation gains		137,689			—			—			137,689
Gains on derivatives designated as cash flow hedges		—			23,976			—			23,976
Gains on derivatives designated as cash flow hedges transferred to net earnings		—			(105,056	)		—			(105,056	)
Unrealized losses on available-for-sale securities		—			—			(14,271	)		(14,271	)
Losses on available-for-sale securities transferred to net earnings		—			—			19,377			19,377
Balance at December 31, 2008	$	65,342		$	101,654		$	(1,260	)	$	165,736
Unrealized foreign currency translation losses		(115,739	)		—			—			(115,739	)
Gains on derivatives designated as cash flow hedges		—			101,162			—			101,162
Gains on derivatives designated as cash flow hedges transferred to net earnings		—			(113,360	)		—			(113,360	)
Unrealized gains on available-for-sale securities		—			—			3,011			3,011
Losses on available-for-sale securities transferred to net earnings		—			—			474			474
Balance at December 31, 2009	$	(50,397	)	$	89,456		$	2,225		$	41,284

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Cash Flows

				(Recast
				note 25)
For the years ended December 31
($Cdn thousands)	2009			2008
Operating activities
Net earnings	$	1,099,422		$	450,117
Items not requiring (providing) cash:
Depreciation, depletion and reclamation		240,643			207,453
Provision for future taxes [note 18]		2,237			(117,461	)
Deferred gains		(41,254	)		(112,361	)
Unrealized (gains) losses on derivatives		(180,260	)		156,098
Unrealized foreign exchange losses		—			71,241
Stock-based compensation [note 22]		2,772			14,574
Gain on sale of assets [note 16]		(566	)		(4,097	)
Equity in loss from associated companies [note 17]		29,811			9,706
Other expense (income) [note 17]		7,101			(425	)
Writedown of investments [notes 9, 17]		—			29,992
Discontinued operations [note 25]		(382,425	)		(83,968	)
Minority interest		(3,035	)		(245	)
Other operating items [note 19]		(84,333	)		(91,036	)
Cash provided by operations		690,113			529,588
Investing activities
Additions to property, plant and equipment		(392,719	)		(531,061	)
Acquisitions, net of cash [note 24]		—			(503,157	)
Purchase of short-term investments [note 5]		(202,850	)		—
Increase in long-term receivables, investments and other		(40,258	)		(49,518	)
Proceeds on sale of property, plant and equipment		3,647			37,093
Cash used in investing (continuing operations)		(632,180	)		(1,046,643	)
Cash provided by investing (discontinued operations) [note 25]		871,300			—
Cash provided by (used in) investing		239,120			(1,046,643	)
Financing activities
Decrease in debt		(726,460	)		(10,712	)
Increase in debt		—			640,089
Issue of debentures, net of issue costs [note 11]		495,272			—
Issue of shares, net of issue costs [note 14]		440,150			—
Issue of shares, stock option plan		1,292			972
Dividends		(92,603	)		(80,495	)
Cash provided by financing		117,651			549,854
Increase in cash during the year		1,046,884			32,799
Exchange rate changes on foreign currency cash balances		(9,877	)		3,737
Cash and cash equivalents at beginning of year		64,222			27,686
Cash and cash equivalents at end of year	$	1,101,229		$	64,222
Cash and cash equivalents comprised of:
Cash	$	56,009		$	61,429
Cash equivalents		1,045,220			2,793
	$	1,101,229		$	64,222
Supplemental cash flow disclosure
Interest paid	$	35,267		$	52,272
Income taxes paid	$	57,093		$	117,788

See accompanying notes to consolidated financial statements.

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Notes to Consolidated Financial Statements

For the years ended December 31, 2009 and 2008

($Cdn thousands, except per share amounts and as noted)

1.	Cameco Corporation
	Cameco Corporation is incorporated under the Canada Business Corporations Act. Cameco Corporation and its subsidiaries (collectively, Cameco or the company) are primarily engaged in the exploration for and the development, mining, refining, conversion and fabrication of uranium for sale as fuel for generating electricity in nuclear power reactors in Canada and other countries. The company has a 31.6% interest in Bruce Power L.P. (BPLP), which operates the four Bruce B nuclear reactors in Ontario.
2.	Significant Accounting Policies

(a)	Consolidation Principles
	The consolidated financial statements include the accounts of Cameco and its subsidiaries. Interests in joint ventures are accounted for by the proportionate consolidation method. Under this method, Cameco includes in its accounts its proportionate share of assets, liabilities, revenues and expenses.
	The consolidated financial statements are prepared by management in accordance with Canadian generally accepted accounting principles. Management makes various estimates and assumptions in determining the reported amounts of assets and liabilities, revenues and expenses for each year presented, and in the disclosure of commitments and contingencies. The most significant estimates are related to the lives and recoverability of mineral properties, provisions for decommissioning and reclamation of assets, future income taxes, financial instruments and mineral reserves. Actual results could differ from these estimates. This summary of significant accounting policies is a description of the accounting methods and practices that have been used in the preparation of these consolidated financial statements and is presented to assist the reader in interpreting the statements contained herein.
(b)	Cash and cash equivalents
	Cash and cash equivalents consist of balances with financial institutions and investments in money market instruments, which have a term to maturity of three months or less at time of purchase.
(c)	Short-term investments
	Short-term investments consist of short-term money market instruments with terms to maturity at the date of acquisition of between three and 12 months. The short-term investments are classified as available-for-sale and are carried at fair value in the consolidated balance sheets with unrealized gains and losses reported in other comprehensive income (OCI). Realized gains and losses, as well as other-than-temporary declines in value, are recorded in the consolidated statements of earnings.
(d)	Inventories
	Inventories of broken ore, uranium concentrates and refined and converted products are valued at the lower of average cost and net realizable value. Average cost includes direct materials, direct labour, operational overhead expenses and depreciation, depletion and reclamation. Net realizable value for finished products is considered to be the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
(e)	Supplies
	Consumable supplies and spares are valued at the lower of cost or replacement value.
(f)	Investments
	Investments in associated companies over which Cameco has the ability to exercise significant influence are accounted for by the equity method. Under this method, Cameco includes in earnings its share of earnings or losses of the associated company. Portfolio investments are classified as available-for-sale and are carried at fair value in the consolidated balance sheets with unrealized gains and losses reported in OCI. Realized gains and losses, as well as other-than-temporary declines in value, are recorded in the consolidated statements of earnings.

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(g)	Property, Plant and Equipment
	Assets are carried at cost. Costs of additions and improvements are capitalized. When assets are retired or sold, the resulting gains or losses are reflected in current earnings. Maintenance and repair expenditures are charged to cost of production.
	The decision to develop a mine property within a project area is based on an assessment of the commercial viability of the property, the availability of financing and the existence of markets for the product. Once the decision to proceed to development is made, development and other expenditures relating to the project area are deferred and carried at cost with the intention that these will be depleted by charges against earnings from future mining operations. No depreciation or depletion is charged against the property until commercial production commences. After a mine property has been brought into commercial production, costs of any additional work on that property are expensed as incurred, except for large development programs, which will be deferred and depleted over the remaining lives of the related assets.
	The carrying values of non-producing properties are periodically assessed by management and if management determines that the carrying values cannot be recovered, the unrecoverable amounts are written off against current earnings.
	Cameco reviews the carrying values of its property, plant and equipment when changes in circumstances indicate that those carrying values may not be recoverable. Estimated future net cash flows are calculated using estimated recoverable reserves, estimated future commodity prices and the expected future operating and capital costs. An impairment loss is recognized when the carrying value of an asset held for use exceeds the sum of undiscounted future net cash flows. An impairment loss is measured as the amount by which the asset’s carrying amount exceeds its fair value.
	Interest is capitalized on expenditures related to development projects actively being prepared for their intended use. Capitalization is discontinued when the asset enters commercial operation or development ceases.
	Fuel services assets, mine buildings, equipment and mineral properties are depreciated or depleted according to the unit-of-production method. This method allocates the costs of these assets to each accounting period. For fuel services, the amount of depreciation is measured by the portion of the facilities’ total estimated lifetime production that is produced in that period. For mining, the amount of depreciation or depletion is measured by the portion of the mines’ proven and probable reserves which are recovered during the period.
	Nuclear generating plants are depreciated according to the straight-line method based on the lower of useful life and remaining lease term.
	Other assets are depreciated according to the straight-line method based on estimated useful lives, which generally range from three to 10 years.
(h)	Intangible Assets
	Intangible assets acquired in a business combination are recorded at their fair values. Finite-lived intangible assets are amortized over the estimated production profile of the business unit to which they relate. The carrying values of intangible assets are periodically assessed by management and if management determines that the carrying values cannot be recovered, the unrecoverable amount is charged to earnings in the current period.
(i)	Future Income Taxes
	Future income taxes are recognized for the future income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Future income tax assets and liabilities are measured using enacted or substantively enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in rates is included in earnings in the period, which includes the enactment date. Future income tax assets are recorded in the financial statements and a valuation allowance is provided, if necessary, to reduce the future income tax asset to an amount that is more likely than not to be realized. Accrued interest and penalties for uncertain tax positions are recognized in the period in which uncertainties are identified.
(j)	Research and Development and Exploration Costs
	Expenditures for research and technology related to the products, processes and expenditures for geological exploration programs are charged against earnings as incurred.

