EX-99.1 2 d764353dex991.htm EX-99.1 EX-99.1

EXHIBIT 99.1

Cameco Corporation

2023 Annual Information Form

March 22, 2024


LOGO

Cameco Corporation

2023 Annual information form

March 22, 2024


Contents

 

Important information about this document

     1  

Our business

     6  

Our vision, values and strategy

     11  

Operations, projects and investments

     25  

Uranium – Tier-one operations

     26  

Uranium – Tier-two operations

     71  

Uranium – Advanced projects

     73  

Uranium – Exploration

     74  

Fuel services

     76  

Westinghouse Electric Company

     79  

Other nuclear fuel cycle investments

     86  

Mineral reserves and resources

     87  

Our ESG principles and practices

     92  

The regulatory environment

     96  

Risks that can affect our business

     107  

1 – Operational risks

     107  

2 – Financial risks

     114  

3 – Governance and compliance risks

     121  

4 – Social risks

     123  

5 – Environmental risks

     124  

6 – Strategic risks

     125  

Legal proceedings

     134  

Investor information

     134  

Governance

     139  

Appendix A

     144  


Important information about this document

This annual information form (AIF) for the year ended December 31, 2023 provides important information about Cameco Corporation. It describes our history, our markets, our operations and projects, our mineral reserves and resources, our approach to environmental, social and governance matters (ESG), our regulatory environment, the risks we face in our business and the market for our shares, among other things.

It also incorporates by reference:

 

•  our management’s discussion and analysis for the year ended December 31, 2023 (2023 MD&A), which is available on SEDAR+ (sedarplus.com) and on EDGAR (sec.gov) as an exhibit to our Annual Report on Form 40-F; and

 

•  our audited consolidated financial statements for the year ended December 31, 2023 (2023 financial statements), which are also available on SEDAR+ and on EDGAR as an exhibit to our Annual Report on Form 40-F.

   Throughout this document, the terms we, us, our, the company and Cameco mean Cameco Corporation and its subsidiaries.

We have prepared this document to meet the requirements of Canadian securities laws, which are different from what United States (US) securities laws require.

The information contained in this AIF is presented as at December 31, 2023, the last day of our most recently completed financial year, and is based on what we knew as of March 15, 2024, except as otherwise stated.

Reporting currency and financial information

Unless we have specified otherwise, all dollar amounts are in Canadian dollars. Any references to $(US) mean US dollars.

The financial information in this AIF has been presented in accordance with International Financial Reporting Standards (IFRS).

Caution about forward-looking information

Our AIF and the documents incorporated by reference include 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 US securities laws. We refer to them in this AIF as forward-looking information. In particular, the discussions under the headings Market overview and developments, Building a balanced portfolio, and Westinghouse Electric Company in this AIF contain forward-looking information.

Key things to understand about the forward-looking information in this AIF:

 

   

It typically includes words and phrases about the future, such as anticipate, believe, estimate, expect, plan, will, intend, goal, target, forecast, project, strategy and outlook (see examples on page 2).

 

   

It represents our current views and can change significantly.

 

   

It is based on a number of material assumptions, including those we have listed below on pages 4 and 5, which may prove to be incorrect.

 

   

Actual results and events may be significantly different from what we currently expect, due to the risks associated with our business. We list a number of these material risks below. We recommend you also review other parts of this document, including Risks that can affect our business starting on page 107, and our 2023 MD&A, 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 Canadian or US securities laws.

 

2023 ANNUAL INFORMATION FORM    Page 1


Examples of forward-looking information in this AIF

 

    our view that we have the strengths to take advantage of the world’s rising demand for safe, reliable, affordable, and carbon-free energy, and our vision to energize a clean-air world

 

    that we will continue to focus on delivering our products responsibly and addressing the environmental, social and governance (ESG) risks and opportunities that we believe will make our business sustainable and will build long-term value

 

    our expectations for the future of the nuclear industry and the potential for new enrichment technology, including that nuclear power must be a central part of the solution to the world’s shift to a low-carbon climate-resilient economy and that our investment in enrichment technology, if successful, will allow us to participate in the entire nuclear fuel value chain

 

    our expectations about 2024 and future global uranium supply, consumption, contracting, demand, geopolitical issues and the market, including the discussion under the headings Market overview and developments and Building a balanced portfolio

 

    our expectations about 2024 and future consumption of conversion services

 

    our expectations about 2024 and future global consumption, contracting, demand, geopolitical and market issues relating to Westinghouse Electric Company’s (Westinghouse): fuel fabrication for light water reactors; reactor maintenance and other services; design, engineering, and support for the development of new reactors; and nuclear sustainability services

 

    our expectations about when future reactors will come online

 

    our efforts to participate in the commercialization and deployment of small modular reactors (SMRs) and contribute to the mitigation of global climate change and help to provide energy security and affordability by exploring SMRs and other emerging opportunities within the fuel cycle

 

    our expectations about future demand for SMRs

 

    our expectation that the US Department of Energy (DOE) will make available a portion of its excess uranium inventory over the next two decades

 

    the discussion under the heading Our ESG principles and practices, including our belief there is a significant opportunity for us to be part of the solution to combat climate change and that we are well positioned to deliver significant long-term business value

 

    our ability to implement and execute our overarching low-carbon transition strategy

 

    our expectations relating to care and maintenance costs

 

    our expectations of executing major supply contracts
    our ability to capitalize on the current backlog of long-term contracting as a proven and reliable supplier with tier-one productive capacity and a record of honouring supply commitments, and to increase value throughout these price cycles

 

    future plans and expectations for our uranium properties, advanced projects, and fuel services operating sites, including production levels and the suspension of production at certain properties, pace of advancement and expansion capacity, and carbon reduction targets

 

    estimates of operating and capital costs and mine life for our tier one uranium operations

 

    our expectations regarding our licence for Crow Butte

 

    our ability to successfully negotiate a new collective agreement for the unionized employees at McArthur River

 

    estimated decommissioning and reclamation costs for uranium properties and fuel services operating sites

 

    Kazatomprom’s planned production levels and timing for JV Inkai in 2024

 

    our mineral reserve and resource estimates

 

    our expectations that the price of uranium, production costs, and recovery rates will allow us to operate or develop a particular site or sites

 

    estimates of metallurgical recovery and other production parameters for each uranium property

 

    production estimates at the McArthur River/Key Lake, Cigar Lake and Inkai operations, and the Port Hope UF6 conversion facility

 

    our discussion of the ongoing conflict between Russia and Ukraine

 

    our views on our ability to align our production with market opportunities and our contract portfolio

 

    our expectation regarding opportunities to improve operational effectiveness and to reduce our impact on the environment, including through the use of digital and automation technologies

 

    our expectations relating to our Canada Revenue Agency (CRA) transfer pricing dispute, including our confidence that the courts would reject any attempt by CRA to utilize the same or similar positions for other tax years currently in dispute and our belief that CRA should return the full amount of cash and security that has been paid or otherwise secured by us

 

    our expectations regarding the amount of security we will need to provide to CRA in connection with the tax debts CRA considers us owing for 2017
 

 

2023 ANNUAL INFORMATION FORM    Page 2


    our investments allowing us to participate in the entire nuclear fuel value chain; fuel fabrication; reactor maintenance; development of new reactors; and nuclear sustainability services
  the discussion of our expectations relating to our recent acquisition of a 49% interest in Westinghouse, including its future prospects, our belief that Westinghouse is well-positioned for long-term growth driven by the expected increase in global demand for nuclear power, our expectation that the acquisition will be transformative and accretive to Cameco, our expectation that the investment will augment the core of our business and offer more solutions to our customers across the nuclear fuel cycle various factors and drivers for Westinghouse’s business segments, our expectation that there will be new opportunities for Westinghouse to compete for and win new business and other matters discussed under the heading Westinghouse Electric Company
 

 

Material risks

 

    actual sales volumes or market prices for any of our products or services are lower than we expect, or cost of sales is higher than we expect, for any reason, including changes in market prices, loss of market share to a competitor, trade restrictions, geopolitical issues or the impact of a pandemic

 

    we are adversely affected by changes in currency exchange rates, royalty rates, tax rates or inflation

 

    our production costs are higher than planned, or necessary supplies are not available or not available on commercially reasonable terms

 

    our strategies may change, be unsuccessful or have unanticipated consequences, or we may not be able to achieve anticipated operational flexibility and efficiency

 

    changing views of governments regarding the pursuit of carbon reduction strategies or our view may prove to be inaccurate on the role of nuclear power in pursuit of those strategies

 

    our estimates and forecasts prove to be inaccurate, including production, purchases, deliveries, cash flow, revenue, costs, decommissioning, reclamation expenses, or receipt of future dividends from JV Inkai

 

    that we may not realize the expected benefits from the Westinghouse acquisition

 

    Westinghouse fails to generate sufficient cash flow to fund its approved annual operating budget or make quarterly distributions to the partners

 

    we are unable to enforce our legal rights under our existing agreements, permits or licences

 

    we are subject to litigation or arbitration that has an adverse outcome

 

    that the courts may accept the same, similar or different positions and arguments advanced by CRA to reach decisions that are adverse to us for other tax years

 

    the possibility of a materially different outcome in disputes with CRA for other tax years
    our uranium suppliers or purchasers fail to fulfil their commitments

 

    our McArthur River or Cigar Lake development, mining or production plans are delayed or do not succeed for any reason

 

    our production plans for our Port Hope UF6 conversion facility do not succeed for any reason

 

    McClean Lake’s mill production plan is delayed or does not succeed for any reason

 

    water quality and environmental concerns could result in a potential deferral of production and additional capital and operating expenses required for the Cigar Lake and McArthur River/Key Lake operations

 

    JV Inkai’s development, mining or production plans are delayed or do not succeed for any reason or JV Inkai is unable to transport and deliver its production

 

    we may be unsuccessful in pursuing innovation or implementing advanced technologies, including the risk that the commercialization and deployment of SMRs or new enrichment technology may incur unanticipated delays or expenses, or ultimately prove to be unsuccessful

 

    the risk that we may become unable to pay future dividends at the expected rate

 

    our expectations relating to care and maintenance costs prove to be inaccurate

 

    the risk that we may not be able to refinance our debenture on terms that are as favourable as we expect, or that we may not realize our expected cash flow, or meet our expectations in reducing total debt

 

    we are affected by natural phenomena, including inclement weather, fire, flood and earthquakes

 

    the risks that generally apply to all our operations and advanced uranium projects that are discussed under the heading Risks that can affect our business in this AIF and under the heading Managing the risks in our 2023 MD&A
 

 

2023 ANNUAL INFORMATION FORM    Page 3


    that CRA does not agree that the court rulings for the years that have been resolved in Cameco’s favour should apply to subsequent tax years

 

    that CRA will not return all or substantially all of the cash and security that has been paid or otherwise secured in a timely manner, or at all

 

    there are defects in, or challenges to, title to our properties

 

    our mineral reserve and resource estimates are not reliable, or there are unexpected or challenging geological, hydrological or mining conditions

 

    we are affected by environmental, safety and regulatory risks

 

    we are adversely affected by subsurface contamination from current or legacy operations

 

    necessary permits or approvals from government authorities cannot be obtained or maintained

 

    we are affected by political risks, including any potential future unrest in Kazakhstan

 

    operations are disrupted due to problems with our own or our suppliers’ or customers’ facilities, the unavailability of reagents, equipment, operating parts and supplies critical to production, equipment failure, lack of tailings capacity, labour shortages, labour relations issues, strikes or lockouts, underground floods, cave-ins, ground movements, tailings dam failures, transportation disruptions or accidents, aging infrastructure, or other development and operating risks

 

    we are affected by terrorism, sabotage, blockades, civil unrest, social or political activism, outbreak of illness (such as a pandemic), accident or a deterioration in political support for, or demand for, nuclear energy

 

    a major accident at a nuclear power plant

 

    we are impacted by changes in the regulation or public perception of the safety of nuclear power plants, which adversely affect the construction of new plants, the re-licensing of existing plants, and the demand for uranium

 

    government laws, regulations, policies, or decisions that adversely affect us, including tax and trade laws and sanctions on nuclear fuel imports
    the risk that Westinghouse may not be able to meet sales commitments for any reason

 

    the risk that Westinghouse may not achieve the expected growth or success in its business

 

    the risk to Westinghouse’s business associated with potential production disruptions, including those related to global supply chain disruptions, global economic uncertainty, political volatility, labour relations issues, and operating risks

 

    the risk that Westinghouse’s strategies may change, be unsuccessful, or have unanticipated consequences

 

    the risk that Westinghouse may fail to comply with nuclear licence and quality assurance requirements at its facilities

 

    the risk that Westinghouse may be delayed in announcing its future financial results

 

    the risk that Westinghouse may lose protections against liability for nuclear damage, including discontinuation of global nuclear liability regimes and indemnities

 

    the risk that increased trade barriers may adversely impact Westinghouse’s business

 

    the risk that Westinghouse may default under its credit facilities, impacting adversely Westinghouse’s ability to fund its ongoing operations and to make distributions

 

    the risk that liabilities at Westinghouse may exceed our estimates and the discovery of unknown or undisclosed liabilities

 

    the risk that occupational health and safety issues may arise at Westinghouse’s operations

 

    the risk that there may be disputes between us and Brookfield regarding our strategic partnership

 

    the risk that we may default under the governance agreement with Brookfield, including us losing some or all of our interest in Westinghouse

 

 

 

Material assumptions

 

    our expectations regarding sales and purchase volumes and prices for uranium and fuel services, cost of sales, trade restrictions, inflation, and that counterparties to our sales and purchase agreements will honour their commitments

 

    our expectations for the nuclear industry, including its growth profile, market conditions, geopolitical issues, and the demand for and supply of uranium