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(k)	Environmental Protection and Asset Retirement Obligations
	The fair value of the liability for an asset retirement obligation is recognized in the period incurred. The fair value, discounted using the company’s credit adjusted risk-free rate, is added to the carrying amount of the associated asset and depreciated over the asset’s useful life. The liability is accreted over time, using the company’s credit adjusted risk-free rate, through periodic charges to earnings, and it is reduced by actual costs of decommissioning and reclamation. Cameco’s estimates of reclamation costs could change as a result of changes in regulatory requirements, reclamation plans, cost estimates and timing of estimated expenditures. Costs related to ongoing environmental programs are charged against earnings as incurred.
(l)	Employee Future Benefits
	Cameco accrues its obligations under employee benefit plans. The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on service and management’s best estimate of expected plan investment performance, salary escalation, retirement ages of employees and expected health care costs. For the purpose of calculating the expected return on plan assets, those assets are measured at fair value. Cameco measures the plan assets and the accrued benefit obligations on December 31 each year.
	On both the Cameco-specific and BPLP-specific defined benefit pension plans, past service costs arising from plan amendments are amortized on a straight-line basis over the expected average remaining service life of the plan participants. Net actuarial gains, which exceed 10% of the greater of the accrued benefit obligation and the fair value of plan assets, are amortized on a straight-line basis over the expected average remaining service life of the plan participants.
	On the Cameco-specific retirement benefit plans that do not vest or accumulate, past service costs arising from plan amendments, and net actuarial gains and losses, are recognized in the period they arise. Conversely, the BPLP-specific amounts are amortized on a straight-line basis over the expected average remaining service life of the plan participants.
(m)	Stock-Based Compensation
	Cameco has five stock-based compensation plans that are described in note 22. These encompass a stock option plan, an employee share ownership plan, a performance share unit plan, a deferred share unit plan and a phantom stock option plan. In calculating compensation expense, Cameco includes an estimate for forfeitures that is based on historic trends.
	Options granted under the stock option and performance share unit plans for which the holder cannot elect cash settlement are accounted for using the fair value method. Under this method, the compensation cost of options granted is measured at estimated fair value at the grant date and recognized over the shorter of the period to eligible retirement or the vesting period. Options that may be settled in cash are accounted for as liabilities and are carried at their intrinsic value. The intrinsic value of the liability is marked-to-market each period and is amortized to expense over the shorter of, the period to eligible retirement, or the vesting period.
	Deferred share units and phantom stock options are amortized over the shorter of the period to eligible retirement or the vesting period and re-measured at each reporting period, until settlement, using the quoted market value. Cameco’s contributions under the employee share ownership plan are expensed during the year of contribution. Shares purchased with company contributions and with dividends paid on such shares become unrestricted on January 1 of the second plan year following the date on which such shares were purchased.

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(n)	Revenue Recognition
	Cameco supplies uranium concentrates and uranium conversion services to utility customers.
	Cameco recognizes revenue on the sale of its nuclear products when evidenced by a contract that indicates the product, pricing and delivery terms, delivery occurs, the related revenue is fixed or determinable and collection is reasonably assured.
	Cameco has three types of sales arrangements with its customers in its uranium and fuel services businesses. These arrangements include uranium supply, toll conversion services and conversion supply (converted uranium), which is a combination of uranium supply and toll conversion services.
	Uranium Supply
	In a uranium supply arrangement, Cameco is contractually obligated to provide uranium concentrates to its customers. Cameco-owned uranium is physically delivered to conversion facilities (Converters) where the Converter will credit Cameco’s account for the volume of accepted uranium. Based on delivery terms in a sales contract with its customer, Cameco instructs the Converter to transfer title of a contractually specified quantity of uranium to the customer’s account at the Converter’s facility. At this point, Cameco invoices the customer and recognizes revenue for the uranium supply.
	Toll Conversion Services
	In a toll conversion arrangement, Cameco is contractually obligated to convert customer-owned uranium to a chemical state suitable for enrichment. The customer delivers uranium to Cameco’s conversion facilities. Once conversion is complete, Cameco physically delivers converted uranium to enrichment facilities (Enrichers) where the Enricher will credit Cameco’s account for the volume of accepted processed uranium. Based on delivery terms in a sales contract with its customer, Cameco instructs the Enricher to transfer title of a contractually specified quantity of converted uranium to the customer’s account at the Enricher’s facility. At this point, Cameco invoices the customer and recognizes revenue for the toll conversion services.
	Conversion Supply
	In a conversion supply arrangement, Cameco is contractually obligated to provide uranium concentrates and conversion services to its customers. Cameco-owned uranium is converted and physically delivered to an Enricher as described in the toll conversion services arrangement. Based on delivery terms in a sales contract with its customer, Cameco instructs the Enricher to transfer title of a contractually specified quantity of converted uranium to the customer’s account at the Enricher’s facility. At this point, Cameco invoices the customer and recognizes revenue for both the uranium supplied and the conversion service provided. It is rare for Cameco to enter into back-to-back arrangements for uranium supply and toll conversion services. However, in the event that a customer requires such an arrangement, revenue from uranium supply is deferred until the toll conversion service has been rendered.
	Revenue from deliveries to counterparties with whom Cameco has arranged a standby product loan facility (up to the limit of the loan facilities) and the related cost of sales are deferred until the loan arrangements have been terminated, or if drawn upon, when the loans are repaid and that portion of the facility is terminated.
	Electricity sales are recognized at the time of generation, and delivery to the purchasing utility is metered at the point of interconnection with the transmission system. Revenues are recognized on an accrual basis, which includes an estimate of the value of electricity produced during the period but not yet billed.
(o)	Amortization of Financing Costs
	For financial instruments that are measured at amortized cost, the effective interest method of amortization is used for any debt discounts and issue expenses. Unamortized costs are classified with their related financial liability.
(p)	Foreign Currency Translation
	Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at year-end rates of exchange. Revenue and expense transactions denominated in foreign currencies are translated into Canadian dollars at rates in effect at the time of the transactions. The applicable exchange gains and losses arising on these transactions are reflected in earnings.
	The United States (US) dollar is considered the functional currency of most of Cameco’s operations outside of Canada. The financial statements of these operations are translated into Canadian dollars using the current rate method whereby all assets and liabilities are translated at the year-end rate of exchange, and all revenue and expense items are translated at the average rate of exchange prevailing during the year. Exchange gains and losses arising from this translation, representing the net unrealized foreign currency translation gain (loss) on Cameco’s net investment in these foreign

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	operations, are recorded in the foreign currency translation adjustments component of accumulated other comprehensive income (AOCI). Exchange gains or losses arising from the translation of foreign debt designated as hedges of a net investment in foreign operations are also recorded in the foreign currency translation adjustments component of AOCI. These adjustments are not included in earnings until realized through a reduction in Cameco’s net investment in such operations.
(q)	Derivative Financial Instruments and Hedging Transactions
	Financial Assets and Financial Liabilities
	All financial assets and liabilities are carried at fair value in the consolidated balance sheets, except for items classified in the following categories, which are carried at amortized cost: loans and receivables, held-to-maturity securities and financial liabilities not held-for-trading. Realized and unrealized gains and losses on financial assets and liabilities that are held-for-trading are recorded in the consolidated statements of earnings. Unrealized gains and losses on financial assets that are available-for-sale are reported in OCI until realized, at which time they are recorded in the consolidated statements of earnings.
	Hedge Accounting and Derivatives
	Derivative financial and commodity instruments are employed by Cameco to reduce exposure to fluctuations in foreign currency exchange rates, interest rates and commodity prices. All derivative instruments are recorded at fair value in the consolidated balance sheets, except for those designated as hedging instruments.
	The purpose of hedging transactions is to modify Cameco’s exposure to one or more risks by creating an offset between changes in the fair value of, or the cash inflows attributable to, the hedged item and the hedging item. Hedge accounting ensures that the offsetting gains, losses, revenues and expenses are recognized to net earnings in the same period or periods. When hedge accounting is appropriate, the hedging relationship is designated as a fair value hedge, a cash flow hedge, or a foreign currency risk hedge related to a net investment in a self-sustaining foreign operation.
	At the inception of a hedging relationship, Cameco formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The process includes linking all derivatives to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. Cameco also formally assesses, both at the inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
	For fair value hedges, changes in the fair value of the derivatives and corresponding changes in fair value of the hedged items attributed to the risk being hedged are recognized in the consolidated statements of earnings. For cash flow hedges, the effective portion of the changes in the fair values of the derivative instruments are recorded in OCI until the hedged items are recognized in the consolidated statements of earnings. Derivative instruments that do not qualify for hedge accounting, or are not designated as hedging instruments, are marked-to-market and the resulting net gains or losses are recognized on the consolidated statements of earnings.
	Derivatives may be embedded in other financial instruments (the “host instrument”). Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not clearly and closely related to those of the host instrument, the terms of the embedded derivative are the same as those of a stand-alone derivative, and the combined contract is not held-for-trading or designated at fair value. These embedded derivatives are measured at fair value with subsequent changes recognized in gains or losses on derivatives on the consolidated statements of earnings.
(r)	Earnings Per Share
	Earnings per share are calculated using the weighted average number of common shares outstanding.
	The calculation of diluted earnings per share assumes that outstanding options and warrants which are dilutive to earnings per share are exercised and the proceeds are used to repurchase shares of the company at the average market price of the shares for the period. The effect is to increase the number of shares used to calculate diluted earnings per share.

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3. Accounting Standards

(a) Changes in Accounting Policies

(i)	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 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.
(ii)	Financial Instruments — Disclosures
	Effective October 1, 2009, Cameco adopted the amendments to Handbook Section 3862, Financial Instruments — Disclosures. The amendments harmonize Canadian standards with IFRS and provide for enhanced disclosures on liquidity risk and require new disclosures on fair value measurements of financial instruments.

(b) Future Changes in Accounting Policy

(i)	International Financial Reporting Standards (IFRS)
	In February 2008, the Accounting Standards Board announced that Canadian publicly accountable enterprises will be required to adopt IFRS effective January 1, 2011. As a result, Cameco will publish its first consolidated financial statements, prepared in accordance with IFRS, for the quarter ending March 31, 2011. We will also provide comparative data on an IFRS basis, including an opening balance sheet as at January 1, 2010.
(ii)	Business Combinations
	CICA Handbook Section 1582, Business Combinations is effective for business combinations with an acquisition date after January 1, 2011. This standard specifies a number of changes, including an expanded definition of a business, a requirement to measure all business acquisitions at fair value, a requirement to measure non-controlling interests at fair value and a requirement to recognize acquisition-related costs as expenses.
(iii)	Consolidated Financial Statements
	CICA Handbook Section 1601, Consolidated Financial Statements, which replaces the existing standard, is effective for periods beginning on or after January 1, 2011. This section establishes the standards for preparing consolidated financial statements.
(iv)	Non-controlling Interests in Consolidated Financial Statements
	CICA Handbook Section 1602, Non-controlling Interests in Consolidated Financial Statements is effective for periods beginning on or after January 1, 2011. This section specifies that non-controlling interests be treated as a separate component of equity, not as a liability or other item outside of equity. Section 1602 will be applied prospectively to all non-controlling interests, including any that arose before the effective date.

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4.	Financial Risk Management
	This note presents information about various risks that Cameco is exposed to from its use of financial instruments, its objectives, policies and processes for measuring and managing risk, and the company’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.
	Risk Management Overview
	Cameco is exposed in varying degrees to a variety of financial instrument related risks. Management and the board of directors, both separately and together, discuss the principal risks of our businesses. The board sets policies for the implementation of systems to manage, monitor and mitigate identifiable risks. Cameco’s risk management objective in relation to these instruments is to protect and minimize volatility in cash flow.
	Market Risk
	Cameco engages in various business activities which expose the company to market risk from changes in commodity prices and foreign currency exchange rates. As part of its overall risk management strategy, Cameco uses derivatives to manage some of its exposures to market risk that result from these activities.
	Derivative instruments may include financial and physical forward contracts. Such contracts may be used to establish a fixed price for a commodity, an interest-bearing obligation or a cash flow denominated in a foreign currency. Market risks are monitored regularly against defined risk limits and tolerances.
	Cameco’s actual exposure to these market risks is constantly changing as the company’s portfolios of foreign currency and commodity contracts change. Changes in fair value or cash flows based on market variable fluctuations cannot be extrapolated as the relationship between the change in the market variable and the change in fair value or cash flow may not be linear.
	The types of risk exposure and the way in which such exposure is managed are as follows:

(a)	Commodity Price Risk
	As a significant producer and supplier of uranium, nuclear fuel processing and electricity, Cameco bears significant exposure to changes in prices for these products. A substantial change in prices will affect the company’s net earnings and operating cash flows. Prices for Cameco’s products are volatile and are influenced by numerous factors beyond the company’s control, such as supply and demand fundamentals, geopolitical events and, in the case of electricity prices, weather.
	Cameco’s sales contracting strategy focuses on reducing the volatility in future earnings and cash flow, while providing both protection against decreases in market price and retention of exposure to future market price increases. To mitigate the risks associated with the fluctuations in the market price for uranium products, Cameco seeks to maintain a portfolio of uranium product sales contracts with a variety of delivery dates and pricing mechanisms that provide a degree of protection from pricing volatility. To mitigate risks associated with fluctuations in the market price for electricity, BPLP enters into various energy and sales related contracts that qualify as cash flow hedges. At December 31, 2009, the effect of a $1/MWh increase in the market price for electricity would be an increase of $778,000 in net earnings, and a decrease in other comprehensive income of $3,450,000 for 2009.
(b)	Foreign Exchange Risk
	The relationship between the Canadian and US dollars affects financial results of the uranium business as well as the fuel services business.
	Sales of uranium and fuel services are routinely denominated in US dollars while production costs are largely denominated in Canadian dollars. Cameco attempts to provide some protection against exchange rate fluctuations by planned hedging activity designed to smooth volatility. Cameco also has a natural hedge against US currency fluctuations because a portion of its annual cash outlays, including purchases of uranium and fuel services, is denominated in US dollars. At December 31, 2009, the effect of a $0.01 increase in the US to Canadian dollar exchange rate on our portfolio of currency hedges and other US denominated exposures would have been a decrease of $11,000,000 in net earnings for 2009.
(c)	Counterparty Credit Risk
	Cameco’s sales of uranium product, conversion and fuel manufacturing services expose the company to the risk of non-payment. Counterparty credit risk is associated with the ability of counterparties to satisfy their contractual obligations to Cameco, including both payment and performance.
	Cameco manages this risk by monitoring the credit worthiness of our customers and seeking pre-payment or other forms of payment security from customers with an unacceptable level of credit risk.

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	Cameco’s maximum counterparty credit exposure at the balance sheet date consists primarily of the carrying amount of financial assets such as accounts receivable and short-term investments. At December 31, 2009, there were no significant concentrations of credit risk and no amounts were held as collateral.
(d)	Liquidity Risk
	Financial liquidity represents Cameco’s ability to fund future operating activities and investments. Cameco ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the company’s holdings of cash and cash equivalents. The company believes that these sources will be sufficient to cover the likely short-term and long-term cash requirements.
	The tables below outline the maturity dates for Cameco’s non-derivative financial liabilities including, principal and interest, as at December 31, 2009:

			Due in less		Due in		Due in		Due after
(Millions)	Total		than 1 year		1-3 years		3-5 years		5 years
Long-term debt	$	794	$	—	$	—	$	—	$	794
BPLP lease		171		12		28		35		96
Short-term debt		77		77		—		—		—
Total contractual repayments	$	1,042	$	89	$	28	$	35	$	890

			Due in less		Due in		Due in		Due after
(Millions)	Total		than 1 year		1-3 years		3-5 years		5 years
Interest on long-term debt	$	358	$	42	$	85	$	85	$	146
Interest on BPLP lease		67		12		22		17		16
Interest on short-term debt		2		2		—		—		—
Total interest payments	$	427	$	56	$	107	$	102	$	162

Capital Management

Cameco’s capital structure reflects our vision and the environment in which we operate. We seek growth through development and expansion of existing assets and by acquisition. Our capital resources are managed to support achievement of our goals. The overall objectives for managing capital remained unchanged in 2009 from the prior comparative period. Cameco’s management considers its capital structure to consist of long-term debt, short-term debt (net of cash and cash equivalents), minority interest and shareholders’ equity.

The capital structure at December 31, 2009 was as follows:

(Thousands)	2009			2008
Long-term debt	$	964,482		$	1,223,157
Short-term debt		76,762			89,817
Cash and cash equivalents		(1,101,229	)		(64,222	)
Short-term investments		(202,836	)		—
Net debt		(262,821	)		1,248,752
Minority interest		164,040			141,018
Shareholders’ equity		4,843,828			3,513,623
Total equity		5,007,868			3,654,641
Total capital	$	4,745,047		$	4,903,393

Cameco is bound by certain covenants in its general credit facilities. These covenants place restrictions on total debt, including guarantees, and set minimum levels for net worth. As of December 31, 2009, Cameco met these requirements.

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5.	Short-Term Investments
	In 2009, Cameco purchased money market instruments with terms to maturity between three and 12 months. The fair values of marketable securities held at December 31, 2009 were $202,836,000 (2008 — nil).
6.	Inventories

	2009		2008
Uranium
Concentrate	$	310,893	$	287,079
Broken ore		18,125		21,396
		329,018		308,475
Fuel Services		124,206		89,635
Total	$	453,224	$	398,110

7. Property, Plant and Equipment

			Accumulated
			Depreciation
	Cost		and Depletion		2009 Net		2008 Net
Uranium
Mining	$	3,308,418	$	1,507,039	$	1,801,379	$	1,799,885
Non-producing		1,476,409		—		1,476,409		1,325,532
Fuel Services		491,921		212,608		279,313		279,391
Electricity
Assets under capital lease		164,288		80,422		83,866		93,220
Other		586,368		224,991		361,377		367,004
Other		117,897		52,138		65,759		67,626
Total	$	6,145,301	$	2,077,198	$	4,068,103	$	3,932,658

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8. Intangible Assets and Goodwill

			Accumulated
	Cost		Depreciation		2009 Net		2008 Net
Intangible assets	$	118,819	$	21,106	$	97,713	$	101,442

	The intangible asset value relates to intellectual property associated with Cameco Fuel Manufacturing and is being amortized on a unit-of-production basis.
9.	Long-Term Receivables, Investments and Other

	2009			2008
BPLP [note 21]
Capital lease receivable from BPLP (i)	$	94,895		$	97,044
Derivatives [note 27]		141,949			75,994
Accrued pension benefit asset [note 23]		36,613			6,061
Equity accounted investments
Global Laser Enrichment LLC (privately held) [note 24]		185,716			240,018
UNOR Inc. (market value $952)		935			1,088
UEX Corporation (market value $45,909)		6,052			6,714
Huron Wind (privately held)		4,002			4,623
Minergia S.A.C. (privately held)		4,551			534
UFP Investments Inc. (privately held)		2,617			—
Available-for-sale securities
Western Uranium Corporation (market value $4,637)		4,637			3,296
GoviEx Uranium (privately held) [note 24]		25,214			34,442
Derivatives [note 27]		68,432			5,793
Deferred charges
Cost of sales [note 13]		14,415			6,414
Advances receivable from Inkai JV LLP (ii)		141,149			126,130
Accrued pension benefit asset [note 23]		7,773			4,815
Other		64,320			59,623
		803,270			672,589
Less current portion		(154,725	)		(49,836	)
Net	$	648,545		$	622,753

(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 $370,000,000 (US) and advances under the facility bear interest at a rate of LIBOR plus 2%. At December 31, 2009, $337,000,000 (US) of principal and interest was outstanding (2008 — $257,000,000 (US)), of which 40% represents the joint venture partner’s share. As management does not anticipate repayment in the next 12 months, it has classified this loan as long term.

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10.	Short-Term Debt
	In 2008, a promissory note in the amount of $73,344,000 (US) was issued to finance the acquisition of GE-Hitachi Global Laser Enrichment LLC (GLE) [note 24]. The promissory note is payable on demand and bears interest at market rates.
	In February 2009, Cameco concluded an arrangement for a $100,000,000 unsecured revolving credit facility, maturing February 5, 2010. In December 2009, this facility was extended to February 4, 2011, and is extendable for one additional 364-day term upon mutual agreement with the lender. There is no amount outstanding under this facility.
11.	Long-Term Debt

	2009			2008
Debentures	$	793,842		$	298,177
Capital lease obligation — BPLP		170,640			180,784
Commercial paper and bank debt		—			744,196
		964,482			1,223,157
Less current portion		(11,629	)		(10,175	)
Net	$	952,853		$	1,212,982

On September 25, 2003, the company issued unsecured convertible debentures in the amount of $230,000,000. The debentures bore interest at 5% per annum, were to mature on October 1, 2013, and at the holder’s option were convertible into common shares of Cameco. The debentures were redeemable by the company beginning October 1, 2008, at a redemption price of par plus accrued and unpaid interest. The fair value of the conversion option associated with the convertible debentures on the date of issuance was $30,473,000, resulting in an effective interest rate of 7.21%. The amount was reflected as contributed surplus. The conversion price was $10.83 per share, a rate of approximately 92.3 common shares per $1,000 of convertible debentures. Interest was payable semi-annually in arrears on April 1 and October 1. On August 14, 2008, Cameco gave notice of its intention to redeem all of these debentures on October 1, 2008. As a result of debenture conversions and redemptions, 21,204,585 shares were issued during 2008 [note 14].

Cameco has $300,000,000 outstanding in senior unsecured debentures (Series C). These debentures bear interest at a rate of 4.7% per annum (effective interest rate of 4.79%) and mature September 16, 2015.

On September 2, 2009, Cameco issued debentures in the amount of $500,000,000. The debentures bear interest at 5.67% per annum (effective interest rate of 5.80%) and mature on September 2, 2019. The proceeds of the issue after deducting expenses were $495,300,000.

Cameco has a $500,000,000 unsecured revolving credit facility that is available until November 30, 2012. This facility can be extended for an additional year on the 2010 and 2011 anniversary dates, upon mutual agreement with the lenders. In addition to direct borrowings under the facility, up to $100,000,000 can be used for the issuance of letters of credit and, to the extent necessary, up to $400,000,000 may be allocated to provide liquidity support for the company’s commercial paper program. The facility ranks equally with all of Cameco’s other senior debt. At December 31, 2009, there were no amounts outstanding under this credit facility (2008 — $149,800,000, bearing interest at an average rate of 1.7%). Cameco may also borrow directly in the commercial paper market. There was no commercial paper outstanding at December 31, 2009 (2008 — $152,800,000, bearing interest at an average rate of 2.7%). These amounts, when drawn, are classified as long-term debt.