 

    the continuing pursuit of carbon reduction strategies by governments and the role of nuclear in the pursuit of those strategies
    that no major accident at a nuclear power plant will occur

 

    the absence of new and adverse government regulations, policies or decisions

 

    JV Inkai’s development, mining and production plans succeed, and that JV Inkai will be able to transport and deliver its production

 

    the ability of JV Inkai to pay dividends

 

    that care and maintenance costs will be as expected
 

 

2023 ANNUAL INFORMATION FORM    Page 4


    our expectations regarding spot prices and realized prices for uranium

 

    that the construction of new nuclear power plants and the re-licensing of existing nuclear power plants will not be more adversely affected than expected by changes in regulation or in the public perception of the safety of nuclear power plants

 

    our ability to continue to supply our products and services in the expected quantities and at the expected times

 

    our expected production levels for Cigar Lake, McArthur River/Key Lake, JV Inkai and our fuel services operating sites

 

    our cost expectations, including production costs, operating costs, and capital costs

 

    our expectations regarding tax payments, tax rates, royalty rates, currency exchange rates and interest rates

 

    our entitlement to and ability to receive expected refunds and payments from CRA

 

    in our dispute with CRA, that courts will reach consistent decisions for other tax years that are based upon similar positions and arguments

 

    that CRA will not successfully advance different positions and arguments that may lead to different outcomes for other tax years

 

    our expectation that we will recover all or substantially all of the amounts paid or secured in respect of the CRA dispute to date

 

    our decommissioning and reclamation estimates, including the assumptions upon which they are based, are reliable

 

    our mineral reserve and resource estimates, and the assumptions upon which they are based, are reliable

 

    our understanding of the geological, hydrological and other conditions at our uranium properties

 

    our Cigar Lake and McArthur River development, mining and production plans succeed

 

    our Key Lake mill production plan succeeds

 

    the McClean Lake mill is able to process Cigar Lake ore as expected

 

    our production plans for our Port Hope UF6 conversion facility succeed

 

    our operations are not significantly disrupted as a result of political instability, nationalization, terrorism, sabotage, blockades, civil unrest, breakdown, natural disasters, outbreak of illness (such as a pandemic), governmental or political actions, litigation or arbitration proceedings, cyber-attacks, the unavailability of reagents, equipment, operating parts and supplies critical to production, labour shortages, labour relations issues, strikes or lockouts, underground floods, cave-ins, ground movements, tailings dam failure, lack of tailings capacity, transportation disruptions or accidents, aging infrastructure or other development or operating risks
    our and our contractors’ ability to comply with current and future environmental, safety and other regulatory requirements, and to obtain and maintain required regulatory approvals

 

    that we will be successful in our efforts to renew our operating license for Crow Butte

 

    nuclear power and uranium demand, supply, consumption, long-term contracting, growth in the demand for and global public acceptance of nuclear energy, and prices

 

    Westinghouse’s ability to generate cash flow and fund its approved annual operating budget and make quarterly distributions to the partners

 

    our ability to compete for additional business opportunities so as to generate additional revenue for us as a result of the Westinghouse acquisition

 

    Westinghouse’s production, purchases, sales, deliveries, and costs

 

    the market conditions and other factors upon which we have based Westinghouse’s future plans and forecasts

 

    Westinghouse’s ability to mitigate adverse consequences of delays in production and construction

 

    the success of Westinghouse’s plans and strategies

 

    that there will not be any significant adverse consequences to Westinghouse’s business resulting from business disruptions, including those relating to supply disruptions, economic or political uncertainty and volatility, labour relation issues, and operating risks

 

    Westinghouse’s ability to announce future financial results when expected

 

    Westinghouse will comply with the covenants in its credit agreements

 

    Westinghouse will comply with nuclear license and quality assurance requirements at its facilities

 

    Westinghouse maintaining protections against liability for nuclear damage, including continuation of global nuclear liability regimes and indemnities

 

    that known and unknown liabilities at Westinghouse will not materially exceed our estimates

 

    the absence of disputes between us and Brookfield regarding our strategic partnership, and that we do not default under the governance agreement with Brookfield

 

    that we will be able to refinance our senior unsecured debentures, and assumptions regarding our expected cash flow and our ability to reduce total debt
 

 

2023 ANNUAL INFORMATION FORM    Page 5


Our business

 

Our vision is to energize a clean-air world. We have a 35-year proven track record of providing secure and reliable nuclear fuel supplies to a global customer base to generate safe, reliable, and affordable baseload carbon-free energy. Nuclear energy plants around the world use our uranium and fuel services to generate one of the cleanest sources of electricity available today.

 

Our operations span the nuclear fuel cycle from exploration to fuel services, which include uranium production, refining, UO2 and UF6 conversion services and CANDU fuel manufacturing for heavy water reactors. We have also further enhanced our ability to meet our customers’ growing demand for reliable and secure nuclear fuel supplies, services and technologies by investing in Westinghouse. Westinghouse’s assets are expected to augment the core of our business, providing fuel fabrication for light water reactors; reactor maintenance and other services; the design engineering and support for the development of new reactors; and nuclear sustainability services. We also have made an investment in a third-generation enrichment technology, that if successful we expect will allow us to participate in the entire nuclear fuel value chain.

  

Cameco Corporation

2121 – 11th Street West

Saskatoon, Saskatchewan

Canada S7M 1J3

Telephone: 306.956.6200

 

This is our head office, registered office and principal place of business.

 

We are publicly listed on the Toronto and New York stock exchanges, and had a total of 2,638 employees at December 31, 2023.

With extraordinary assets, a proven operating track record, long-term contract portfolio, strong ESG commitment, employee expertise, comprehensive industry knowledge, and a strong balance sheet, the company is making investments that it expects will create a platform for strategic growth. We are confident in our ability to increase long-term growth by positioning the company as one of the global leaders in supporting the clean energy transition. And we are doing so at a time when the world’s prioritization of decarbonization and energy security is driving growth in demand and when geopolitics are creating concerns about the origin and security of supplies across the nuclear fuel cycle.

Business segments

 

 

URANIUM

 

 

 

Our uranium production capacity is among the world’s largest. In 2023, we continued to ramp-up to our tier-one production run rate and accounted for 16% of world production. We have controlling ownership of the world’s largest high-grade mineral reserves.

Product

 

    uranium concentrates (U3O8)

Mineral reserves and resources

Mineral reserves

 

    approximately 485 million pounds proven and probable

Mineral resources

 

    approximately 409 million pounds measured and indicated

 

    approximately 153 million pounds inferred

Tier-one operations

 

    McArthur River and Key Lake, Saskatchewan

 

    Cigar Lake, Saskatchewan

 

    Inkai, Kazakhstan

Tier-two operations

 

    Rabbit Lake, Saskatchewan

 

    Smith Ranch-Highland, Wyoming

 

    Crow Butte, Nebraska

Advanced projects

 

    Millennium, Saskatchewan

 

    Yeelirrie, Australia

 

    Kintyre, Australia

Exploration

 

    focused on North America

 

    approximately 0.74 million hectares of land
 

 

2023 ANNUAL INFORMATION FORM    Page 6


 

FUEL SERVICES

 

 

We are an integrated uranium fuel supplier, offering refining, conversion, and fuel manufacturing services.

Products

 

    uranium trioxide (UO3)

 

    uranium hexafluoride (UF6) for light-water reactors (we have about 21% of world primary conversion capacity)

 

    uranium dioxide (UO2) for CANDU heavy-water reactors

 

    fuel bundles, reactor components and monitoring equipment used by CANDU heavy-water reactors

Operations

 

    Blind River refinery, Ontario (refines uranium concentrates to UO3)

 

    Port Hope conversion facility, Ontario (converts UO3 to UF6 or UO2)

 

    Cameco Fuel Manufacturing Inc. (CFM), Ontario (manufactures fuel bundles and reactor components for CANDU heavy-water reactors)
 

 

 

WESTINGHOUSE ELECTRIC COMPANY (Westinghouse)

 

 

In 2023, we completed the acquisition of Westinghouse, in a strategic partnership with Brookfield. We own a 49% interest.

Products

 

    Operating plant services (core business) – Provides outage and maintenance services, engineering support, instrumentation and controls equipment, plant modifications, and components and parts to nuclear reactors

 

    Nuclear fuel (core business) – designs and manufactures nuclear fuel supplies and services for light water reactors

 

    New build – designs, develops and procures equipment for new nuclear plant projects

Operations

 

    Columbia, South Carolina

(fuel fabrication)

 

    Springfields, United Kingdom

(fuel fabrication)

 

    Västerås, Sweden

(fuel fabrication)

 

 

For information about the financial performance of our segments for the years ended December 31, 2023 and 2022, see our 2023 MD&A as follows:

 

   

uranium – page 61

 

   

fuel services – page 62

 

   

Westinghouse – page 63

 

 

OTHER NUCLEAR FUEL CYCLE INVESTMENTS

 

 

Enrichment

We have a 49% interest in Global Laser Enrichment LLC (GLE) which is testing third-generation enrichment technology that, if successful, will use lasers to commercially enrich uranium. GLE is the exclusive licensee of the proprietary SILEX laser enrichment technology, that is in the development phase.

 

2023 ANNUAL INFORMATION FORM    Page 7


The nuclear fuel cycle

 

LOGO

 

Our operations and investments span the nuclear fuel cycle, from exploration to fuel manufacturing.

 

LOGO

  Mining

Once an orebody is discovered and defined by exploration, there are three common ways to mine uranium, depending on the depth of the orebody and the deposit’s geological characteristics:

 

    Open pit mining is used if the ore is near the surface. The ore is usually mined using drilling and blasting.

 

    Underground mining is used if the ore is too deep to make open pit mining economical. Tunnels and shafts provide access to the ore.

 

    In situ recovery (ISR) does not require large scale excavation. Instead, holes are drilled into the ore and a solution is used to dissolve the uranium. The solution is pumped to the surface where the uranium is recovered.

 

LOGO

  Mining

Ore from open pit and underground mines is processed to extract the uranium and package it as a powder typically referred to as uranium ore concentrates (UOC) or yellowcake (U3O8). The leftover processed rock and other solid waste (tailings) is placed in an engineered tailings facility.

 

LOGO

  Refining

Refining removes the impurities from the uranium concentrate and changes its chemical form to uranium trioxide (UO3).

 

LOGO

  Conversion

For light water reactors, the UO3 is converted to uranium hexafluoride (UF6) gas to prepare it for enrichment. For heavy water reactors like the CANDU reactor, the UO3 is converted into powdered uranium dioxide (UO2).

LOGO

  Enrichment

Uranium is made up of two main isotopes: U-238 and U-235. Only U-235 atoms, which make up 0.7% of natural uranium, are involved in the nuclear reaction (fission). Most of the world’s commercial nuclear reactors require uranium that has an enriched level of U-235 atoms.

The enrichment process increases the concentration of U-235 to between 3% and 5% by separating U-235 atoms from the U-238. Enriched UF6 gas is then converted to powdered UO2.

 

LOGO

  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.

 

LOGO

  Generation

Nuclear reactors are used to generate electricity. U-235 atoms in the reactor fuel fission, creating heat that generates steam to drive turbines. The fuel bundles in the reactor need to be replaced as the U-235 atoms are depleted, typically after one or two years depending upon the reactor type. The used – or spent – fuel is stored or reprocessed. Typical activities to ensure the safe and reliable operation of nuclear power plants include overhaul, repair and replacement of system components, testing and calibration of parts, and in-service inspections. Nuclear reactors are refueled every 18 to 24 months.

Spent fuel management

The majority of spent fuel is safely stored at the reactor site. A small amount of spent fuel is reprocessed. The reprocessed fuel is used in some European and Japanese reactors.

 

 

2023 ANNUAL INFORMATION FORM    Page 8


Major developments

 

2021    2022    2023
January    January    March

•  We announce the closing of the agreement between Cameco, Silex Systems Limited and GE-Hitachi Nuclear Energy, completing the ownership restructuring of GLE with Cameco’s interest in GLE increasing from 24% to 49%.

 

February

 

•  We announce the Supreme Court of Canada dismissed CRA’s application for leave to appeal the June 26, 2020 decision of the Federal Court of Appeal with respect to the 2003, 2005 and 2006 tax years.

 

April

 

•  We announce plans to restart production at the Cigar Lake mine.

 

October

 

•  We file a notice of appeal with the Tax Court of Canada, asking it to order the reversal of CRA’s transfer pricing adjustment and the return of $777 million in cash and letters of credit we paid or secured for the tax years 2007 through 2013, with costs.

  

•  We announce plans to transition McArthur River and Key Lake from care and maintenance to planned production of 15 million pounds per year (100% basis) by 2024, 40% below its annual licensed capacity, and to reduce production at Cigar Lake in 2024 to 13.5 million pounds per year (100% basis), 25% below its annual licensed capacity starting in 2024.

 

May

 

•  We acquire an additional 4.522% interest in Cigar Lake increasing our interest to 54.547%.

 

October

 

•  We announce our plans to form a strategic partnership with Brookfield Renewable Partners L.P., together with its institutional partners (Brookfield Renewable), to acquire Westinghouse, a global provider of nuclear services, from Brookfield Renewable. Brookfield Renewable will own a 51% interest and we will own a 49% interest in Westinghouse. We are responsible to contribute approximately $2.2 billion (US) in respect of the acquisition.

 

•  We issue 34,057,250 common shares at a price of $21.95 (US) per share for gross proceeds to us of approximately $747.6 million (US) pursuant to a bought deal. The net offering proceeds are intended to partially fund our share of the acquisition of Westinghouse.

 

November

 

•  We announce that the first pounds of uranium ore from the McArthur River mine have now been milled and packaged at the Key Lake mill, marking the achievement of initial production as these facilities transition back to normal operations.

  

•  We sign a major supply contract to provide sufficient volumes of natural uranium hexafluoride, or UF6 (consisting of uranium and conversion services), to meet Ukraine’s full nuclear fuel needs through 2035.