In 2008, Cameco arranged for a $470,000,000, 364-day unsecured revolving credit facility, extendable for up to two additional 364-day terms upon mutual agreement with the lenders. The facility ranks equally with all of Cameco’s other senior debt. At December 31, 2008, there was $29,885,000 (Cdn) and $336,200,000 (US) outstanding under this credit facility, bearing interest at 2.30% and 2.58%, respectively. Borrowings under this short-term facility were incurred to finance acquisitions [note 24]. In September 2009, this credit facility was terminated.

Cameco is bound by certain covenants in its revolving credit facilities. The significant financial covenants require a funded debt to tangible net worth ratio equal to or less than 1:1 and a tangible net worth greater than $1,250,000,000. Non-compliance with any of these covenants could result in accelerated payment and termination of the revolving credit facility. At December 31, 2009, Cameco was in compliance with covenants and does not expect its operating and investing activities in 2010 to be constrained by them.

104

Cameco has $597,062,000 ($400,933,000 and $187,397,000 (US)) in letter of credit facilities. The majority of the outstanding letters of credit at December 31, 2009 relate to future decommissioning and reclamation liabilities [note 12] and amounted to $592,215,000 ($396,427,000 and $187,071,000 (US)) (2008 — $428,910,000 ($294,650,000 and $109,640,000 (US)).

BPLP holds a long-term lease with OPG to operate the Bruce nuclear power facility. The term of the lease, which expires in 2018, is 18 years with an option to extend the lease for up to an additional 25 years. The interest rate associated with the lease is 7.5%.

BPLP has a $200,000,000 (Cameco’s share $63,200,000) revolving credit facility that is available until July 30, 2011, as well as $184,000,000 (Cameco’s share $58,144,000) in letter of credit facilities. As at December 31, 2009, BPLP had $35,000,000 (Cameco’s share $11,060,000) outstanding under the revolving credit facility and $184,000,000 (Cameco’s share $58,144,000) outstanding under the letter of credit facilities.

The table below represents currently scheduled maturities of long-term debt over the next five years.

2010	$	11,629
2011		13,177
2012		14,852
2013		16,337
2014		18,233
Thereafter		890,254
Total	$	964,482

Standby Product Loan Facilities

Cameco had arranged for a standby product loan facility with one of its customers. The arrangement, which was finalized in 2006, allowed Cameco to borrow up to 2,600,000 pounds U₃O₈ equivalent over the period 2006 to 2008 with repayment in 2008 and 2009. Of this material, up to 1,000,000 kilograms of uranium could have been borrowed in the form of UF₆. Under the loan facility, standby fees of 2.25% were payable based on the market value of the facility, and interest was payable on the market value of any amounts drawn at a rate of 4.0%. Any borrowings would have been secured by letters of credit and payable in kind.

On January 29, 2008, Cameco gave notice of termination to the counterparty of the product loan arrangement. The loan facility was terminated on April 1, 2008 and the associated letter of credit facilities were cancelled on January 31, 2008. Cameco recognized previously deferred revenues and costs in its earnings during 2008.

On April 1, 2008, Cameco arranged for a standby product loan facility with one of its customers. The arrangement allows Cameco to borrow up to 2,400,000 pounds U₃O₈ equivalent over the period 2008 to 2011 with repayment during 2012 to 2014. Under the loan facility, standby fees of 2% are payable based on the market value of the facility, and interest is payable on the market value of any amounts drawn at a rate of 5%. Any borrowings are payable in kind. As at December 31, 2009, Cameco did not have any loan amounts outstanding under the facility.

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12.	Provision for Reclamation
	Cameco’s estimates of future asset retirement obligations are based on reclamation standards that satisfy regulatory requirements. Elements of uncertainty in estimating these amounts include potential changes in regulatory requirements, decommissioning and reclamation alternatives and amounts to be recovered from other parties.
	Cameco estimates total future decommissioning and reclamation costs for its operating assets to be $495,112,000. These estimates are reviewed by Cameco technical personnel as required by regulatory agencies or more frequently as circumstances warrant. In connection with future decommissioning and reclamation costs, Cameco has provided financial assurances of $591,548,000 in the form of letters of credit to satisfy current regulatory requirements.
	Under the BPLP lease agreement, OPG, as the owner of the Bruce nuclear plants, is responsible to decommission the Bruce facility and to provide funding and meet other requirements that the Canadian Nuclear Safety Commission (CNSC) may require of BPLP as licensed operator of the Bruce facility. OPG is also responsible to manage radioactive waste associated with decommissioning of the Bruce nuclear plants.
	Following is a reconciliation of the total liability for asset retirement obligations:

	2009			2008
Balance, beginning of year	$	313,203		$	264,055
Changes in estimates		(13,614	)		26,308
Liabilities settled		(6,263	)		(4,663	)
Accretion expense		17,828			15,260
Impact of foreign exchange		(14,258	)		12,243
Balance, end of year	$	296,896		$	313,203

Following is a summary of the key assumptions on which the carrying amount of the asset retirement obligations is based:

(i)	Total undiscounted amount of the estimated cash flows — $495,112,000.
(ii)	Expected timing of payment of the cash flows — timing is based on life of mine plans. The majority of expenditures are expected to occur after 2016.
(iii)	Discount rates — 5.25% to 7.50% for operations in North America and 9.00% for operations in Central Asia.

The asset retirement obligations liability relates to the following segments:

	2009		2008
Uranium	$	192,544	$	213,559
Fuel Services		104,352		99,644
Total	$	296,896	$	313,203

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13. Other Liabilities

	2009			2008
Deferred sales [note 9]	$	24,982		$	31,511
Derivatives [note 27]		4,137			119,869
Accrued post-retirement benefit liability [note 23]		12,019			11,842
Zircatec acquisition holdback		—			2,000
BPLP
Accrued post-retirement benefit liability [note 23]		125,402			117,038
Derivatives [note 27]		36,820			534
Other		13,009			14,308
		216,369			297,102
Less current portion		(29,297	)		(117,222	)
Net	$	187,072		$	179,880

14.	Share Capital
	Authorized share capital:

Unlimited number of first preferred shares
Unlimited number of second preferred shares
Unlimited number of voting common shares, and
One Class B share

(a) Common Shares

Number Issued (Number of Shares)	2009		2008
Beginning of year		365,718,923		344,398,698
Issued:
Equity issuance		26,666,400		—
Stock option plan [note 22]		453,410		115,640
Debenture conversions [note 11]		—		21,204,585
Issued share capital		392,838,733		365,718,923

(b)	Class B Share
	One Class B share issued during 1988 and assigned $1 of share capital entitles the shareholder to vote separately as a class in respect of any proposal to locate the head office of Cameco to a place not in the province of Saskatchewan.
(c)	Share Issuance
	On March 5, 2009, Cameco 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 were $445,532,000. Excluding the deferred tax recoveries, our net cash proceeds amounted to $440,150,000 in 2009.

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15. Interest and Other

	2009			2008
Interest on long-term debt	$	38,377		$	51,950
Interest on short-term debt		2,366			1,377
Foreign exchange (gains) losses		(21,086	)		83,006
Other charges		11,302			12,498
Interest income		(6,614	)		(16,365	)
Capitalized interest		(36,815	)		(39,185	)
Net	$	(12,470	)	$	93,281

16. Gain on Sale of Assets

	2009			2008
Sale of geological data	$	(3,674	)	$	(927	)
Other		3,108			(3,170	)
Net	$	(566	)	$	(4,097	)

17. Other Expense

	2009			2008
Writedown of investments [note 9]	$	—		$	(29,992	)
Equity in loss of associated companies		(29,811	)		(9,706	)
Other		(7,101	)		425
Net	$	(36,912	)	$	(39,273	)

In 2009, the equity in loss of associated companies includes a charge of $18,295,000 for the amortization of in-process research and development associated with the investment in GLE (2008 — $1,991,000). During 2008, the investments in Western Uranium Corporation, Cue Resources Ltd. and UNOR Inc. were determined to be impaired and charges of $17,092,000, $6,479,000 and $6,421,000 respectively, were recognized during the year [note 9].

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18.	Income Taxes
	The significant components of future income tax assets and liabilities at December 31 are as follows:

	2009			2008
Assets
Provision for reclamation	$	89,996		$	92,345
Foreign exploration and development		40,221			30,769
Income tax losses carried forward		100,783			210,454
Other		31,185			68,256
Future income tax assets before valuation allowance		262,185			401,824
Valuation allowance		(57,398	)		(104,307	)
Future income tax assets, net of valuation allowance	$	204,787		$	297,517
Liabilities
Property, plant and equipment	$	338,645		$	339,549
Inventories		5,618			30,567
Long-term investments and other		82,015			80,106
Future income tax liabilities	$	426,278		$	450,222
Net future income tax liabilities	$	221,491		$	152,705
Less current portion		(87,135	)		(68,857	)
	$	134,356		$	83,848

The provision for income taxes differs from the amount computed by applying the combined expected federal and provincial income tax rate to earnings before income taxes. The reasons for these differences are as follows:

	2009			2008
Earnings before income taxes and minority interest	$	766,859		$	341,547
Combined federal and provincial tax rate		31.4	%		32.3	%
Computed income tax expense		240,794			110,320
Increase (decrease) in taxes resulting from:
Reduction in income tax rates		(10,983	)		—
Provincial royalties and other taxes		—			1,988
Manufacturing and processing deduction		(3,211	)		(771	)
Difference between Canadian rate and rates applicable to subsidiaries in other countries		(175,969	)		(176,659	)
Restructuring of gold business		—			(37,053	)
Change in valuation allowance		18,125			6,154
Capital and other taxes		1,824			—
Stock-based compensation plans		1,371			13,105
Other permanent differences		(19,054	)		58,559
Income tax expense (recovery)	$	52,897		$	(24,357	)

109

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 (this reassessment was superseded by a reassessment issued in February 2009 and neither reassessment resulted in more than a nominal amount of cash taxes becoming payable for that year). In December 2009, CRA issued a notice of reassessment for the 2004 tax return, which increased Cameco’s 2004 Canadian taxable income by approximately $108,000,000 (which, again, did not result in more than a nominal amount of cash taxes becoming payable for that year). Cameco believes it is likely that CRA will reassess Cameco’s tax returns for the years 2005 through 2009 on a similar basis.