 

•  CRA has issued revised assessments for the 2007 through 2013 tax years, which resulted in a refund of $297 million, consisting of $86 million in cash and $211 million in letters of credit, which were returned in the second quarter. CRA continues to hold $483 million that we have remitted or secured based on prior reassessments CRA had issued in our longstanding tax dispute.

 

November

 

•  We announce that the acquisition of Westinghouse in a strategic partnership with Brookfield Renewable closed on November 7, 2023.

 

2023 ANNUAL INFORMATION FORM    Page 9


Updated 2024 production plan for McArthur Rive/Key Lake and Cigar Lake

In February 2024, we announced our plan for McArthur River/Key Lake to produce 18 million pounds per year (100% basis) starting in 2024 and to continue to operate Cigar Lake at its licensed capacity of 18 million pounds per year (100% basis) in 2024.

We also plan to begin the work necessary to extend the mine life at Cigar Lake to 2036. In addition, at McArthur River/Key Lake, we plan to undertake an evaluation of the work and investment necessary to expand production up to its annual licensed capacity of 25 million pounds (100% basis), which we expect will allow us to take advantage of this opportunity when the time is right.

Update for 2024 production at Inkai

Based on Kazatomprom (KAP)’s announcement on February 1, 2024, production in Kazakhstan is expected to remain approximately 20% below the level stipulated in subsoil use agreements, primarily due to the sulfuric acid shortage in the country and delays in development of new deposits.

Our current target for production at Inkai in 2024 is 8.3 million pounds of U3O8 (100% basis). However, this target is tentative and contingent upon receipt of sufficient quantities of sulfuric acid. In addition, the allocation of such production between JV Inkai participants is currently under discussion by Cameco and KAP.

How Cameco was formed

Cameco was incorporated under the Canada Business Corporations Act on June 19, 1987.

We were formed when two crown corporations were privatized and their assets merged:

 

 

Saskatchewan Mining Development Corporation (SMDC) (uranium mining and milling operations); and

 

 

Eldorado Nuclear Limited (uranium mining, refining and conversion operations) (now Canada Eldor Inc.)

There are constraints and restrictions on ownership of shares in the capital of Cameco (Cameco shares) set out in our company articles, and a related requirement to maintain offices in Saskatchewan. These are requirements of the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada), as amended, and The Saskatchewan Mining Development Corporation Reorganization Act, as amended, and are described on pages 135 and 136.

We have made the following amendments to our articles:

 

2002  

•  increased the maximum share ownership for individual non-residents to 15% from 5%

 

•  increased the limit on voting rights of non-residents to 25% from 20%

2003  

•  allowed the board to appoint new directors between shareholder meetings as permitted by the Canada Business Corporations Act, subject to certain limitations

 

•  eliminated the requirement for the chair of the board to be ordinarily resident in the province of Saskatchewan

 

We have one main subsidiary:

 

  Cameco Europe Ltd., a Swiss company that we have 100% ownership of through subsidiaries

At January 1, 2024, we do not have any other subsidiary that is material, either individually or collectively.

For more information

You can find more information about Cameco on SEDAR+ (sedarplus.com), EDGAR (sec.gov) and on our website (cameco.com).

See our most recent management proxy circular for additional information, including how our directors and officers are compensated and any loans to them, principal holders of our securities, and securities authorized for issue under our equity compensation plans. We expect the circular for our May 9, 2024 annual meeting of shareholders to be available on April 5, 2024.

See our 2023 financial statements and 2023 MD&A for additional financial information.

 

 

2023 ANNUAL INFORMATION FORM    Page 10


Our vision, values and strategy

Our vision

Our vision – “Energizing a clean-air world” – recognizes that we have an important role to play in enabling the vast reductions in global greenhouse gas (GHG) emissions required to achieve a resilient net-zero carbon economy. We support climate action that is consistent with the ambition of the Paris Agreement and the Canadian government’s corresponding commitment to limit global temperature rise to less than 2°C. We believe that this means the world needs to reach net-zero emissions by 2050 or sooner. The uranium we produce is used around the world in the generation of safe, carbon-free, affordable, baseload nuclear power.

We believe we have the right strategy to achieve our vision and we will do so in a manner that reflects our values. For 35 years, we have been delivering our products responsibly. Building on that strong foundation, we remain committed to our efforts to reduce our own, already low, GHG footprint in our ambition to reach net-zero emissions, while identifying and addressing the ESG risks and opportunities that we believe may have a significant impact on our ability to add long-term value for our stakeholders.

Committed to our values

Our values are discussed below. They define who we are as a company, are at the core of everything we do and help to embed ESG principles and practices as we execute on our strategy in pursuit of our vision. They are:

 

   

safety and environment

 

   

people

 

   

integrity

 

   

excellence

Safety and Environment

The safety of people and protection of the environment are the foundations of our work. All of us share in the responsibility of continually improving the safety of our workplace and the quality of our environment.

We are committed to keeping people safe and conducting our business with respect and care for both the local and global environment.

People

We value the contribution of every employee and we treat people fairly by demonstrating our respect for individual dignity, creativity and cultural diversity. By being open and honest, we achieve the strong relationships we seek.

We are committed to developing and supporting a flexible, skilled, stable and diverse workforce, in an environment that:

 

   

attracts and retains talented people and inspires them to be fully productive and engaged

 

   

encourages relationships that build the trust, credibility and support we need to grow our business

Integrity

Through personal and professional integrity, we lead by example, earn trust, honour our commitments and conduct our business ethically.

We are committed to acting with integrity in every area of our business, wherever we operate.

Excellence

We pursue excellence in all that we do. Through leadership, collaboration and innovation, we strive to achieve our full potential and inspire others to reach theirs.

Our strategy

We are a pure-play investment in the growing demand for nuclear energy, focused on taking advantage of the near-, medium-, and long-term growth occurring in our industry. We provide nuclear fuel and nuclear power products, services, and technologies across the fuel cycle, augmented by our investment in Westinghouse, that support the generation of clean, reliable, secure, and affordable energy. Our strategy is set within the context of what we believe is a transitioning market

 

2023 ANNUAL INFORMATION FORM    Page 11


environment. Increasing populations, a growing focus on electrification and decarbonization, and concerns about energy security and affordability are driving a global focus on tripling nuclear power capacity by 2050, which is expected to durably strengthen the long-term fundamentals for our industry. Nuclear energy must be a central part of the solution to the world’s shift to a low-carbon, climate resilient economy. It is an option that can provide the power needed, not only reliably, but also safely and affordably, and in a way that will help avoid some of the worst consequences of climate change.

Our strategy is to capture full-cycle value by:

 

   

remaining disciplined in our contracting activity, building a balanced portfolio in accordance with our contracting framework

 

   

profitably producing from our tier-one assets and aligning our production decisions in all segments of the fuel cycle with contracted demand and customer needs

 

   

being financially disciplined to allow us to:

 

   

execute our strategy

 

   

invest in new opportunities that are expected to add long-term value

 

   

self-manage risk

 

   

exploring other emerging opportunities within the nuclear power value chain, which align with our commitment to manage our business responsibly and sustainably, contribute to decarbonization, and help to provide secure and affordable energy

We continually evaluate investment opportunities within the nuclear fuel value chain, which align well with our commitment to manage our business responsibly and sustainably, increase our contributions to decarbonization and help provide energy security. Expanding our participation in the fuel cycle is expected to complement our tier-one uranium and fuel services assets, creating new revenue opportunities, and it enhances our ability to meet the increasing needs of existing and new customers for secure, reliable nuclear fuel supplies, services and technologies.

We have signed a number of non-binding arrangements to explore several areas of cooperation to advance the commercialization and deployment of small modular reactors in Canada and around the world.

We will make an investment decision when an opportunity is available at the right time and the right price. We strive to pursue corporate development initiatives that will leave us and our stakeholders in a fundamentally stronger position. As such, an investment opportunity is never assessed in isolation. Investments must compete for investment capital with our own internal growth opportunities. They are subject to our capital allocation process described in our 2023 MD&A under Capital Allocation – Focus on Value, starting on page 30.

We expect our strategy will allow us to increase long-term value, and we will execute it with an emphasis on safety, people and the environment.

For more information on our strategy, see our 2023 MD&A under Our vision, value and strategy – Strategy, starting on page 23.

Market overview and developments

A market in transition

In 2023, geopolitical uncertainty and heightened concerns about energy security and climate change continued to improve the demand and supply fundamentals for the nuclear power industry and the fuel cycle that is required to support it. Increasingly, countries and companies around the globe are recognizing the critical role nuclear power must play in providing clean and secure baseload power. This growing support has led to a rise in demand as reactors are being saved from earlier retirement, 10- and 20-year life extensions are being sought and approved for existing reactor fleets in several countries, and numerous commitments and plans are being made for the construction of new nuclear generating capacity. In addition, there is increasing interest in small modular reactors (SMR), including smaller versions of existing technology and advanced technology designs, which are expected to add to demand in the decades to come, with several projects already underway.

While demand continues to increase, future supply is not keeping pace. Heightened supply risk caused by growing geopolitical uncertainty, shrinking secondary supplies and a lack of investment in new capacity over the past decade has motivated utilities to evaluate their near-, mid-and long-term nuclear fuel supply chains. The uncertainty about where nuclear fuel supplies will come from to satisfy growing demand has led to increased long-term contracting activity and in 2023, about 160 million pounds of uranium was placed under long-term contracts by utilities. While it is the highest annual volume contracted since 2012, it remains below replacement rate and includes our contract with Ukraine, which alone accounted for about 30 million of those pounds. Prices across the nuclear fuel cycle continued to rise in 2023, with spot enrichment prices up 38%, conversion prices continuing to achieve record highs, uranium spot prices more than doubling from around $48 (US) per pound at the end

 

2023 ANNUAL INFORMATION FORM    Page 12


of 2022 to $100 (US) per pound at the end of January 2024, after peaking at $106 (US) per pound earlier in the month, and the long-term price for uranium increasing about 38% over the same period. We expect there will be continued competition to secure uranium, conversion services and enrichment services under long-term contracts with proven producers and suppliers who have a diversified portfolio of assets in geopolitically attractive jurisdictions, with strong environmental, social and governance (ESG) performance, and on terms that help ensure a reliable supply is available to satisfy demand.

Durable demand growth

The benefits of nuclear energy have come clearly into focus, supporting a level of durability of demand that, we believe, has not been previously seen. The durability is being driven not only by accountability for achieving the net-zero carbon targets set by countries and companies around the world, but also by a geopolitical realignment in energy markets that is causing countries to reexamine how they plan to address their energy needs. Net-zero carbon targets are turning global attention to a triple challenge. First, about one-third of the global population must be lifted out of energy poverty by improving access to clean and reliable baseload electricity. Second, approximately 80% of the current global electricity grids that run on carbon-emitting sources of thermal power must be replaced with a clean, reliable alternative. And finally, global power grids must grow by electrifying industries, such as private and commercial transportation, and home and industrial heating, which today are largely powered with carbon-emitting sources of thermal energy. Additionally, geopolitical uncertainty has deepened concerns about energy security, highlighting the role of energy policy in balancing three main objectives: providing a clean emissions profile; providing a reliable and secure baseload profile; and providing an affordable, levelized cost profile. There is increasing recognition that nuclear power meets these objectives and has a key role to play in achieving decarbonization and energy security goals. The growth in demand is not just long-term and in the form of new builds, but medium-term in the form of reactor life extensions, and near-term with early reactor retirement plans being deferred or cancelled and new markets continuing to emerge. And, we are seeing even more long-term momentum building with the development of SMRs, where the use case extends beyond just power generation and numerous companies and countries are pursuing projects.

Demand and energy policy highlights

 

   

In September, the World Nuclear Association released its biennial Global Nuclear Fuel Report which provides scenarios for demand and supply availability across the fuel supply chain through 2040. This included a robust demand outlook showing global nuclear generating capacity increasing to 686 GWe by 2040 in the Reference Scenario, an average annual growth rate of 3.6%, compared to 2.6% in the 2021 report. This improvement was driven by improved government support, life extensions, new builds and importantly, that starting in the 2030s, the deployment of SMRs is forecasted to contribute to capacity growth. Additional key themes include assumed reductions to secondary supply and decreased availability of mobile inventories, along with the need for a growing volume of future uranium supply requiring higher incentive pricing to balance the market after 2030.

 

   

At the 28th annual Conference of Parties (COP28), the 2023 United Nations Climate Change Conference held in the United Arab Emirates, 22 countries (now 28) launched a declaration to triple nuclear energy capacity by 2050. For the first time at the conference, nuclear energy was recognized alongside other low-emissions technologies for the key role it must play in reaching global net-zero GHG emissions by 2050. In addition, the inaugural global stocktake was introduced at COP28, a process where countries and stakeholders can provide an update every five years to track the world’s progress toward the Paris Agreement targets. In 2023, the initiative concluded that more action is required, as emissions continue to rise and put 2030 targets at risk, reinforcing that in order to achieve net zero by 2050, the world needs “absolute economy-wide emission reduction targets”, which were estimated at a cost of “trillions of dollars”.

 

   

China Nuclear Energy Association published the “China Nuclear Energy Development Report 2023” in April, which highlighted China’s continuing growth. According to the report, the country is expected to lead the world in installed nuclear capacity with 110 GWe expected by 2030, rising to 150 GWe expected by 2035, and plans to build over 90% of their major nuclear power reactors domestically. Additionally, a proposal drafted by 15 Chinese national policy advisors was submitted to the government advocating for the development of new nuclear power plants at inland sites, which are now being considered following the end of a post-Fukushima moratorium on proposed inland nuclear power plants.

 

   

In Japan, Takahama unit 2 restarted in September, becoming the country’s 12th reactor to restart since Fukushima. Onagawa unit 2 and Shimane unit 2 are expected to restart in 2024. In November, the Nuclear Regulation Authority approved 20-year life extensions (beyond 40 years) for Sendai units 1 and 2; additionally, Takahama units 3 and 4 are expected to receive similar life extensions, pending generator work in 2026 and 2027. In addition, Japan enacted a bill in May allowing nuclear reactors to operate beyond the 60-year limit.

 

2023 ANNUAL INFORMATION FORM    Page 13


   

In South Korea, Korea Hydro and Nuclear Power (KHNP) announced in September that they successfully completed fuel loading at Shin Hanul unit 2, a new 1,400 MWe APR-1400 pressurized water reactor (PWR) unit. This followed an announcement from the Ministry of Industry and Energy that Shin Hanul units 3 and 4 would be completed by the end of 2024. Additionally, to help achieve the plans set out in their 10th Basic Plan for Electricity Supply and Demand 2030, which targets more than 30% of its power supply to come from nuclear, the Ministry confirmed a review of the need for new nuclear power plants was underway.

 

   

In India, the first domestically designed 700 MWe pressurized heavy water reactor, Kakrapar unit 3, reached full operating capacity in August. Three more units of the same design are expected to come online in the next few years. The country is targeting an expansion of nuclear generating capacity to 22.5 GWe by 2031.

 

   

In February, the European Nuclear Alliance was launched. Led by France, the initiative commits 11 European countries to cooperate across the nuclear fuel supply chain, and to promote new nuclear generation projects and technologies, including the advancement of SMRs. Throughout 2023, the alliance expanded and now includes a commitment from 16 European countries that will prepare a roadmap to develop an integrated European nuclear industry and target 150 GWe of nuclear power by 2050.

 

   

In France, plans were advanced to relaunch the country’s reactor construction program: the government committed to life extensions with a proposed “industrial build” program that initially includes six new European Pressurized Reactors (EPR), as well as eight additional EPRs in the future. Électricité de France filed an application to build the first pair of 1,650 MWe EPRs with construction scheduled to begin in 2028.

 

   

In January 2024, the United Kingdom (UK) announced that they are seeking to quadruple their nuclear power output by 2050. Under the “Civil Nuclear Roadmap”, the UK will invest into developing new advanced nuclear fuel, new regulations, and a new nuclear reactor.

 

   

In June, Sweden’s parliament adopted a new energy target, changing its focus to “100% fossil-free” electricity as opposed to the previously stated focus of “100% renewable”. In August, the government announced a target to further expand the role of nuclear power and in November, announced its intention to build up to 2,500 MWe of new nuclear power capacity by 2035, and up to 10 new reactors by 2045, backed by an offer of loan guarantees.

 

   

In Belgium, the government and nuclear operator ENGIE reached an agreement following prolonged negotiations to extend the lifespans of the Doel unit 4 and Tihange unit 3 reactors by 10 years, with each now expected to operate until 2035.

 

   

In Bulgaria, the government issued its 30-year energy strategy to 2053, which envisions the construction of four new nuclear reactor units. In December, parliament approved a government proposal to inject up to 1.5 billion levs ($(US) 838 million) into the state-owned Kozloduy Nuclear Power Plant to fund the planned construction of the first of two proposed reactors using Westinghouse’s AP1000® technology.

 

   

In Poland, the government adopted a resolution committing to finance the country’s first nuclear power plant. The funds will go to Polish utility Polskie Elektrownie Jadrowe, which signed a contract with Westinghouse for multiple AP1000 reactors in February of 2023.

 

   

In the US, Vogtle unit 3 entered commercial service on July 31, after becoming the first Westinghouse AP1000 reactor in the US to successfully connect to the electrical grid. Vogtle unit 4 is expected to begin operating in the second quarter of 2024.

 

   

Throughout 2023, many US states expressed local support for nuclear: Ohio, Virginia, Kentucky, and Tennessee all began creating state-level advisory authorities to promote, research and develop nuclear power technologies, and Michigan formed a new Nuclear Caucus to support the reopening of the Palisades nuclear power plant, and also approved extending operations at the Monticello nuclear power plant through 2040.

 

   

In Canada, provincial support for nuclear increased in 2023. New Brunswick Power signed a three-year contract with Ontario Power Generation (OPG) to enhance the operational performance of the Point Lepreau nuclear power plant. In Ontario, the Minister of Energy announced support to advance the long-term planning required to explore nuclear expansion options for Bruce Power, outlining the need for nearly 18 GWe in new nuclear capacity to help the province reach its electrification and net-zero goals. Additionally, in Saskatchewan, Crown Investments Corporation provided around $479,000 to help local firms build small, advanced, and micro reactors supply chain capacity, while the Alberta government announced plans to invest around $7 million to study SMRs.

 

   

In January 2024, OPG announced plans to proceed with the refurbishment of the Pickering Nuclear Generating Station’s “B” units (units 5, 6, 7 and 8). Once the project is completed in the mid-2030s, Pickering would produce a total of 2 GWe of electricity, to help meet increasing electricity demand and fuel the province’s economic growth.

 

2023 ANNUAL INFORMATION FORM    Page 14


According to the International Atomic Energy Agency (IAEA), globally there are currently 438 operable reactors and 58 reactors under construction. Several nations are appreciating the clean energy and energy security benefits of nuclear power and have reaffirmed their commitment with plans underway to support existing reactor units and review policies to encourage more nuclear generation. Several other non-nuclear countries have emerged as candidates for new nuclear capacity. In the EU, specific nuclear energy projects have been identified for inclusion under its sustainable financing taxonomy and are therefore eligible for access to low-cost financing. In Canada, the government revised the Canada Green Bond Framework to include nuclear energy projects. In some countries where phase-out policies have been in place, policy reversals and decisions have been made to temporarily keep reactors running, with public opinion polls showing increasing support. With a number of reactor construction projects recently approved and many more planned, demand for uranium continues to improve. There is growing recognition of the role nuclear must play in providing safe, affordable, carbon-free baseload electricity to achieve a low-carbon economy, while being a reliable energy source that helps countries move away from Russian energy supply.

 

LOGO

 

LOGO

Supply uncertainty

Geopolitical uncertainty remained the most notable factor impacting security of supply in 2023. Driven by the Russian invasion of Ukraine, and more recently, the coup d’état in Niger, many governments and utilities are re-examining supply chains and procurement strategies that rely on nuclear fuel supplies from these jurisdictions. In addition, sanctions on Russia and Niger, government restrictions, and restrictions on and cancellations of some cargo insurance coverages continue to create transportation and supply chain risks for nuclear fuel supplies coming out of Central Asia. There are also transportation risks to material being shipped from Australia to Europe as a result of the conflict in the Middle East. Despite the recent increase in market prices, the deepening geopolitical uncertainty and years of underinvestment in new uranium and fuel cycle service capacities has shifted risk from producers to utilities.

 

2023 ANNUAL INFORMATION FORM    Page 15


Supply and trade policy highlights

 

   

Sprott Physical Uranium Trust (SPUT) purchased about 4 million pounds U3O8 in 2023, bringing total purchases since inception to over 45 million pounds U3O8 and increasing the total net asset value to around $(US)7 billion. Volatility in equity markets has impacted SPUT’s valuation (discount or premium to its net asset value) and therefore its ability to raise funds to purchase uranium.

 

   

In June, KAP announced plans to start production at a new uranium deposit, Inkai 3 (100% owned by KAP). KAP expects approval of a Subsoil Use Agreement (SSUA) to produce 10.4 million pounds U3O8 annually for 25 years from Inkai 3’s uranium resources of about 216 million pounds U3O8.

 

   

In September, KAP had restated its plan to increase production in 2024 to 90% of SSUAs and announced a ramp up to 100% of SSUAs in 2025, though the company also warned that geopolitical uncertainty, global supply chain issues, and inflationary pressure could create challenges. On January 12, 2024, KAP announced that it had faced challenges in completing the development required to achieve the planned 2024 production increase, and that it expected to lower its 2024 uranium production guidance due to limited availability of sulfuric acid and delays in the construction and development of new assets, including Budenovskoye 6 and 7. On February 1, 2024, KAP rescinded its 2024 target due to the shortage of sulfuric acid and construction delays in 2023, and they now plan to remain about 20% below SSUAs, expecting to produce between 55 million and 59 million pounds U3O8 in 2024 (previously 65 million to 66 million pounds U3O8). KAP also warned that if the acid, supply chain and construction issues persist throughout 2024, the company’s 2025 plan to increase production to 100% of SSUAs (79 million to 82 million pounds U3O8) may also be affected.

 

   

In April, five of the G7 countries (Canada, France, Japan, UK, and US), entered into a civil nuclear fuel security agreement that attempts to reduce Russia’s influence in the global nuclear fuel supply chain.

 

   

In December, Urenco announced its decision to expand enrichment capacity at their facility in Almelo, Netherlands, increasing capacity by 15% or approximately 750,000 separative work units (SWU), by 2027. This followed a prior announcement of plans to expand enrichment capacity at its Urenco USA site, increasing capacity there by 15% or approximately 700,000 SWU, by 2025.

 

   

In October, Orano announced a planned enrichment capacity extension project at Georges Besse 2. The project, forecasted to cost €1.7 billion, seeks to increase capacity by over 30% or approximately 2.5 million SWU, beginning in 2028.

 

   

In July, ConverDyn announced the restart of Honeywell’s Metropolis uranium conversion facility. The restart plan had been delayed by a safety equipment failure in June, resulting in a special inspection by the US Nuclear Regulatory Commission (NRC). The facility restarted production in July 2023.

 

   

In July, a coup d’état in Niger resulted in a group of military officers removing President Mohamed Bazoum and seizing power. All exports of uranium and gold to France were suspended and in September, Orano stated that it had halted uranium processing operations at the company’s majority-owned SOMAIR (Arlit) project in Niger due to logistical complications caused by international sanctions. This resulted in 2023 production dropping to 3.9 million pounds U3O8, compared to around 5.2 million pounds U3O8 in 2022.

 

   

In December, the US House of Representatives passed the Prohibiting Russian Uranium Impacts Act. The act proposes to prohibit the import of Russian low-enriched uranium (LEU) into the US but includes waivers that allow the import of LEU from Russia if the US Energy Secretary determines no alternative source can be procured, or if the shipments are of national interest. The waivers would gradually reduce and eliminate Russian uranium imports by 2028. The bill is awaiting further action after it was blocked by the US Senate on grounds unrelated to the bill itself. Separately, the US Senate Energy and Natural Resources Committee passed the Nuclear Fuel Security Act of 2023, which directs the Department of Energy to create a “Nuclear Fuel Security Program” and strengthen the US nuclear fuel supply chain, including new LEU and high-assay low-enriched uranium (HALEU) capacity, though no new funding has yet been appropriated. Finally, a Supplemental Funding Bill is progressing through Congress and includes roughly $111 billion (US) for national security measures, including a provision for $2.72 billion (US) to be allocated to a new “American Energy Independence Fund”, which would acquire non-Russian LEU and HALEU, subject to the ban on Russian imports becoming law.

Long-term contracting creates full-cycle value for proven productive assets

Like other commodities, the demand for uranium is cyclical. However, unlike other commodities, uranium is not traded in meaningful quantities on a commodity exchange. The uranium market is principally based on bilaterally negotiated long-term contracts covering the annual run-rate requirements of nuclear power plants, with a small spot market to serve discretionary demand. History demonstrates that in general, when prices are rising and high, uranium is perceived as scarce, and more

 

2023 ANNUAL INFORMATION FORM    Page 16


contracting activity takes place with proven and reliable suppliers. The higher demand discovered during this contracting cycle drives investment in higher-cost sources of production, which due to lengthy development timelines, tend to miss the contracting cycle and ramp up after demand has already been won by proven producers. When prices are declining and low, there is no perceived urgency to contract, and contracting activity and investment in new supply dramatically decreases. After years of low prices, and a lack of investment in supply, and as the uncommitted material available in the spot market begins to thin, security-of-supply tends to overtake price concerns. Utilities typically re-enter the long-term contracting market to ensure they have a reliable future supply of uranium to run their reactors.

 

LOGO

UxC reports that over the last five years approximately 510 million pounds U3O8 equivalent have been locked-up in the long-term market, while approximately 780 million pounds U3O8 equivalent have been consumed in reactors. We remain confident that utilities have a growing gap to fill.

We believe the current backlog of long-term contracting presents a substantial opportunity for proven and reliable suppliers with tier-one productive capacity and a record of honoring supply commitments. As a low-cost producer, we manage our operations to increase value throughout these price cycles.

 

LOGO

In our industry, customers do not come to the market right before they need to load nuclear fuel into their reactors. To operate a reactor that could run for more than 60 years, natural uranium and the downstream services have to be purchased years in advance, allowing time for a number of processing steps before a finished fuel bundle arrives at the power plant. At present, we believe there is a significant amount of uranium that needs to be contracted to keep reactors running into the next decade.

 

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UxC estimates that cumulative uncovered requirements are about 2.2 billion pounds to the end of 2040. With the lack of investment over the past decade, there is growing uncertainty about where uranium will come from to satisfy growing demand, and utilities are becoming increasingly concerned about the availability of material to meet their long-term needs. In addition, secondary supplies have diminished, and the material available in the spot market has thinned as producers and financial funds continue to purchase material. Furthermore, geopolitical uncertainty is causing some utilities to seek nuclear fuel suppliers whose values are aligned with their own or whose origin of supply better protects them from potential interruptions, including from transportation challenges or the possible imposition of formal sanctions.

We will continue to take the actions we believe are necessary to position the company for long-term success. Therefore, we will continue to align our production decisions with our customers’ needs under our contract portfolio. We will undertake contracting activity which is intended to ensure we have adequate protection while maintaining exposure to the benefits that come from having uncommitted, low-cost supply to place into a strengthening market.