Late in 2009, CRA’s Transfer Pricing Review Committee decided not to impose a penalty for 2004 based on the documentation that had been submitted by Cameco. This followed the same decision by the Transfer Pricing Review Committee late in 2008 for the 2003 notice of reassessment.

Having regard to advice from its external advisors, Cameco’s opinion is that CRA’s position is incorrect, and Cameco is contesting CRA’s position. 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 $9,000,000 in 2009, bringing the cumulative tax provision related to this matter for the years 2003 through 2009 to $24,000,000. 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 2009 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 and the litigation process is proceeding. Cameco expects to file a Notice of Appeal for the 2004 reassessment in 2010.

	2009			2008
Earnings before income taxes and minority interest
Canada	$	109,534		$	(378,584	)
Foreign		657,325			720,131
	$	766,859		$	341,547
Current income taxes
Canada	$	17,109		$	44,752
Foreign		33,551			48,352
	$	50,660		$	93,104
Future income taxes (recovery)
Canada	$	3,885		$	(101,746	)
Foreign		(1,648	)		(15,715	)
	$	2,237		$	(117,461	)
Income tax expense (recovery)	$	52,897		$	(24,357	)

For 2009, earnings from discontinued operations [note 25] included a net income tax expense of $94,600,000 (2008 — recovery of $400,000).

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

	2009			2008
Gains (losses) on derivatives designated as cash flow hedges	$	48,368		$	(6,773	)
Gains on derivatives designated as cash flow hedges transferred to net earnings		(48,121	)		(38,415	)
Unrealized gains (losses) on assets available-for-sale		466			(2,072	)
Losses on assets available-for-sale transferred to net earnings		80			3,024
Total income tax expense (recovery) included in OCI	$	793		$	(44,236	)

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:

	2009		2008
Gains on derivatives designated as cash flow hedges	$	36,987	$	36,740
Gains (losses) on assets available-for-sale		346		(200	)
Total income tax expense included in AOCI	$	37,333	$	36,540

19.	Statements of Cash Flows
	Other Operating Items

	2009			2008
Changes in non-cash working capital:
Accounts receivable	$	34,556		$	(122,239	)
Inventories		(74,938	)		21,694
Supplies and prepaid expenses		(27,838	)		(33,137	)
Accounts payable and accrued liabilities		30,784			10,393
Hedge position settlements		—			52,152
Other		(46,897	)		(19,899	)
Total	$	(84,333	)	$	(91,036	)

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20.	Uranium Joint Ventures
	Cameco conducts a portion of its exploration, development, mining and milling activities through joint ventures. Cameco’s significant uranium joint venture interests are comprised of:

Producing:
McArthur River	69.81	%
Key Lake	83.33	%
Inkai	60.00	%
Non-producing:
Cigar Lake	50.03	%

	Uranium joint ventures allocate uranium production to each joint venture participant and the joint venture participant derives revenue directly from the sale of such product. Mining and milling expenses incurred by the joint venture are included in the cost of inventory. At December 31, 2009, Cameco’s share of property, plant and equipment in these joint ventures amounted to $2,345,000,000 (2008 — $2,233,000,000) [note 7].
21.	Investment in BPLP
	Cameco holds a 31.6% interest in BPLP, which is governed by an agreement that provides for joint control of the strategic operating, investing and financing activities among the three major partners. Cameco proportionately consolidates its 31.6% interest in BPLP.
	Fuel Supply Agreements
	Cameco has entered into fuel supply agreements with BPLP for the procurement of fabricated fuel. Under these agreements, Cameco will supply uranium, conversion services and fabrication services. Contract terms are at market rates and on normal trade terms. During 2009, sales of uranium and conversion services to BPLP amounted to $84,909,000 (2008 — $58,611,000), approximately 3.7% (2008 — 2.7%) of Cameco’s total revenue. At December 31, 2009, amounts receivable under these agreements totaled $11,505,000 (2008 — $11,131,000).
	The following schedules reflect Cameco’s 31.6% proportionate interest in the balance sheets, statements of earnings and statements of cash flows of BPLP.
	Balance Sheets

(Millions)	2009		2008
Current assets	$	252	$	190
Property, plant and equipment		390		403
Long-term receivables and investments		207		156
	$	849	$	749
Current liabilities	$	129	$	110
Long-term liabilities		320		304
		449		414
Equity		400		335
	$	849	$	749

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Statements of Earnings

(Millions)	2009		2008
Revenue	$	518	$	445
Operating costs		286		285
Earnings before interest and taxes		232		160
Interest		1		13
Earnings before taxes	$	231	$	147

Statements of Cash Flows

(Millions)	2009			2008
Cash provided by operations	$	238		$	173
Cash (used in) provided by investing		(36	)		4
Cash used in financing		(200	)		(178	)

22.	Stock-Based Compensation Plans
	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. Options granted under the stock option plan have an exercise price of not less than the closing price quoted on the TSX for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options vest over three years and expire eight years from the date granted. Options have not been awarded to directors since 2003 and the plan has been amended to preclude the issue of options to directors.
	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 24,580,129 shares have been issued.
	Stock option transactions for the respective years were as follows:

(Number of Options)	2009			2008
Beginning of year		7,120,555			6,422,592
Options granted		1,381,039			1,154,015
Options exercised [note 14]		(453,410	)		(330,852	)
Options forfeited		(108,351	)		(125,200	)
End of year		7,939,833			7,120,555
Exercisable		5,550,148			4,957,129

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Weighted average exercise prices were as follows:

	2009		2008
Beginning of year	$	27.98	$	25.40
Options granted		19.41		38.82
Options exercised		9.79		11.62
Options forfeited		35.68		38.77
End of year	$	27.42	$	27.98
Exercisable	$	26.84	$	22.08

Total options outstanding and exercisable at December 31, 2009 were as follows:

2009			Options Outstanding				Options Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
			Remaining		Exercisable				Exercisable
Option Price Per Share	Number		Life		Price		Number		Price
$5.75 - 13.49		1,824,320		2	$	8.28		1,824,320	$	8.28
13.50 - 32.99		2,892,581		6		23.42		1,533,352		26.99
33.00 - 55.00		3,222,932		6		41.84		2,192,476		42.18
		7,939,833						5,550,148

The foregoing options have expiry dates ranging from February 25, 2010 to March 2, 2018.

Non-vested stock option transactions for the respective years were as follows:

(Number of Options)	2009			2008
Beginning of year		2,163,426			2,726,113
Options granted		1,381,039			1,154,015
Options forfeited		(75,039	)		(93,823	)
Options vested		(1,079,741	)		(1,622,879	)
End of year		2,389,685			2,163,426

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. The impact of the reclassification of the stock options at November 10, 2008, was a decrease in liabilities of $25,987,000 with a corresponding increase in contributed surplus.

For the year ended December 31, 2009, Cameco has recorded a net expense of $4,372,000 (2008 recovery — $50,870,000), related to options that vested during the year.

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The fair value of the options granted each year was determined using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2009			2008
Number of options granted		1,381,039			1,154,015
Average strike price	$	19.41		$	38.82
Expected dividend	$	0.24		$	0.24
Expected volatility		36	%		39	%
Risk-free interest rate		1.6	%		2.9	%
Expected life of option		4.0	years		3.5	years
Expected forfeitures		15	%		15	%
Weighted average grant date fair values	$	5.23		$	11.90

Executive Performance Share Unit (PSU), Deferred Share Unit (DSU), and Other Plans

Commencing in 2005, Cameco provides each plan participant an annual grant of PSUs in an amount determined by the board. Each PSU represents one phantom common share that entitles the participant to a payment of one Cameco common share purchased on the open market, or cash at the board’s discretion, at the end of each three-year period if certain performance and vesting criteria have been met. The final value of the PSUs will be based on the value of Cameco common shares at the end of the three-year period and the number of PSUs that ultimately vest. Vesting of PSUs at the end of the three-year period will be based on total shareholder return over the three years, Cameco’s ability to meet its annual cash flow from operations targets and whether the participating executive remains employed by Cameco at the end of the three-year vesting period. As of December 31, 2009, the total PSUs held by the participants was 233,710 (2008 — 179,810).

Cameco offers a deferred share unit plan to non-employee directors. A DSU is a notional unit that reflects the market value of a single common share of Cameco. 60% of each director’s annual retainer is paid in DSUs. In addition, on an annual basis, directors can elect to receive the remaining 40% of their annual retainer and any additional fees in the form of DSUs. Each DSU fully vests upon award. The DSUs will be redeemed for cash upon a director leaving the board. The redemption amount will be based upon the weighted average of the closing prices of the common shares of Cameco on the TSX for the last 20 trading days prior to the redemption date multiplied by the number of DSUs held by the director. As of December 31, 2009, the total DSUs held by participating directors was 373,921 (2008 — 380,890).

Cameco makes annual grants of bonuses to eligible non-North American employees in the form of phantom stock options. Employees receive the equivalent value of shares in cash when exercised. Options granted under the phantom stock option plan have an award value equal to the closing price quoted on the TSX for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options vest over three years and expire eight years from the date granted. As of December 31, 2009, the number of options held by participating employees was 267,148 (2008 — 277,549) with exercise prices ranging from $5.88 to $46.88 per share (2008 — $4.81 to $46.88) and a weighted average exercise price of $30.61 (2008 — $29.97).

Commencing in 2007, Cameco created an employee share ownership plan whereby both employee and company contributions are used to purchase shares on the open market for employees. The company’s contributions are expensed during the year of contribution. Under the plan, all employees have the opportunity to participate in the program to a maximum of 6% of eligible earnings each year with Cameco matching the first 3% of employee-paid shares by 50%. Cameco contributes $1,000 of shares annually to each employee that is enrolled in the plan. At December 31, 2009, there were 3,306 participants in the plan (2008 — 3,067). The total number of shares purchased in 2009 on behalf of participants, including the company contribution, was 281,207 shares (2008 — 287,847). In 2009, the company’s contributions totaled $5,166,000 (2008 — $4,513,000).