Building a balanced portfolio

The purpose of our contracting framework is to deliver value. Our approach is to secure a solid base of earnings and cash flow by maintaining a balanced contract portfolio that optimizes our realized price.

Contracting decisions in all segments of our business need to consider the nuclear fuel market structure, the nature of our competitors, and the current market environment. The vast majority of run-rate fuel requirements are procured under long-term contracts. The spot market is thinly-traded where utilities buy small, discretionary volumes. This market structure is reflective of the baseload nature of nuclear power and the relatively small proportion of the overall operating costs the fuel represents compared to other sources of baseload electricity. Additionally, about half of the fuel supply typically comes from diversified mining companies that produce uranium as a by-product, or by state-owned entities with production volume strategies or ambitions to serve state nuclear power ambitions with low-cost fuel supplies. We evaluate our strategy in the context of our market environment and continue to adjust our actions in accordance with our contracting framework:

 

   

First, we build a long-term contract portfolio by layering in volumes over time. In addition to our committed sales, we will compete for customer demand in the market where we think we can obtain value and, in general, as part of longer-term contracts. We will take advantage of opportunities the market provides, where it makes sense from an economic, logistical, diversification and strategic point of view. Those opportunities may come in the form of spot, mid-term or long-term demand, and will be additive to our current committed sales.

 

   

As we build our portfolio of long-term contracts, we decide how to best source material to satisfy that demand, planning our production in accordance with our contract portfolio and other available sources of supply. We will not produce from our tier-one assets to sell into an oversupplied spot market.

 

   

We do not intend to build an inventory of excess uranium. Excess inventory serves to contribute to the sense that uranium is abundant and creates an overhang on the market, and it ties up working capital on our balance sheet.

 

   

Depending on the timing and volume of our production, purchase commitments, and our inventory volumes, we may be active buyers in the market in order to meet our annual delivery commitments. Historically, prior to the supply curtailments that we began in 2016, we have generally planned our annual delivery commitments to slightly exceed the annual supply we expect to come from our annual production and our long-term purchase commitments and have therefore relied on the spot market to meet a small portion of our delivery commitments. In general, if we choose to purchase material to meet demand, we expect the cost of that material will be more than offset by the volume of commitments in our sales portfolio that are exposed to market prices at the time of delivery over the long-term.

In addition to this framework, our contracting decisions always factor in who the customer is, our desire for regional diversification, the product form, and logistical factors.

Ultimately, our goal is to protect and extend the value of our contract portfolio on terms that recognize the value of our assets, including future development projects, and pricing mechanisms that provide adequate protection when prices go down and exposure to rising prices. We believe using this framework will allow us to create long-term value. Our focus will continue to be on ensuring we have the financial capacity to execute on our strategy and self-manage risk.

 

2023 ANNUAL INFORMATION FORM    Page 18


Long-term contracting

Uranium is not traded in meaningful quantities on a commodity exchange. Utilities have historically bought the majority of their uranium and fuel services products under long-term contracts that are bilaterally negotiated with suppliers. The spot market is discretionary and typically used for one-time volumes, not to satisfy annual demand. We sell uranium and fuel products and services directly to nuclear utilities around the world as uranium concentrates, UO2 and UF6, conversion services, or fuel fabrication and reactor components for CANDU heavy water reactors. We have a solid portfolio of long-term sales contracts that reflect our reputation as a proven, reliable supplier of geographically stable supply, and the long-term relationships we have built with our customers.

In general, we are active in the market, buying and selling uranium when it is beneficial for us and in support of our long-term contract portfolio. We undertake activity in the spot and term markets prudently, looking at the prices and other business factors to decide whether it is appropriate to purchase or sell into the spot or term market. Not only is this activity a source of profit, but it also gives us insight into underlying market fundamentals.

We deliver the majority of our uranium under long-term contracts each year, some of which are tied to market-related pricing mechanisms quoted at time of delivery. Therefore, our net earnings and operating cash flows are generally affected by changes in the uranium price. Market prices are influenced by the fundamentals of supply and demand, market access and trade policy issues, geopolitical events, disruptions in planned supply and demand, and other market factors.

The objectives of our contracting strategy are to:

 

   

optimize realized price by balancing exposure to future market prices while providing some certainty for our future earnings and cash flow

 

   

focus on meeting the nuclear industry’s growing annual uncovered requirements with our tier-one production

 

   

establish and grow market share with strategic and regionally diverse customers

We have a portfolio of long-term contracts, each bilaterally negotiated with customers, that have a mix of base-escalated pricing and market-related pricing mechanisms, including provisions that provide exposure to rising market prices and also protect us when the market price is declining. This is a balanced and flexible approach that allows us to adapt to market conditions, put a floor on our average realized price and deliver the best value over the long term.

This approach has allowed our realized price to outperform the market during periods of weak uranium demand, and we expect it will enable us to realize increases linked to higher market prices in the future.

Base-escalated contracts for uranium: use a pricing mechanism based on a term-price indicator at the time the contract is accepted and escalated to time of each delivery over the term of the contract.

Market-related contracts for uranium: are different from base-escalated contracts in that the pricing mechanism may be based on either the spot price or the long-term price, and that price is generally set a month or more prior to delivery rather than at the time the contract is accepted. These contracts may provide for discounts, and typically include floor prices and/or ceiling prices, which are established at time of contract acceptance and usually escalate over the term of the contract.

Fuel services contracts: the majority of our fuel services contracts use a base-escalated mechanism per kgU and reflect the market at the time the contract is accepted.

Optimizing our contract portfolio

We work with our customers to optimize the value of our contract portfolio. With respect to new contracting activity, there is often a lag from when contracting discussions begin and when contracts are executed. With our large pipeline of business under negotiation in our uranium segment, and a value driven strategy, we continue to be strategically patient in considering the commercial terms we are willing to accept. We layer in contracts over time, with higher commitments in the near term and declining over time in accordance with utilities growing uncovered requirements. Demand may come in the form of off-market negotiations or through on-market requests for proposals. We remain confident that we can add acceptable new sales commitments to our portfolio of long-term contracts to underpin the ongoing operation of our productive capacity and capture long-term value.

Given our view that additional long-term supply will need to be incented to meet the growing demand for safe, clean, reliable, carbon-free nuclear energy, our preference today is to sign long-term contracts with market-related pricing mechanisms. However, we believe our customers expect prices to rise and prefer to lock-in today’s prices, with a fixed-price mechanism.

 

2023 ANNUAL INFORMATION FORM    Page 19


Our goal is to balance all these factors, along with our desire for customer and regional diversification, with product form, and logistical factors to ensure we have adequate protection and will have exposure to rising market prices under our contract portfolio, while maintaining the benefits that come from having low-cost supply to deliver into a strengthening market.

With respect to our existing contracts, at times we may also look for opportunities to optimize the value of our portfolio. In cases where there is a changing policy, operating, or economic environment, we may consider adjusting our contracts in a manner that allow us to maintain our customer relationships and is mutually beneficial.

Contract portfolio status

We have executed contracts to sell approximately 205 million pounds of U3O8 with 37 customers worldwide in our uranium segment, and over 75 million kilograms as UF6 conversion with 33 customers worldwide in our fuel services segment.

Customers – U3O8:

Five largest customers account for 62% of commitments

 

LOGO

Customers – UF6 conversion:

Five largest customers account for 64% of commitments

 

LOGO

Managing our contract commitments

We allow sales volumes to vary year-to-year depending on:

 

   

the level of sales commitments in our long-term contract portfolio

 

2023 ANNUAL INFORMATION FORM    Page 20


   

market opportunities

 

   

our sources of supply

To meet our delivery commitments and to mitigate risk, we have access to a number of sources of supply, which includes uranium obtained from:

 

   

our productive capacity

 

   

purchases under our JV Inkai agreement, under long-term agreements and in the spot market

 

   

our inventory in excess of our working requirements

 

   

product loans

Our supply discipline

As spot is not the fundamental market, true value is built under a long-term contract portfolio and is measured over the full commodity cycle. Therefore, we align our uranium production decisions with our contract commitments and market opportunities to avoid carrying excess inventory or having to sell into an oversupplied spot market. In accordance with market conditions, and to mitigate risk, we evaluate the optimal mix of our production, inventory and purchases in order to satisfy our contractual commitments and in order to realize the best return over the entire commodity cycle. During a prolonged period of uncertainty, this could mean leaving our uranium in the ground. For the years 2016 through 2022, we left more than 130 million pounds of uranium in the ground (100% basis) by curtailing our production. We purchased more than 60 million pounds including spot and long-term purchases and in 2018 we drew down our inventory by almost 20 million pounds. That totals over 210 million pounds (100% basis) of uranium that were not available to the market.

However, today we believe the uranium market is in transition, driven by the growing demand for nuclear energy and the increasing recognition that it is essential to the clean-energy transition and to energy security. As the market continues to transition, we expect to continue placing our uranium under long-term contracts and meet rising demand with production from our best margin operations.

With the improvements in the market, the new long-term contracts we have put in place, and a pipeline of contracting discussions, we plan to produce 18 million pounds (100% basis) at McArthur River/Key Lake and Cigar Lake in 2024. Based on KAP’s announcement on February 1, 2024, production in Kazakhstan is expected to remain approximately 20% below the level stipulated in subsoil use agreements, primarily due to the sulfuric acid shortage in the country and delays in development of new deposits. Our current target for production at Inkai in 2024 is 8.3 million pounds U3O8 (100% basis). However, this target is tentative and contingent upon receipt of sufficient quantities of sulfuric acid. In addition, the allocation of such production between the JV Inkai participants is currently under discussion by Cameco and KAP. We also plan to begin the work necessary to extend the mine life at Cigar Lake. In addition, we plan to undertake the evaluation of the work and investment necessary to expand production at McArthur River/Key Lake up to its annual licensed capacity of 25 million pounds, which we expect will allow us to take advantage of this opportunity when the time is right.

Our production decisions will continue to be aligned with market opportunities and our ability to secure the appropriate long-term contract homes for our unencumbered, in-ground inventory, demonstrating that we continue to responsibly manage our assets in accordance with our customers’ needs.

In addition to our uranium production plans, we plan to produce 12,000 tonnes at our Port Hope UF6 conversion facility in 2024 to satisfy our book of long-term business for conversion services and customer demand, at a time when conversion prices are at historic highs.

Our production plans for McArthur River/Key Lake and Cigar Lake are expected to generate strong financial performance by allowing us to source more of our committed sales from the lower cost produced pounds. In addition, with conversion demand elevated, we have been successful in securing long-term sales commitments that will support increased UF6 production at Port Hope, which is expected to further improve its contribution to our financial results. However, this is not an end to our supply discipline. We expect to continue to adjust our production in accordance with our contract portfolio. This will remain our production plan until we see further improvements in the uranium market and contracting progress, once again demonstrating that we are a responsible fuel supplier.

 

2023 ANNUAL INFORMATION FORM    Page 21


Managing our costs

Production costs

In order to operate efficiently and cost-effectively, we manage operating costs and improve plant reliability by prudently investing in production infrastructure, new technology, and business process improvements. Like all mining companies, our uranium segment is affected by the cost of inputs such as labour and fuel.

 

LOGO

 

*

Production supplies include reagents, fuel and other items. Contracted services include utilities and camp costs, air charters, mining and maintenance contractors and security and ground freight.

Over the last number of years, the annual cash cost of production reflected the operating cost of mining and milling our share of Cigar Lake as this was our only operating site. With the restart of the McArthur River/Key Lake operations the annual cost of production will reflect a combined cost of all our operating uranium assets. See 2023 financial results by segment – Uranium starting on page 61 of our 2023 MD&A for more information. In 2024, our cash production costs may continue to be affected by inflation, the availability of personnel with the necessary skills and experience, supply chain challenges impacting the availability of materials and reagents, and our continued efforts to ramp up to planned production at McArthur River/Key Lake.

Operating costs in our fuel services segment are mainly fixed. In 2023, labour accounted for about 56% of the total. The largest variable operating cost is for anhydrous hydrogen fluoride, followed by zirconium, and energy (natural gas and electricity).

We continue to look to adopt innovative and advanced digital and automation technologies to improve efficiency and operational flexibility and to further reduce cost.

Care and maintenance costs and operational readiness costs

In 2024, we expect to incur between $50 million and $60 million in care and maintenance costs related to the suspension of production at our Rabbit Lake mine and mill, and our US operations. Production at these operations are higher-cost and a restart is less certain. We continue to evaluate our options in order to minimize these costs.

Purchases and inventory costs

Our costs are also affected by the purchases of uranium and conversion services we make under long-term contracts and on the spot market.

To meet our delivery commitments, we make use of our mined production, inventories, purchases of our share of material from Inkai, purchases under long-term contracts, purchases we make on the spot market and product loans. In 2024, we expect the price for the majority of our purchases will be quoted at the time of delivery.

The cost of purchased material may be higher or lower than our other sources of supply, depending on market conditions. The cost of purchased material affects our cost of sales, which is determined by calculating the average of all of our sources of supply, including opening inventory, production, and purchases, and adding royalties, selling costs, and care and maintenance costs. Our cost of sales could be impacted if we do not achieve our annual production plan, or if we are unable to source uranium as planned, and we are required to purchase uranium at prices that differ from our cost of inventory.

 

2023 ANNUAL INFORMATION FORM    Page 22


Financial impact

The growing demand for nuclear power due to its safety, clean energy, reliability, security and affordability attributes has contributed to increased demand for nuclear fuel products and services. As a result, we have seen significant price increases across the nuclear fuel value chain, which reflect the need for capacity increases to satisfy the projected growth.

The deliberate and disciplined actions we took to curtail production and streamline operations over the past decade came with near-term costs like care and maintenance costs, operational readiness costs, and purchase costs higher than our production costs. However, we considered these costs as investments in our future.