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Cameco has recognized the following expenses (recoveries) under these plans:

	2009		2008
Performance share units	$	3,347	$	(112	)
Deferred share units		4,930		(6,252	)
Phantom stock options		1,531		(2,390	)
Employee share ownership plan		5,166		4,513

	At December 31, 2009, a liability of $18,467,000 (2008 — $10,507,000) was included in the balance sheet to recognize accrued but unpaid expenses for these plans.
23.	Pension and Other Post-Retirement Benefits
	Cameco maintains both defined benefit and defined contribution plans providing pension and post-retirement benefits to substantially all of its employees.
	Under the defined pension benefit plans, Cameco provides benefits to retirees based on their length of service and final average earnings. The non-pension post-retirement plan covers such benefits as group life and supplemental health insurance to eligible employees and their dependants. The costs related to the non-pension post-retirement plans are charged to earnings in the period during which the employment services are rendered. However, these future obligations are not funded.
	The effective date for the most recent valuations for funding purposes on the pension benefit plans is January 1, 2009. The next planned effective date for valuation for funding purposes of the pension benefit plans is set to be January 1, 2012. The status of the defined plans is as follows:

(a) Accrued Benefit Obligation

	Pension Benefit Plans						Other Benefit Plans
	2009			2008			2009			2008
Balance at beginning of year	$	23,580		$	28,441		$	11,842		$	13,143
Current service cost		915			1,198			435			504
Interest cost		1,683			1,569			730			629
Actuarial loss (gain)		5,647			(5,410	)		(442	)		(1,785	)
Plan amendments		—			—			—			52
Foreign exchange		(238	)		100			—			—
Benefits paid		(747	)		(2,318	)		(546	)		(701	)
	$	30,840		$	23,580		$	12,019		$	11,842

(b) Plan Assets

	Pension Benefit Plans
	2009			2008
Fair value at beginning of year	$	20,289		$	23,864
Actual return on plan assets		(708	)		(3,039	)
Employer contributions		5,335			59
Benefits paid		(707	)		(595	)
Fair value at end of year	$	24,209		$	20,289

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Plan assets consist of:

	Pension Benefit Plans
	2009			2008
Asset Category (i)
Equity securities		28	%		35	%
Fixed income		23	%		9	%
Other (ii)		49	%		56	%
Total		100	%		100	%

(i)	The defined benefit plan assets contain no material amounts of related party assets at December 31, 2009 and 2008 respectively.
(ii)	Relates to the value of the refundable tax account held by the Canada Revenue Agency. The refundable total is approximately equal to half of the sum of the realized investment income plus employer contributions less half of the benefits paid by the plan.

(c) Funded Status Reconciliation

	Pension Benefit Plans						Other Benefit Plans
	2009			2008			2009			2008
Fair value of plan assets	$	24,209		$	20,289		$	—		$	—
Accrued benefit obligation		30,840			23,580			12,019			11,842
Funded status of plans — deficit		(6,631	)		(3,291	)		(12,019	)		(11,842	)
Unamortized net actuarial loss		14,404			8,106			—			—
Accrued benefit asset (liability) [notes 9, 13]	$	7,773		$	4,815		$	(12,019	)	$	(11,842	)

(d) Net Pension Expense

	2009			2008
Current service cost	$	915		$	1,198
Interest cost		1,683			1,569
Actual return on plan assets		708			3,039
Actuarial loss (gain)		5,647			(5,410	)
Balance prior to adjustments to recognize the long-term nature of employee future benefit costs		8,953			396
Difference between actual and expected return on plan assets		(1,494	)		(3,859	)
Difference between actuarial loss recognized for year and actual actuarial loss (gain) on accrued benefit obligation for year		(4,974	)		6,258
Defined benefit pension expense		2,485			2,795
Defined contribution pension expense		13,506			13,005
Net pension expense	$	15,991		$	15,800

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	2009			2008
Significant assumptions at December 31
Discount rate		6.0	%		7.0	%
Rate of compensation increase		4.5	%		4.5	%
Long-term rate of return on assets		5.9	%		6.0	%

(e) Other Post-Retirement Benefit Expense (Recovery)

	2009			2008
Current service cost	$	435		$	504
Interest cost		730			629
Actuarial gain		(442	)		(1,785	)
Plan amendment costs		—			52
Other post-retirement benefit expense (recovery)	$	723		$	(600	)

	2009			2008
Significant assumptions at December 31
Discount rate		6.0	%		7.0	%
Initial health care cost trend rate		9.0	%		8.0	%
Cost trend rate declines to		6.0	%		6.0	%
Year the rate reaches its final level		2011			2011

(f) Pension and Other Post-Retirement Benefits Cash Payments

	2009		2008
Employer contributions to funded pension plans	$	5,335	$	59
Benefits paid for unfunded benefit plans		585		2,425
Cash contributions to defined contribution plans		13,506		13,005
Total cash payments for employee future benefits	$	19,426	$	15,489

Benefits paid by the funded pension plan were $707,000 for 2009 (2008 — $595,000). Cameco’s expected contributions for the year ended December 31, 2010 are approximately $288,820 for the pension benefit plans.

The following are estimated future benefit payments, which reflect expected future service:

	Pension Benefit Plans		Other Benefit Plans
2010	$	809	$	617
2011		1,357		710
2012		1,370		751
2013		1,457		841
2014		1,862		844
2015 to 2019		12,817		4,166

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BPLP

BPLP has a funded registered pension plan and an unfunded supplemental pension plan. The funded plan is a contributory, defined benefit plan covering all employees up to the limits imposed by the Income Tax Act. The supplemental pension plan is a non-contributory, defined benefit plan covering all employees with respect to benefits that exceed the limits under the Income Tax Act. These plans are based on years of service and final average salary.

BPLP also has other post-retirement benefit and other post-employment benefit plans that provide for group life insurance, health care and long-term disability benefits. These plans are non-contributory.

The effective date for the most recent valuations for funding purposes on the pension benefit plans is January 1, 2009. The next planned effective date for valuation for funding purposes of the pension benefit plans is set to be January 1, 2010. The status of Cameco’s proportionate share (31.6%) of the defined plans is as follows:

(a) Funded Status Reconciliation

	Pension Benefit Plans						Other Benefit Plans
	2009			2008			2009			2008
Fair value of plan assets	$	635,293		$	546,755		$	—		$	—
Accrued benefit obligation		711,636			617,259			151,826			112,355
Funded status of plans — deficit		(76,343	)		(70,504	)		(151,826	)		(112,355	)
Unrecognized prior service cost		—			—			2,431			2,881
Unamortized net actuarial loss (gain)		112,956			76,565			23,993			(7,564	)
Accrued benefit asset (liability) [notes 9, 13]	$	36,613		$	6,061		$	(125,402	)	$	(117,038	)

(b) Pension Asset Categories

	Asset Allocation						Target Allocation
	2009			2008			2009			2008
Asset Category (i)
Equity securities		60	%		56	%		60	%		60	%
Fixed income		38	%		42	%		40	%		40	%
Cash		2	%		2	%		—			—
Total		100	%		100	%		100	%		100	%

The assets of the pension plan are managed on a going concern basis subject to legislative restrictions. The plan’s investment policy is to maximize returns within an acceptable risk tolerance. Pension assets are invested in a diversified manner with consideration given to the demographics of the plan participants. Rebalancing will take place on a monthly basis if outside of 3% of the target asset allocation.

⁽ⁱ⁾ The defined benefit plan assets contain no material amounts of related party assets at December 31, 2009.

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(c) Net Pension Expense

	2009			2008
Current service cost	$	16,562		$	27,599
Interest cost		41,061			43,375
Actual return on plan assets		(65,486	)		78,229
Actuarial loss (gain)		65,018			(238,037	)
Balance prior to adjustments to recognize the long-term nature of employee future benefit costs		57,155			(88,834	)
Difference between actual and expected return on plan assets		27,286			(121,493	)
Difference between actuarial loss recognized and actual actuarial loss (gain) on accrued benefit obligation for year		(63,677	)		249,271
Net pension expense	$	20,764		$	38,944

	2009			2008
Significant assumptions at December 31
Discount rate		6.0	%		6.8	%
Rate of compensation increase		5.5	%		6.0	%
Long-term rate of return on assets		7.0	%		7.0	%

(d) Other Benefit Plans Expense

	2009			2008
Current service cost	$	4,454		$	7,007
Interest cost		7,284			7,308
Actuarial loss (gain)		31,127			(36,228	)
Balance prior to adjustments to recognize the long-term nature of employee future benefit costs		42,865			(21,913	)
Difference between amortization of past service costs and actual plan amendments for year		450			450
Difference between actuarial (gain) loss recognized and actual actuarial loss (gain) on accrued benefit obligation for year		(31,556	)		37,608
Other benefit plans expense	$	11,759		$	16,145

	2009			2008
Significant assumptions at December 31
Discount rate		5.8	%		6.4	%
Rate of compensation increase		3.5	%		3.5	%
Initial health care cost trend rate		10.0	%		9.5	%
Cost trend rate declines to		5.0	%		5.0	%
Year the rate reaches its final level		2019			2019

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(e) Pension and Other Post-Retirement Benefits Cash Payments

	2009		2008
Employer contributions to funded pension plans	$	48,980	$	37,604
Benefits paid for unfunded benefit plans		4,209		3,815
Total cash payments for employee future benefits	$	53,189	$	41,419

Benefits paid by the funded pension plan were $32,531,000 for 2009 (2008 — $37,015,000). BPLP’s expected contributions for the year ended December 31, 2010 are approximately $56,771,000 for the pension benefit plans.

The following are estimated future benefit payments, which reflect expected future service:

	Pension Benefit Plans		Other Benefit Plans
2010	$	39,924	$	4,989
2011		43,146		5,438
2012		46,583		5,965
2013		50,119		6,513
2014		53,682		7,078
2015 to 2019		317,914		43,343

24. Acquisitions

(a)	Acquisition of Interest in GE-Hitachi Global Laser Enrichment LLC (GLE)
	On June 19, 2008, Cameco, through a wholly owned subsidiary acquired a 24.0% interest in GLE at an initial cost of $123,848,000 (US). In addition, a promissory note in the amount of $73,344,000 (US) was issued in support of future development of the business. The remainder of GLE is owned indirectly by General Electric Company (51%) and Hitachi Ltd. (25%). GLE is in the process of developing uranium enrichment technology. The investment in GLE extends Cameco’s involvement in the front end of the nuclear fuel cycle. The promissory note is payable on demand and bears interest at market rates. The purchase price was financed with cash and debt. The equity method is being used to account for this investment.
	The purchase price allocation of Cameco’s 24.0% investment was as follows:

Cash	$	46,415
Notes receivable		27,488
Property, plant & equipment		8,289
Intangible assets		115,485
Net liabilities		(603	)
Equity interest acquired	$	197,074
Financed by:
Bank debt	$	123,774
Promissory note		73,300
	$	197,074

The amount allocated to the investment in GLE includes an excess purchase price of approximately $110,517,000 over Cameco’s incremental share of the book value of the underlying net assets of the business. The values assigned to assets will be amortized to income over their estimated lives.