Today, thanks to our investments, and with our continued ability to secure new long-term sales commitments, we believe we are well-positioned for growth. Our core growth is expected to come from our existing tier-one mining and fuel services assets. We do not have to build new capacity to pursue new opportunities. We have sufficient productive capacity to expand, a position we have not enjoyed in previous price cycles.

And, with the acquisition of a 49% interest in Westinghouse, we expect to be able to expand our growth profile by extending our reach in the nuclear fuel cycle at a time when there are tremendous tailwinds for the nuclear power industry. We are extending our reach with an investment in assets, that like ours, are strategic, proven, licensed and permitted, that are located in geopolitically favourable jurisdictions, and that we expect will be able to grow from their existing footprint. These assets are also expected to provide new opportunities for our existing suite of uranium and fuel services assets.

We believe our actions and investments have helped position the company to self-manage risk and as we make the transition back to a tier-one run rate, we expect to generate strong financial performance, allowing us to execute on our strategy while rewarding our stakeholders for their continued patience and support of our strategy to build long-term value.

Supply sources

Uranium supply sources include primary production (production from mines that are currently in commercial operation) and secondary supply sources (excess inventories, uranium made available from defense stockpiles and the decommissioning of nuclear weapons, re-enriched depleted uranium tails, and used reactor fuel that has been reprocessed).

Primary production

While the uranium production industry is international in scope, there are only a small number of companies operating in relatively few countries. In addition, there are barriers to entry and bringing on and ramping up production can take a significant number of years. During the low-price environment that persisted for about a decade following 2011, a number of projects were cancelled or delayed, and some production was discontinued. Current prices and contracting activity are supporting the restart of some assets, however, the market has yet to incentivise the investment in new supply necessary to meet the anticipated growth in uranium requirements.

We estimate world mine production in 2023 was about 140 million pounds U3O8, up from 129 million pounds in 2022:

 

   

Over 80% of estimated world production was sourced from four countries: Kazakhstan (39%), Canada (21%), Namibia (11%) and Australia (9%).

 

   

About 80% of estimated world production was attributable to five producers. Cameco accounted for approximately 16% (22 million pounds) of estimated world production.

Secondary sources

There are a number of secondary sources, but most of these sources are finite and will not meet long-term needs:

 

   

The US government has historically made some of its inventories available to the market, although in smaller and predictable quantities.

 

   

The Russian government also holds substantial volumes of nuclear fuel inventory largely in the form of depleted uranium, but overall, their contribution to secondary supplies has reduced significantly since the end of the Highly Enriched Uranium (HEU) Agreement between the Russian and United States governments.

 

   

Utilities, mostly in Europe and some in Japan and Russia, use reprocessed uranium and plutonium from used reactor fuel.

 

   

Re-enriched depleted uranium tails and uranium from underfeeding are also generated when there is excess enrichment capacity.

 

2023 ANNUAL INFORMATION FORM    Page 23


Uranium from US inventories

Historically, the US Department of Energy (DOE) was one of the primary sources of secondary supplies in the uranium market. This role has been significantly reduced since the suspension of the barter program of its natural UF6 inventory. DOE’s current primary contribution to secondary supplies is high-enriched uranium (HEU) downblending. The vast majority of the DOE’s inventory is large volumes of depleted uranium (DU).

In 2018, the DOE suspended its practice of bartering its excess uranium through 2019. The barter suspension has since been extended on an annual basis. The DOE has indicated a commitment to continue the suspension of the UF6 barter program. There is currently no available timetable to dispose of the remaining natural UF6 in DOE’s excess inventory, estimated at less than 9 million pounds.

The DOE’s DU inventory may become available to the market over the next two decades, although a significant portion of the inventory requires either further processing or the development of commercial arrangements before it can be brought to market.

Trade restraints and policies

The importation of Russian uranium into the US market is regulated by the amended USEC Privatization Act and by the Agreement Suspending the Antidumping Action against Russian Uranium Products (RSA), which together impose annual quotas on imports of Russian uranium. These quotas were set at the equivalent of 20% of annual US reactor demand and expired at the end of 2020. An amendment to the RSA was signed that extends the agreement from January 1, 2021 through December 31, 2040 and provides a clear set of rules around access to the US nuclear energy sector by Russian nuclear fuel suppliers. Since 1992, the importation of Russian uranium products in the US has been subject to a quota under the RSA. The amendment reduces the average overall quota and introduces caps, which will reduce the amount of Russian uranium, conversion and enrichment supplied to the US over the long-term. The amendment also includes important new provisions to ensure that all Russian origin uranium must be counted against the quota even if it is imported after further processing in other countries.

The US restrictions do not affect the sale of Russian uranium to other countries. A significant portion of world uranium demand is from utilities in countries that are not affected by the US restrictions. Utilities in some countries, however, adopt policies that limit the amount of Russian uranium they will buy. The Euratom Supply Agency in Europe must approve all uranium related contracts for members of the European Union (EU) and limits the use of certain nuclear fuel supplies from any one source to maintain security of supply, although these limits do not apply to uranium sold separately from enriched uranium product.

Since the Russian invasion of Ukraine on February 24, 2022, many jurisdictions have imposed strict economic sanctions against Russia, including Canada, the United States, the European Union, the United Kingdom, and others. The Canadian government has cancelled existing export permits to Russia and will not grant new export permits to Russia. The US government is yet to ban imports of Russian supplies, though the Prohibiting Russian Uranium Imports Act was passed by the United States House of Representatives in December 2023 which proposes an immediate ban on Russian imports 90 days after enactment. However, the proposed bill allows for a waiver process which authorizes imports equal to but not exceeding volumes stipulated in the RSA. These waivers would expire on January 1, 2028, and no new Russian imports would be permitted thereafter. Trade sanctions will impact the flow of nuclear fuel supplies coming in and out of Russia, including supplies shipped through Russian ports. The global nuclear industry currently relies on Russia for approximately 13% of its supply of uranium concentrates, 25% of conversion supply, and 37% of enrichment capacity.

The US Congress approved an omnibus spending bill for 2021, providing nearly $1.5 billion (US) in spending for nuclear programs which notably included initial funding of $75 million (US) for the creation of a national uranium reserve. This allowed the US government to begin purchasing domestically produced uranium and UF6 to guard against potential commercial and national security risks as a result of the country’s near-total reliance on foreign imports. In 2022, contracts were awarded to five US uranium producers for 1.1 million pounds U3O8. No contracts were awarded in 2023.

 

2023 ANNUAL INFORMATION FORM    Page 24


Conversion services

We have about 21% of world UF6 primary conversion capacity and supply UO2 for Canadian-made CANDU reactors. For conversion services, we compete with a small number of primary commercial suppliers to meet global demand. In addition, at times we compete with secondary supplies that come to market as UF6 and are described above.

Operations, projects and investments

Uranium

 

Tier-one operations

  

McArthur River mine/Key Lake mill

     26  

Cigar Lake

     41  

Inkai

     56  

Tier-two operations

  

Rabbit Lake

     71  

US ISR Operations

     72  

Advanced projects

  

Millennium

     73  

Yeelirrie

     74  

Kintyre

     74  

Exploration

     74  

Fuel services

 

Refining, conversion and fuel manufacturing

  

Blind River Refinery

     77  

Port Hope Conversion Services

     77  

Cameco Fuel Manufacturing Inc.

     78  

Westinghouse

 

Core business

     82  

New build

     84  

Other nuclear fuel cycle investments

 

Global Laser Enrichment (GLE)

     86  

 

2023 ANNUAL INFORMATION FORM    Page 25


Uranium production

 

Cameco’s share

(million lbs U3O8)

   2022      2023      2024 Plan  

McArthur River/Key Lake

     0.8 1       9.4 1       12.6 1 

Cigar Lake

     9.6 2       8.2 2       9.8 2 

Rabbit Lake

     —  3       —  3       —  3 

US ISR Operations

     —  3       —  3       —  3 
  

 

 

    

 

 

    

 

 

 

Total

     10.4        17.6        22.4  
  

 

 

    

 

 

    

 

 

 

 

1 

The McArthur River/Key Lake operations restarted production in November 2022. In 2023, production continued to ramp up and all remaining operational activities, including mine development and underground exploration were restarted.

 

2 

At Cigar Lake, productivity in 2023 was impacted as we completed development and commissioning activities in the first quarter and achieved first production from a new mining area. We had expected to recover from these delays in the second half of the year. However, in the third quarter, we determined maintenance work was required on one of the underground circuits, which had not been planned. The additional time required to complete this work did not allow for the delayed production volumes to be recovered prior to year-end.

 

3

The Rabbit Lake operation remains in a state of care and maintenance, and we are no longer developing new wellfields at US ISR operations.

Due to equity accounting, our share of production from Inkai is shown as a purchase. Based on KAP’s announcement on February 1, 2024, production in Kazakhstan is expected to remain approximately 20% below the level stipulated in subsoil use agreements, primarily due to the sulfuric acid shortage in the country and delays in development of new deposits. Our current target for production at Inkai in 2024 is 8.3 million pounds of U3O8 (100% basis). However, this target is tentative and contingent upon receipt of sufficient quantities of sulfuric acid. In addition, the allocation of such production between the JV Inkai participants is currently under discussion by Cameco and KAP. We received our share of JV Inkai’s 2023 production.

Uranium – Tier-one operations

McArthur River mine / Key Lake mill

 

LOGO   

2023 Production (our share)

 

9.4M lbs

 

2024 Production Outlook (our share)

 

12.6M lbs

 

Estimated Reserves (our share)

 

265.6M lbs

 

Estimated Mine Life

 

2044

  

McArthur River is the world’s largest, high-grade uranium mine, and Key Lake is the world’s largest uranium mill. We are the operator of both the mine and mill.

McArthur River is considered a material uranium property for us. There is a technical report dated March 29, 2019 (effective December 31, 2018) that can be downloaded from SEDAR+ (sedarplus.com) or from EDGAR (sec.gov).

 

2023 ANNUAL INFORMATION FORM    Page 26


Location    Saskatchewan, Canada
Ownership       McArthur River – 69.805%
      Key Lake – 83.33%
Mine type    Underground
Mining methods    Blasthole stoping and raiseboring
End product    Uranium concentrate
Certification    ISO 14001 certified
Estimated reserves    265.6 million pounds (proven and probable), average grade U3O8: 6.72%
Estimated resources    4.9 million pounds (measured and indicated), average grade U3O8: 2.28%
      1.7 million pounds (inferred), average grade U3O8: 2.90%
Licensed capacity    Mine and mill: 25.0 million pounds per year
Licence term    Through October 2043
Total packaged production:    2000 to 2023    340.0 million pounds (McArthur River/Key Lake) (100% basis)
   1983 to 2002    209.8 million pounds (Key Lake) (100% basis)
2023 production    9.4 million pounds (13.5 million pounds on 100% basis)
2024 production outlook    12.6 million pounds (18.0 million pounds on 100% basis)
Estimated decommissioning cost    $50.6 million – McArthur River (100% basis)1
      $276.7 million – Key Lake (100% basis)1

All values shown, including reserves and resources, represent our share only, unless indicated.

 

1 

These amounts represent the submitted, but not yet approved, Preliminary Decommissioning Plan (PDP) and Preliminary Decommissioning Cost Estimate (PDCE) values.

Business structure

 

McArthur River is owned by a joint venture (MRJV)

between two companies:

  

Key Lake is owned by a joint venture between

the same two companies:

•  Cameco – 69.805% (operator)

  

•  Cameco – 83.333% (operator)

•  Orano Canada Inc. (Orano) – 30.195%

  

•  Orano – 16.667%

History

 

1976   

•  Canadian Kelvin Resources Ltd. and Asamera Oil Corporation Ltd. form an exploration joint venture, which includes the lands that the McArthur River mine is situated on

1977   

•  SMDC, one of our predecessor companies, acquires a 50% interest

1980   

•  McArthur River joint venture is formed

 

•  SMDC becomes the operator

 

•  Active surface exploration begins

 

•  Between 1980 and 1988 SMDC reduces its interest to 43.991%

1988   

•  Eldorado Resources Limited merges with SMDC to form Cameco

 

•  We become the operator

 

•  Deposit discovered by surface drilling

1988-1992   

•  Surface drilling reveals significant mineralization of potentially economic uranium grades, in a 1,700 metre zone at depths of between 500 to 640 metres

1992   

•  We increase our interest to 53.991%

1993   

•  Underground exploration program receives government approval – program consists of shaft sinking (completed in 1994) and underground development and drilling

1995   

•  We increase our interest to 55.844%

1997-1998   

•  Federal authorities issue construction licences for McArthur River after reviewing the environmental impact statement, holding public hearings, and receiving approvals from the governments of Canada and Saskatchewan

1998   

•  We acquire all of the shares of Uranerz Exploration and Mining Ltd. (UEM), increasing our interest to 83.766%

•  We sell half of the shares of UEM to Orano, reducing our interest to 69.805%, and increasing Orano’s to 30.195%

 

2023 ANNUAL INFORMATION FORM    Page 27


 

1999   

•  Federal authorities issue the operating licence and provincial authorities give operating approval, and mining begins in December

2003   

•  Production is temporarily suspended in April because of a water inflow

 

•  Mining resumes in July

2009   

•  UEM distributes equally to its shareholders:

 

•  its 27.922% interest in the McArthur River joint venture, giving us a 69.805% direct interest, and Orano a 30.195% direct interest

 

•  its 33.333% interest in the Key Lake joint venture, giving us an 83.33% direct interest, and Orano a 16.667% direct interest

2013   

•  Federal authorities granted a 10-year renewal of the McArthur River and Key Lake operating licences

2014   

•  After a two-week labour disruption, we enter into a four-year collective agreement with unionized employees at McArthur River and Key Lake operations

2017   

•  We announce our plan to temporarily suspend production at McArthur River and Key Lake in 2018

2018   

•  We announce the suspension of production at McArthur River and Key Lake for an indeterminate duration

2022   

•  We announce plans to transition McArthur River and Key Lake from care and maintenance to planned production of 15 million pounds per year (100% basis) by 2024

2023   

•  We updated our production plans for McArthur River and Key Lake to achieve production of 18 million pounds per year (100% basis) starting in 2024

 

•  In October 2023, the Canadian Nuclear Safety Commission (CNSC) granted 20-year renewals to the licences for both McArthur River and Key Lake.