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(b)	Acquisition of Interest in Kintyre Uranium Exploration Project (Kintyre)
	On August 11, 2008, a venture comprised of a wholly owned Cameco subsidiary (70%) and Mitsubishi Development Pty Ltd. (30%) acquired a 100% interest in the Kintyre uranium exploration project in the East Pilbara region of Western Australia from Rio Tinto for a total cost of $495,000,000 (US). Kintyre is an advanced exploration project located in Western Australia about 1,250 kilometres northeast of Perth.
	The values assigned to the net assets acquired were as follows:

Property, plant & equipment	$	501,287
Minority interest		(150,386	)
Net assets acquired	$	350,901
Financed by:
Bank debt	$	350,901

(c)	Acquisition of Interest in GoviEx Uranium (GoviEx)
	On August 22, 2008, Cameco, through a wholly owned subsidiary, acquired a 12% interest in GoviEx at an initial cost of $28,125,000 (US). GoviEx is a closely held exploration company formed in 2006 with uranium exploration properties in Niger, Africa. The equity method was being used to account for this interest until June 2009.
	Cameco had an option to acquire an additional 10% interest in GoviEx for $31,250,000 (US) following completion of a due diligence review. Cameco elected not to proceed with the additional investment and it was determined in June 2009, that Cameco no longer had the ability to exert significant influence over the operations of GoviEx. The use of the equity method of accounting was discontinued and the investment in GoviEx is now accounted for as an available-for-sale security.

25.	Restructuring of the Gold Business
	The assets and liabilities related to discontinued operations have been reclassified as assets or liabilities of discontinued operations on the consolidated balance sheets. Operating results related to the discontinued operations have been included in earnings from discontinued operations on the consolidated statements of earnings. Comparative period balances have been restated.

(a)	Sale of Centerra Gold Inc.
	On December 30, 2009, Cameco completed a public offering of 88,618,472 common shares of Centerra for net proceeds of approximately $871,000,000 and recorded a net gain of $374,000,000. Concurrent with this offering, Cameco transferred an additional 25,300,000 common shares of Centerra to Kyrgyzaltyn pursuant to the agreement that Cameco entered into with the Government of the Kyrgyz Republic on April 24, 2009. As a result of the closing of the public offering, and the transfer of the Centerra common shares to Kyrgyzaltyn, Cameco has disposed of its entire interest in Centerra.
(b)	Kyrgyz Share Transfer
	In 2007, the Parliament of the Kyrgyz Republic challenged the legal validity of Kumtor Gold Company (Kumtor) agreements with the Kyrgyz Republic. As a result, Cameco and Centerra entered into discussions with Kyrgyzaltyn, culminating in the signing of two agreements in August 2007 providing for the transfer of a certain number of Centerra shares to Kyrgyzaltyn, subject to certain conditions. These agreements, however, were never ratified by the Kyrgyz parliament.
	On April 24, 2009, Cameco, Centerra, the Kyrgyz government and other parties signed a new 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 and Cameco transferred 25,300,000 shares of its 113,918,000 Centerra common shares to a custodian, to be held in escrow, for ultimate release to Kyrgyzaltyn, subject to certain conditions. Cameco retained its voting rights over these shares while they were held in escrow. As a result of the public offering concluded on December 30, 2009, Cameco released the shares held in escrow to Kyrgyzaltyn.
	The total amount of the after-tax loss related to this agreement is $179,000,000, of which an expense of $46,000,000 was recorded in 2009, a recovery of $20,000,000 in 2008 and an expense of $153,000,000 in 2007.

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(c)	Financial Results of Discontinued Operations
	The results of the operations of Centerra are presented under “discontinued operations” on the consolidated statements of earnings. The following table presents the components of the discontinued operations amounts, net of future income tax expenses [note 18]:

(Millions)	2009			2008
Sale of Centerra	$	374.2		$	—
Kyrgyz share transfer		(45.9	)		19.9
Operating earnings		54.1			64.1
Earnings from discontinued operations	$	382.4		$	84.0

The following table presents the components of the operating results of Centerra:

(Millions)	2009		2008
Revenue	$	770.2	$	676.6
Expenses
Products and services sold		440.4		371.3
Depreciation, depletion and reclamation		122.4		85.9
Exploration		28.5		25.0
Other		37.3		33.9
Earnings before income taxes and minority interest		141.6		160.5
Income tax expense		33.4		36.6
Minority interest		54.1		59.8
Operating earnings	$	54.1	$	64.1

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26. Commitments and Contingencies

(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 has 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, and has amended it as required, most recently on August 7, 2009. BE served its answer and counter-statement on December 22, 2008, most recently amended on July 8, 2009, and the Consortium served its reply and answer to counter-statement on January 22, 2009, most recently amended on August 7, 2009.
	The Unit 8 steam generators require on-going monitoring and maintenance as a result of the defect. In addition to the $64,558,200 in damages sought in the notice of claim, the claim seeks an additional $4,900,000 spent on inspection, monitoring and maintenance of Unit 8, and $31,900,000 in costs for future monitoring and maintenance, as well as repair costs and lost revenue due to anticipated unplanned outages as a consequence of the defect in Unit 8. The initial claim had also sought damages for the early replacement of the Unit 8 steam generators due to the defect shortening their useful operating lives. However, recent inspection data and analysis of the condition of the Unit 8 steam generators now indicates that they will continue to function until the end of the Consortium’s lease of the Bruce Power facility in 2018, as was expected at the time the MPA was entered into. The claim for early replacement was thus abandoned via an amendment to the claim on August 7, 2009. The parties have completed oral discoveries and are currently in the process of completing answers to undertakings given during discoveries. The hearing is scheduled to take place in April and May 2010.
	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.
(b)	Annual supplemental rents of $26,000,000 (subject to CPI) per operating reactor are payable by BPLP to OPG. Should the hourly annual average price of electricity in Ontario fall below $30 per megawatt hour, the supplemental rent reduces to $13,000,000 per operating reactor. In accordance with the Sublease Agreement, Bruce A L.P. will participate in its share of any adjustments to the supplemental rent.
(c)	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 December 31, 2009, Cameco’s actual exposure under these assurances was nil.
ii)	Guarantees to customers under power sales agreements of up to $35,300,000. At December 31, 2009, Cameco’s actual exposure under these guarantees was $28,300,000.
iii)	Termination payments to OPG pursuant to the lease agreement of $58,300,000. The fair value of these guarantees is nominal.

(d) 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, 2019 or one year after the shutdown of the BPLP units. During 2009, BPLP became entitled to $526,000,000 under this agreement and currently expects to repay $12,000,000. The remaining $514,000,000 was recognized as revenue with Cameco’s share being $162,000,000.

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(e)	Cameco’s North American workforce includes about 3,000 employees, of which approximately 850 (28%) belong to three separate labour unions. A collective agreement for one of the three unions, representing about 250 employees, is set to expire in 2010.
(f)	At December 31, 2009, Cameco’s purchase commitments, the majority of which are fixed price uranium and conversion purchase arrangements, were as follows:

	(Millions (US))
2010	$	134
2011		150
2012		169
2013		326
2014		27
Thereafter		34
Total	$	840

27.	Financial Instruments
	The majority of revenues at Cameco are derived from the sale of uranium products, and electricity through its investment in BPLP. Cameco’s uranium product financial results are closely related to the long and short-term market price of uranium sales and conversion services. Prices fluctuate and can be affected by demand for nuclear power, worldwide production and uranium levels, and political and economic conditions in uranium producing and consuming countries. BPLP’s revenue from electricity is affected by changes in electricity prices associated with an open spot market for electricity in Ontario. Financial results for Cameco are also impacted by changes in foreign currency exchange rates and other operating risks. Finally, certain financial assets are subject to credit risks, including cash and securities, accounts receivable, and commodity and currency instruments.
	To mitigate risks associated with certain financial assets, Cameco will hold positions with a variety of large creditworthy institutions. Sales of uranium products, with short payment terms, are made to customers that management believes are creditworthy.
	To mitigate risks associated with foreign currency on its sale of uranium products, Cameco enters into forward sales contracts to establish a price for future delivery of the foreign currency.
	To mitigate risks associated with the fluctuations in the market price for uranium products, Cameco seeks to maintain a portfolio of uranium product sales contracts with a variety of delivery dates and pricing mechanisms that provide a degree of protection from price volatility. To mitigate risks associated with the fluctuations in the market price for electricity, BPLP enters into various energy and sales related contracts that qualify as cash flow hedges. These instruments have terms ranging from 2010 to 2015. At December 31, 2009, the marked-to-market gain on BPLP’s sales contracts was $96,000,000.
	All financial instruments measured at fair value are categorized into one of three hierarchy levels, described below, for disclosure purposes. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities:

Level 1 — Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 — Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 — Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

When the inputs used to measure fair value fall within more than one level of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measure in its entirety.

Except as otherwise disclosed, the fair market value of Cameco’s financial assets and liabilities approximates the carrying amount as a result of the short-term nature of the instruments, or the variable interest rate associated with the instruments, or the fixed interest rate of the instruments being similar to market rates.

125

The fair values of Cameco’s privately held available-for-sale securities, as described in note 9, have not been disclosed because of the unavailability of a quoted market price in an active market. Cameco does not currently have plans to dispose of any of these investments.

The following tables present Cameco’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis.

As at December 31, 2009

Description	Total			Level 1		Level 2			Level 3
Derivative instrument assets	$	210,381		$	—	$	197,381		$	13,000
Available-for-sale securities [notes 5, 9]		207,473			207,473		—			—
Derivative instrument liabilities		(40,957	)		—		(39,957	)		(1,000	)
Net	$	376,897		$	207,473	$	157,424		$	12,000

As at December 31, 2008

Description	Total			Level 1		Level 2			Level 3
Derivative instrument assets	$	81,787		$	—	$	81,787		$	—
Available-for-sale securities [note 9]		3,718			3,718		—			—
Derivative instrument liabilities		(120,403	)		—		(120,403	)		—
Net	$	(34,898	)	$	3,718	$	(38,616	)	$	—

The fair value of a financial instrument is the amount at which the financial instrument could be exchanged in an arm’s-length transaction between knowledgeable and willing parties under no compulsion to act. Fair values of identical instruments traded in active markets are determined by reference to last quoted prices, in the most advantageous active market for that instrument. In the absence of an active market, we determine fair values based on quoted prices for instruments with similar characteristics and risk profiles. Fair values of financial instruments determined using valuation models require the use of inputs. In determining those inputs, we look primarily to external, readily observable market inputs, when available, including factors such as interest rate yield curves, currency rates, and price and rate volatilities, as applicable. In some circumstances, we use input parameters that are not based on observable market data. In these cases, we may adjust model values to reflect the valuation uncertainty in order to determine what the fair value would be based on the assumptions that market participants would use in pricing the financial instrument. These adjustments are made in order to determine the fair value of the instruments.

We make valuation adjustments for the credit risk of our derivative portfolios in order to arrive at their fair values. These adjustments take into account the creditworthiness of our counterparties.

Equity-accounted investments and financial instruments classified as available-for-sale comprise actively traded debt and equity securities and are carried at fair value based on available quoted prices.

There were no significant transfers between level 1 and level 2 of the fair value hierarchy. Transfers from level 2 to level 3 are noted in the preceding tables. Transfers into level 3 are comprised of BPLP derivative financial instruments with contract terms extending beyond 36 months. Previously, all BPLP derivative financial instruments were classified as level 2, but given the recent decline in electricity prices as a result of the recession, the liquidity in the market was significantly reduced, resulting in a lack of an active market and observable market inputs beyond 36 months.

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Derivatives

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

As at December 31, 2009

	Cameco			BPLP			Total
Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(2,736	)	$	9,082		$	6,346
Foreign currency contracts		67,031			—			67,031
Cash flow hedges:
Energy and sales contracts		—			96,047			96,047
Net	$	64,295		$	105,129		$	169,424
Classification:
Current portion of long-term receivables, investments and other [note 9]	$	66,972		$	87,439		$	154,411
Long-term receivables, investments and other [note 9]		1,460			54,510			55,970
Current portion of other liabilities [note 13]		(445	)		(19,595	)		(20,040	)
Other liabilities [note 13]		(3,692	)		(17,225	)		(20,917	)
Net	$	64,295		$	105,129		$	169,424

As at December 31, 2008

	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 9]	$	5,793		$	43,654		$	49,447
Long-term receivables, investments and other [note 9]		—			32,340			32,340
Current portion of other liabilities [note 13]		(110,918	)		(73	)		(110,991	)
Other liabilities [note 13]		(8,951	)		(461	)		(9,412	)
Net	$	(114,076	)	$	75,460		$	(38,616	)

127

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

For the year ended December 31, 2009

	Cameco			BPLP			Total
Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(4,764	)	$	(4,737	)	$	(9,501	)
Foreign currency contracts		(234,066	)		—			(234,066	)
Interest rate contracts		401			—			401
Cash flow hedges:
Energy and sales contracts		—			(638	)		(638	)
Net	$	(238,429	)	$	(5,375	)	$	(243,804	)

For the year ended December 31, 2008

	Cameco		BPLP			Total
Non-hedge derivatives:
Embedded derivatives — sales contracts	$	18,052	$	2,841		$	20,893
Foreign currency contracts		179,673		—			179,673
Interest rate contracts		906		—			906
Cash flow hedges:
Energy and sales contracts		—		(1,031	)		(1,031	)
Ongoing hedge inefficiency		2,210		—			2,210
Net	$	200,841	$	1,810		$	202,651

Over the next 12 months, based on current exchange rates, Cameco expects an estimated $34,260,000 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 $63,876,000 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.

Currency

At December 31, 2009, Cameco had $1,490,000,000 (US) in forward contracts at an average exchange rate of $1.09 and €34,200,000 at an average exchange rate of $1.46. The foreign currency contracts are scheduled for use as follows:

(Millions)	US		Rate		Cdn		Euro		Rate		US
2010	$	880		1.08	$	950	€	13		1.45	$	19
2011		475		1.12		532		16		1.47		24
2012		135		1.06		143		5		1.46		7
Total	$	1,490		1.09	$	1,625	€	34		1.46	$	50

These positions consist entirely of forward sales contracts. The average exchange rate reflects the original spot prices at the time the contracts were entered into and includes forward points. The realized exchange rate will depend on the forward premium (discount) that is earned (paid) as contracts are utilized. Of these amounts, $1,325,000,000 of the US-denominated contracts and $34,000,000 of the Euro-denominated contracts mature in 2010. The remaining $165,000,000 in US-denominated contracts matures in 2011.

128

28.	Per Share Amounts
	Per share amounts have been calculated based on the weighted average number of common shares outstanding during the year. The weighted average number of paid shares outstanding in 2009 was 387,955,503 (2008 — 350,130,431).

	2009		2008
Basic earnings per share computation
Net earnings	$	1,099,422	$	450,117
Weighted average common shares outstanding		387,956		350,130
Basic earnings per common share	$	2.83	$	1.29
Diluted earnings per share computation
Net earnings	$	1,099,422	$	450,117
Weighted average common shares outstanding		387,956		350,130
Dilutive effect of stock options		1,977		1,982
Weighted average common shares outstanding, assuming dilution		389,933		352,112
Diluted earnings per common share	$	2.82	$	1.28

29.	Segmented Information
	Cameco has three reportable segments: uranium, fuel services and electricity. The uranium segment involves the exploration for, mining, milling, purchase and sale of uranium concentrate. The fuel services segment involves the refining, conversion and fabrication of uranium concentrate and the purchase and sale of conversion services. The electricity segment involves the generation and sale of electricity.
	Cameco’s reportable segments are strategic business units with different products, processes and marketing strategies.
	Accounting policies used in each segment are consistent with the policies outlined in the summary of significant accounting policies.

129

(a)	Business Segments
	2009

				Fuel				Inter-
(Millions)	Uranium			Services		Electricity		Segment			Total
Revenue	$	1,551.3		$	276.3	$	518.3	$	(30.9	)	$	2,315.0
Expenses
Products and services sold		901.4			203.9		243.5		(24.5	)		1,324.3
Depreciation, depletion and reclamation		161.9			22.8		55.6		0.3			240.6
Exploration		49.1			—		—		—			49.1
Other		15.9			21.3		—		—			37.2
Cigar Lake remediation		17.9			—		—		—			17.9
Gain on sale of assets		(0.6	)		—		—		—			(0.6	)
Non-segmented expenses												(120.4	)
Earnings (loss) before income taxes and minority interest		405.7			28.3		219.2		(6.7	)		766.9
Income tax expense												52.9
Minority interest												(3.0	)
Net earnings from continuing operations											$	717.0
Assets	$	5,956.1		$	383.9	$	904.4	$	—		$	7,244.4
Intangibles	$	—		$	97.7	$	—	$	—		$	97.7
Capital expenditures for the year	$	333.3		$	20.7	$	38.7	$	—		$	392.7

2008 (Recast)

				Fuel				Inter-
(Millions)	Uranium			Services		Electricity		Segment			Total
Revenue	$	1,512.4		$	251.7	$	445.3	$	(26.8	)	$	2,182.6
Expenses
Products and services sold		712.0			217.5		245.5		(28.5	)		1,146.5
Depreciation, depletion and reclamation		135.9			26.6		46.0		(1.0	)		207.5
Exploration		53.2			—		—		—			53.2
Other		37.9			2.0		—		—			39.9
Cigar Lake remediation		11.4			—		—		—			11.4
Gain on sale of assets		(4.1	)		—		—		—			(4.1	)
Non-segmented expenses												386.7
Earnings before income taxes and minority interest		566.1			5.6		153.8		2.7			341.5
Income tax recovery												(24.4	)
Minority interest												(0.2	)
Net earnings from continuing operations											$	366.1
Assets	$	4,595.7		$	311.3	$	826.1	$	—		$	5,733.1
Intangibles	$	—		$	101.4	$	—	$	—		$	101.4
Capital expenditures for the year	$	421.1		$	77.2	$	32.8	$	—		$	531.1

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(b) Geographic Segments

(Millions)	2009		2008
Revenue from products and services
Canada — domestic	$	739.2	$	589.7
— export		194.9		291.3
United States		1,380.9		1,301.6
	$	2,315.0	$	2,182.6
Assets
Canada	$	5,755.7	$	4,121.9
United States		662.9		798.2
Australia		553.1		505.1
Europe		139.0		194.9
Kazakhstan		231.4		214.4
	$	7,342.1	$	5,834.5

(c)	Major Customers
	Cameco relies on a small number of customers to purchase a significant portion of its uranium concentrates and uranium conversion services. During 2009, revenues from one customer of Cameco’s uranium and fuel services segments represented approximately $252,699,000 (2008 — $106,799,000), about 14% (2008 — 6%) of Cameco’s total revenues from these segments. As customers are relatively few in number, accounts receivable from any individual customer may periodically exceed 10% of accounts receivable depending on delivery schedules.
	During 2009, electricity revenues from one customer of BPLP represented approximately 5% (2008 — 4%) of BPLP’s total revenues.

30.	Related Party Transactions
	Cameco purchases a significant amount of goods and services for its Saskatchewan mining operations from northern Saskatchewan suppliers to support economic development in the region. One such supplier is Points Athabasca Contracting Ltd. and the president of the company became a member of the board of directors of Cameco during 2009. In 2009, Cameco paid Points Athabasca Contracting Ltd. $30,800,000 (2008 — $38,500,000) for construction and contracting services. The transactions were conducted in the normal course of business and were accounted for at the exchange amount. Accounts payable include a balance of $230,000 (2008 — $940,000) resulting from these transactions.
31.	Comparative Figures
	Certain prior year balances have been reclassified to conform to the current financial statement presentation.

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INVESTOR INFORMATION

Common Shares

Toronto (CCO) | New York (CCJ)

Transfer Agents and Registrars

For information on common share holdings, dividend cheques, lost share certificates and address changes, contact:

In Canada:	In the United States:
CIBC Mellon Trust Company	BNY Mellon Shareowner Services
P.O. Box 7010	480 Washington Blvd.
Adelaide Street Postal Station	Jersey City, New Jersey 07310
Toronto, Ontario M5C 2W9	U.S.A.
Canada

Telephone:

1-800-387-0825 (toll-free within Canada and the United States)

OR

1-416-643-5500 (from any country other than Canada and the United States)

Fax:

1-416-643-5501 (all countries)

cibcmellon.com/investorinquiry

Annual Meeting

The annual meeting of shareholders of Cameco Corporation is scheduled
to be held on Wednesday, May 26, 2010, at 1:30 p.m. at Cameco’s head
office in Saskatoon, Saskatchewan.

Dividend Policy

The board of directors has established a policy of paying a quarterly dividend of $0.07 ($0.28 per year) per common share. This policy will be reviewed from time to time in light of the company’s cash flow, earnings, financial position and other relevant factors.

Inquiries

Cameco Corporation
2121 — 11th Street West
Saskatoon, Saskatchewan S7M 1J3
Phone: 306-956-6200
Fax: 306-956-6201

Cameco has a plan for growth —

Fuelled from diverse sources.

With 479 million pounds of proven and probable U₃O₈
reserves, Cameco has the potential to “Double U” by 2018.

cameco.com