Technical report

 

This description is based on the project’s technical report: McArthur River Operation, Northern Saskatchewan, Canada, dated March 29, 2019 (effective December 31, 2018). The report was prepared for us in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101), by or under the supervision of Linda Bray, P. Eng., Gregory M. Murdock, P. Eng., and Alain D. Renaud, P. Geo. The following description has been prepared under the supervision of Biman Bharadwaj, P. Eng., Daley McIntyre, P. Eng., Gregory M. Murdock, P. Eng., and Alain D. Renaud, P. Geo. They are all qualified persons within the meaning of NI 43-101 but are not independent of us.

 

The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the technical report. We recommend you read the technical report in its entirety to fully understand the project. You can download a copy from SEDAR+ (sedarplus.com) or from EDGAR (sec.gov).

  

 

For information about uranium sales see pages 19 to 21, environmental matters see Our ESG principles and practices and The regulatory environment starting on pages 92 and 96, and taxes see page 104.

 

For a description of royalties payable to the province of Saskatchewan on the sale of uranium extracted from orebodies within the province, see page 103.

 

For a description of risks that might affect access, title or the right or ability to perform work on the property, see Governance and compliance risks starting at page 121, Social risks starting at page 123 and Environmental risks starting at page 124.

About the McArthur River property

Location

The McArthur River mine site is located near Toby Lake, approximately 620 kilometres north of Saskatoon. The mine site is in close proximity to other uranium production operations: the Key Lake mill is 80 kilometres southwest by road and the Cigar Lake mine is 46 kilometres northeast by air.

 

2023 ANNUAL INFORMATION FORM    Page 28


Access

Access to the property is by an all-weather gravel road and by air. Supplies are transported by truck from Saskatoon and elsewhere. There is a 1.6-kilometre unpaved air strip and an air terminal one kilometre east of the mine site, on the surface lease.

Saskatoon, a major population centre south of the McArthur River property, has highway and air links to the rest of North America.

Leases

Surface lease

The MRJV acquired the right to use and occupy the lands necessary to mine the deposit under a surface lease agreement with the province of Saskatchewan. The lease covers 1,425 hectares and expires in May 2043.

We are required to report annually on the status of the environment, land development and progress on northern employment and business development.

Mineral lease

We have the right to mine the deposit under ML 5516, granted to us by the province of Saskatchewan. The lease covers 1,380 hectares and expires in March 2034. We have the right to renew the lease for further 10-year terms.

Mineral claims

A mineral claim gives us the right to explore for minerals and to apply for a mineral lease. There are 28 mineral claims, totaling 87,747 hectares, adjoining the mineral lease and surrounding the deposit. The mineral claims are in good standing until 2025, or later.

Environment, social and community factors

The climate is typical of the continental sub-arctic region of northern Saskatchewan. Summers are short and cool even though daily temperatures can sometimes reach above 30°C. The mean daily temperature for the coldest month is below -20°C, and winter daily temperatures can reach below -40°C.

The deposit is 40 kilometres inside the eastern margin of the Athabasca Basin in northern Saskatchewan. The topography and environment are typical of the taiga forested lands in the Athabasca Basin.

We are committed to building long-lasting and trusting relationships with the communities in which we operate. For more information, see Our ESG principles and practices at page 92.

No communities are in the immediate vicinity of McArthur River. The community of Wollaston Lake is approximately 120 kilometres by air to the east of the mine site. The community of Pinehouse is approximately 300 kilometres south of the mine by road.

Athabasca Basin community resident employees and contractors fly to the mine site from designated pick-up points. Other employees and contractors fly to the mine from Saskatoon with pick-up points in Prince Albert and La Ronge.

Geological setting

The deposit is in the southeastern portion of the Athabasca Basin in northern Saskatchewan, within the southwest part of the Churchill structural province of the Canadian Shield. The deposit is located at or near the unconformity contact between the Athabasca Group sandstones and underlying metasedimentary rocks of the Wollaston Domain.

The deposit is similar to other Athabasca Basin deposits but is distinguished by its very high grade and overall size. Unlike Cigar Lake, there is no development of extensive hydrothermal clay alteration in the sandstone above the uranium mineralization and the deposit is relatively simple geochemically with negligible amounts of other metals.

McArthur River’s geological setting is similar to the Cigar Lake deposit in that the sandstone that overlies the deposit and basement rocks contains large volumes of water at significant pressure.

 

2023 ANNUAL INFORMATION FORM    Page 29


Mineralization

McArthur River’s mineralization is structurally controlled by a northeast-southwest trending reverse fault (the P2 fault), which dips 40-65 degrees to the southeast and has thrust a wedge of basement rock into the overlying sandstone with a vertical displacement ranging between 60 and 80 metres.

The deposit consists of nine mineralized zones with delineated mineral resources and/or reserves: Zones 1, 2, 3, 4, 4 South, A, B, McA North 1 and McA North 2. These and three under-explored mineralized showings, known as McA North 3, McA North 4 and McA South 1, as well as other mineralized occurrences have been identified over a strike length of 2,700 metres.

The main part of the mineralization, generally at the upper part of the basement wedge, averages 12.7 metres in width and has a vertical extent ranging between 50 metres and 120 metres.

The deposit has two distinct styles of mineralization:

 

   

high-grade mineralization at the unconformity near the P2 reverse fault and within both sandstone and basement rocks

 

   

fracture controlled and vein like mineralization that occurs in the sandstone away from the unconformity and within the basement quartzite

The high-grade mineralization along the unconformity constitutes most of the mineralization within the McArthur River deposit. Mineralization occurs across a zone of strongly altered basement rocks and sandstone across both the unconformity and the P2 structure. Mineralization is generally within 15 metres of the basement/sandstone contact with the exception of Zone 2.

Uranium oxide in the form of uraninite and pitchblende (+/- coffinite) occurs as disseminated grains in aggregates ranging in size from millimetres to decimetres, and as massive mineralization up to several metres thick.

Geochemically, the deposit does not contain any significant quantities of the elements nickel, copper, cobalt, lead, zinc, molybdenum, and arsenic that are present in other unconformity related Athabasca uranium deposits although locally elevated quantities of these elements have been observed in Zone B.

Deposit type

McArthur River is an unconformity-associated uranium deposit. Deposits of this type are believed to have formed through an oxidation-reduction reaction at a contact where oxygenated fluids met with reducing fluids. The geological model was confirmed by surface drilling, underground drilling, development, and production activities.

About the McArthur River operation

McArthur River is a fully developed property with sufficient surface rights to meet current mining operation needs. In February 2018, we began a planned 10-month production suspension. In response to market conditions, in July 2018 we extended the suspension for an indeterminate duration. In February 2022, we announced plans to transition from care and maintenance to planned production of 15 million pounds per year (100% basis) by 2024. In February 2023, we updated our 2024 production plan to achieve 18 million pounds per year (100% basis).

We began construction and development of the McArthur River mine in 1997 and completed it on schedule. Mining began in December 1999 and commercial production on November 1, 2000. We have successfully extracted over 340 million pounds (100% basis) since we began mining in 1999.

The mineral reserves at McArthur River are contained within seven zones: Zones 1, 2, 3, 4, 4 South, A and B. There are currently two active mining zones (Zone 2 and 4), one with development significantly advanced (Zone 1), and one in the early stages of development (Zone 4 South).

Zone 2 has been actively mined since production began in 1999. The ore zone was initially divided into three freeze panels.

As the freeze wall was expanded, the inner connecting freeze walls were decommissioned to recover the inaccessible uranium around the active freeze pipes. Mining of Zone 2 is almost complete. About 3.5 million pounds of mineral reserves remain, and we expect to recover them using a combination of raisebore and blasthole stope mining.

Zone 4 has been actively mined since 2010. The zone was divided into four freeze panels, and like in Zone 2, as the freeze wall was expanded, the inner connecting freeze walls were decommissioned. Zone 4 has 103.9 million pounds of mineral reserves secured behind freeze walls, and it will be the main source of production for the next several years. Raisebore and blasthole stope mining will be used to recover the mineral reserves.

 

2023 ANNUAL INFORMATION FORM    Page 30


Zone 1 is the next planned mine area to be brought into production. Freeze hole drilling was completed in 2023 and brine distribution construction work has resumed. A small section of the planned freeze wall is currently actively freezing. Once brine distribution construction is complete and an active freeze wall has been established, drill and extraction chamber development will need to be completed prior to the start of production. Once complete, an additional 48.0 million pounds of mineral reserves will be secured behind freeze walls. Blasthole stope mining is currently planned as the main extraction method in Zone 1.

Zone 4 South is in the early development stages. Access development for the freeze drifts has resumed on the lower levels and freeze drilling began at the end of 2023 on the upper freeze drifts which were established prior to the 2018 shutdown.

Permits

We need three key permits to operate the McArthur River mine:

 

   

Uranium Mine Operating Licence – renewed in 2023 and expires in October 2043 (from the CNSC);

 

   

Approval to Operate Pollutant Control Facilities – renewed in 2022 and expires on June 30, 2028 (from the Saskatchewan Ministry of Environment (SMOE)); and

 

   

Water Rights Licence and Approval to Operate Works – amended in 2011 and valid for an undefined term (from the Saskatchewan Watershed Authority)

The CNSC licence conditions handbook allows McArthur River to produce up to 25.0 million pounds (100% basis) per year.

Infrastructure

Surface facilities are 550 metres above sea level. The site includes:

 

    an underground mine with three shafts: one full service shaft and two ventilation shafts

 

    1.6-kilometre gravel airstrip and air terminal

 

    waste rock stockpiles

 

    water containment ponds and treatment plant

 

    a freshwater pump house

 

    a powerhouse

 

    electrical substations
    backup electrical generators

 

    a warehouse

 

    freeze plants

 

    a concrete batch plant

 

    an administration and maintenance shop building

 

    a permanent residence and recreation facilities

 

    an ore slurry load out facility
 

 

Water, power and heat

Toby Lake, which is nearby and easy to access, has enough water to satisfy all surface water requirements. Collection of groundwater that naturally enters our shafts is sufficient to meet all underground process water requirements and supplements the surface industrial water supply. The site is connected to the provincial power grid, and it has backup generators in case there is an interruption in grid power.

McArthur River operates throughout the year despite cold winter conditions. During the winter, we heat the fresh air necessary to ventilate the underground workings using propane-fired burners.

Employees

Employees are recruited with preference given to residents of northern Saskatchewan.

We reached a new collective agreement with unionized employees at our McArthur River/Key Lake operations in July 2019. The agreement expired on December 31, 2022. Negotiations for a new agreement have commenced. As in past negotiations, work continues under the terms of the expired collective agreement. There is a risk to the production plan if we are unable to reach an agreement and there is a labour dispute.

Mining

The McArthur River deposit presents unique challenges that are not typical of traditional hard or soft rock mines. These challenges are the result of mining in or near high pressure ground water in challenging ground conditions with significant radiation concerns due to the high-grade uranium ore. We take significant steps and precautions to reduce the risks. Mine designs and mining methods are selected based on their ability to mitigate hydrological, radiological, and geotechnical risks. Operational experience gained since the start of production has resulted in a significant reduction in risk. However, there is no guarantee that our efforts to mitigate risk will be successful.

 

2023 ANNUAL INFORMATION FORM    Page 31


Mining methods and techniques

There are three approved mining methods at McArthur River: raisebore mining, blasthole stope mining and boxhole mining. However, only raisebore and blasthole stope mining remain in use. These methods all use ground freezing to mine the McArthur River deposit.

Ground freezing

All the mineralized areas discovered to date at McArthur River are in, or partially in, water-bearing ground with significant pressure at mining depths. This high pressure water source is isolated from active development and production areas in order to reduce the inherent risk of an inflow. To date, McArthur River has relied on pressure grouting and ground freezing to successfully mitigate the risks of the high pressure ground water.

Chilled brine is circulated through freeze holes to form an impermeable freeze barrier around the area being mined. This prevents water from entering the mine, and helps stabilize weak rock formations. Ground freezing significantly reduces, but does not fully eliminate, the risk of water inflows.

Blasthole stoping

Blasthole stoping began in 2011 and was the main extraction method prior to our production suspension. It is planned in areas where blastholes can be accurately drilled and small stable stopes excavated without jeopardizing the freeze wall integrity. The use of this method has allowed the site to improve operating costs by increasing overall extraction efficiency by reducing underground development, concrete consumption, mineralized waste generation and improving extraction cycle time.

Raisebore mining

Raisebore mining is an innovative non-entry approach that we adapted to meet the unique challenges at McArthur River, and it has been used since mining began in 1999. This method is favourable for mining the weaker rock mass areas of the deposit, and is suitable for massive high-grade zones where there is access both above and below the ore zone.

Initial processing

McArthur River produces two product streams, high-grade slurry and low-grade mineralized rock. Both product streams are shipped to the Key Lake mill to produce uranium ore concentrate.

The high-grade material is ground and thickened into a slurry underground and then pumped to surface. The material is then thickened further, blended for grade control and shipped to Key Lake in slurry totes using haul trucks.

The low-grade mineralized material is hoisted to surface and shipped as a dry product to Key Lake using covered haul trucks. Once at Key Lake, the material is ground, thickened and blended with the high-grade slurry to a nominal 5% U3O8 mill feed grade. It is then processed into uranium ore concentrate and packaged in drums for further processing offsite.

Tailings

McArthur River does not have a tailings management facility (TMF) as it ships all mineralized material to Key Lake for final milling and processing.

Waste rock

The waste rock piles are confined to a small footprint on the surface lease and managed in contained facilities. These are separated into three categories:

 

   

clean waste (includes mine development waste, crushed waste, and various piles for concrete aggregate and backfill)

 

   

low-grade mineralization temporarily stored on lined pads until trucked to Key Lake

 

   

waste with acid-generating potential – temporarily stored on lined pads – for concrete aggregate

Water inflow incidents

There have been two notable water inflow incidents at the McArthur River mine. These two inflows have strongly influenced our mine design, inflow risk mitigation and inflow preparedness:

 

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Bay 12 Inflow: Production was suspended on April 6, 2003, as increased water inflow due to a rock fall in a new development area (Bay 12 located just above the 530-metre level) began to flood the lower portions of the mine, including the underground grinding circuit area. Additional dewatering capacity was installed, and the flooded areas were dewatered and repaired. We resumed mining in July 2003 and sealed off the excess water inflow in July 2004.

590-7820N Inflow: In November 2008, there was a small water inflow in the lower Zone 4 development area on the 590-metre level. It did not impact production but did delay local development for approximately one year. In January 2010, the inflow was sealed off and local development was resumed.

Pumping capacity and treatment limits

Our standard for this mine is to secure pumping capacity of at least one and a half times the estimated maximum sustained inflow. We review our dewatering system and requirements at least once a year and before we begin work on any new zone. As our mine plan is advanced, our dewatering system will be expanded to handle water from the new mine areas. We believe we have sufficient pumping, water treatment and surface storage capacity to handle the estimated maximum sustained inflow.

Production

McArthur River Mine

No mining took place from 2019 through 2021. In 2022, we produced 0.64 million pounds (0.45 million pounds our share) and in 2023, we produced 14.8 million pounds (10.3 million pounds our share). We plan to produce 18 million pounds (100% basis) in 2024.

The mine plan is designed to extract all current McArthur River mineral reserves. The following is a general summary of the mine plan production schedule parameters on a 100% basis for these mineral reserves:

 

Total mine production   

•  2,135,000 tonnes of ore

 

•  374 million pounds of U3O8, based on current unmined mineral reserves

 

•  Average grade of 7.95%

 

•  170 to 390 tonnes per day, varying with ore grade (18 million pound annual mine rate)

Note: Broken and in-circuit ore inventory (previously mined material) is not included in the mine production plan total. Current broken inventory consists of 5.2 million pounds at McArthur River and 1.0 million pounds at Key Lake.

Key Lake Mill

No milling took place from 2019 through 2021. In 2022, we packaged 1.1 million pounds (0.8 million pounds our share) and in 2023, we packaged 13.5 million pounds (9.4 million pounds our share).

The mill plan is designed to process all current McArthur River mineral reserves plus Key Lake low-grade mineralization remaining from the Deilmann and Gaertner pits. In addition, a small amount of recycled product from Blind River and Port Hope facilities is planned to be processed. The following is a general summary of the mill plan production schedule parameters on a 100% basis for these mineral reserves, mineralized material, and product:

 

Total mill production   

•  3,393,000 tonnes of mill feed including blend and recycle material

 

•  Average feed grade of 5.14%

 

•  380 million pounds of U3O8 packaged based on an average recovery of 99.0%

Production Suspension

In 2018, we had a temporary planned production suspension and in July 2018 we extended the suspension for an indeterminate duration. There was nominal production in 2018 and no production from 2019 through 2021. A reduced workforce remained at McArthur River and Key Lake to keep the facilities in a state of safe care and maintenance. Care and maintenance activities included mine dewatering, water treatment, freeze wall maintenance, and environmental monitoring, as well as preservation maintenance and monitoring of critical facilities.

 

2023 ANNUAL INFORMATION FORM    Page 33


Production Resumption Plan

With our February 2022 announcement to transition McArthur River and Key Lake from care and maintenance to resuming production, through most of 2022, we undertook the necessary operational readiness activities prior to restarting production.

In November 2022, we announced that the first pounds of uranium ore from the McArthur River mine had been milled and packaged at the Key Lake mill, marking the achievement of initial production as these facilities transition back into normal operations. Total packaged production from McArthur River and Key Lake in 2022 was 1.1 million pounds (0.8 million pounds our share).

Operational readiness activities consisted of recruitment, training, infrastructure upgrades and commissioning as well as reactivation of mobile equipment previously stored for care and maintenance. Operational activities included mine dewatering, water treatment, freeze wall maintenance, and environmental monitoring.

In 2022, production forecasts were revised as we worked through normal commissioning issues to integrate the existing and new assets with upgraded operational technology which caused some delays to the schedule at the mill. During the year, we expensed operational readiness costs of approximately $169 million directly to cost of sales. With the restart of production in 2023, we no longer expense monthly operational readiness costs.

Production ramp-up activities continued in 2023. Total packaged production from McArthur River and Key Lake in 2023 was 13.5 million pounds (9.4 million pounds our share), slightly less than the announced September 3, 2023, forecast of 14 million pounds (9.8 million pounds our share).

All required mining and milling activities have now resumed at McArthur and Key Lake and the sites are expected to operate at a normal 18 million pound annual production rate in 2024, however, several operational risks remain including the availability of personnel with the necessary skills and experience, aging infrastructure, and the potential impact of supply chain challenges on the availability of materials, reagents and equipment that carry with them the risks of not achieving our production plans.

Licensed annual production capacity

The McArthur River mine and Key Lake mill are both licensed to produce up to 25 million pounds (100% basis) per year. To achieve annual production at the licensed capacity, additional investment will be required.

In 2024, we plan to undertake an evaluation of the work and investment necessary to expand production up to its annual licensed capacity, which we expect will allow us to take advantage of this opportunity when the time is right. We will continue to plan our production to align with our contract portfolio and market opportunities, demonstrating that we continue to be a responsible supplier of uranium fuel.

Key Lake mill

Location and access

The Key Lake mill is located in northern Saskatchewan, 570 kilometres north of Saskatoon. The site is 9 kilometres long and 5 kilometres wide and is connected to McArthur River by an 80-kilometre all-weather road. There is a 1.6-kilometre unpaved air strip and an air terminal on the east edge of the site.

Permits

We need two key permits to operate the Key Lake mill:

 

   

Uranium Mill Operating Licence – renewed in October 2023 and expires in October 2043 (from the CNSC); and

 

   

Approval to Operate Pollutant Control Facilities – renewed in 2021 and expires on November 30, 2029 (from the SMOE)

The CNSC licence conditions handbook allows the Key Lake mill to produce up to 25.0 million pounds (100% basis) per year.

Supply

All McArthur River ore, including our share, is milled at Key Lake. We do not have a formal toll milling agreement with the Key Lake joint venture.

 

2023 ANNUAL INFORMATION FORM    Page 34


In June 1999, the Key Lake joint venture (Cameco and UEM) entered a toll milling agreement with Orano to process their total share of McArthur River ore. The terms of the agreement (as amended in January 2001) include the following:

 

   

processing is at cost, plus a toll milling fee; and

 

   

the Key Lake joint venture owners are responsible for decommissioning the Key Lake mill and for certain capital costs, including the cost of any tailings management associated with milling Orano’s share of McArthur River ore

With the UEM distribution in 2009 (see History on page 28 for more information), we made the following changes to the agreement:

 

   

the fees and expenses related to Orano’s pro-rata share of ore produced just before the UEM distribution (16.234% – the first ore stream) have not changed. Orano is not responsible for any capital or decommissioning costs related to the first ore stream.

 

   

the fees and expenses related to Orano’s pro-rata share of ore produced as a result of the UEM distribution (an additional 13.961% – the second ore stream) have not changed. Orano’s responsibility for capital and decommissioning costs related to the second ore stream are, however, as a Key Lake joint venture owner under the original agreement.

The agreement was amended again in 2011 and now requires:

 

   

milling of the first ore stream at the Key Lake mill until May 31, 2028; and

 

   

milling of the second ore stream at the Key Lake mill for the entire life of the McArthur River project

Processing

McArthur River low-grade mineralization, including legacy low-grade mineralized waste rock stored at Key Lake, is ground and thickened at Key Lake and then blended with McArthur River high-grade slurry to a nominal 5% U3O8 mill feed grade. All remaining uranium processing (leaching through to calcined uranium ore concentrate packaging) and tailings disposal also occur at Key Lake.

The Key Lake mill comprises the following eight plants:

 

   

ore slurry receiving plant

 

   

grinding/blending plant

 

   

reverse osmosis plant

 

   

leaching/counter current decantation plant

 

   

solvent extraction plant

 

   

yellowcake precipitation/dewatering/calcining/packing/ammonium sulfate plant

 

   

bulk neutralization/lime handling/tailings treatment and pumping

 

   

powerhouse/utilities/acid plant/oxygen plant complex

Recovery and metallurgical testing

The McArthur River original flowsheet was largely based on the use of conventional mineral processing concepts and equipment. Where necessary, testwork was undertaken to prove design concepts or adapt conventional equipment for unique services. Simulated ore was utilized in much of the testwork because the off-site testing facilities were not licensed to receive radioactive materials. Testwork at the Key Lake metallurgical laboratory also confirmed the suitability of the Key Lake mill circuit for processing McArthur River ore with some Key Lake circuit modifications.

To date, numerous changes have been made to both the McArthur River and Key Lake processing and water treatment circuits to improve their operational reliability and efficiency. From a uranium recovery perspective, the most important was to change the McArthur River grinding circuit classification system from screens to cyclones. This was completed in late 2009 and provided a measurable recovery increase as well as reduced particle segregation issues. From 2012 to 2017 Key Lake achieved an annual mill recovery of 99% and this is assumed to continue.

Testing at Key Lake has shown that use of a silica coagulant was able to alleviate the issues caused by the cement dilution in the ore from McArthur River. This has eliminated the need to operate the gravity concentrator circuit as well as increased the solvent extraction circuit operational reliability.

Waste rock

There are five rock stockpiles at the Key Lake site:

 

   

three contain non-mineralized waste rock. These will be decommissioned when the site is closed.

 

   

two contain low-grade mineralized material. These are used to lower the grade of McArthur River ore before it enters the milling circuit.

 

2023 ANNUAL INFORMATION FORM    Page 35


Treatment of effluent

We modified Key Lake’s effluent treatment process to satisfy our licence and permit requirements.

Tailings capacity

There are two tailings management facilities (TMF) at the Key Lake site:

 

   

an above-ground impoundment facility, where tailings are stored within compacted till embankments. We have not deposited tailings here since 1996, and are looking at several options for decommissioning this facility in the future; and

 

   

the Deilmann open pit, which was mined out in the 1990s. Tailings from processing McArthur River ore are deposited in the Deilmann in-pit TMF.

Beginning in July 2001, periodic sloughing of the pit walls in the western portion of the Deilmann TMF was experienced. We implemented a long-term stabilization plan, with the final phase completed in 2019.

Based upon the current licence conditions, tailings capacity is sufficient to mill all the known McArthur River mineral reserves and resources, should they be converted to reserves, with additional capacity to toll mill ore from other regional deposits.

Decommissioning and financial assurances

Updated preliminary decommissioning plans for McArthur River and Key Lake were submitted in 2017 and 2018 as part of the regular five-year update schedule. Prior to revising the letters of credit, approval of the updated plans is required from the province of Saskatchewan and CNSC staff as well as formal approval from the CNSC through a Commission proceeding. The necessary approvals were received. The documents included our estimated cost for implementing the plans and addressing known environmental liabilities.

In 2022, as part of the required five-year update schedule, we submitted revised preliminary decommissioning estimates for McArthur River and Key Lake, which are currently being reviewed by the province of Saskatchewan and CNSC staff.

For more information, see Nuclear waste management and decommissioning.

Operating and capital costs

The following is a summary of the operating and capital cost estimates for the life of mine, stated in constant 2023 dollars and reflecting a forecast life-of-mine mill production of 377 million pounds U3O8 packaged.

 

Operating Costs ($Cdn million)

   Total
(2024 – 2044)
 

McArthur River Mining

  

Site administration

   $ 1,037.0  

Mining costs

     1,933.4  

Process

     224.4  

Corporate overhead

     222.6  
  

 

 

 

Total mining costs

   $ 3,364.4  
  

 

 

 

Key Lake Milling

  

Administration

   $ 891.1  

Milling costs

     1,818.0  

Corporate overhead

     165.8  
  

 

 

 

Total milling costs

   $ 2,874.9  
  

 

 

 

Total operating costs

   $ 6,293.3  
  

 

 

 

Total operating cost per pound U3O8

   $ 16.70  
  

 

 

 

Note: Presented as total cost to the McArthur River Joint Venture.

 

2023 ANNUAL INFORMATION FORM    Page 36


Estimated operating costs to the MRJV consist of annual expenditures at McArthur River to mine the mineral reserves, process it underground, including grinding, density control and pumping the resulting slurry to surface for transportation to Key Lake.

Operating costs at Key Lake consist of costs for receipt of the slurry, up to and including precipitation of the uranium into yellowcake, including cost of disposal of tailings to the Deilmann TMF.

 

Capital Costs ($Cdn million)

   Total
(2024 – 2044)
 

McArthur River Mine Development

   $ 477.6  

McArthur River Mine Capital

  

Freeze infrastructure

   $ 123.4  

Water management

     11.7  

Concrete Batching and Delivery

     27.7  

Other mine capital

     351.4  
  

 

 

 

Total mine capital

   $ 514.2  
  

 

 

 

Key Lake Mill Sustaining

  
  

 

 

 

Total mill capital

   $ 244.1  
  

 

 

 

Total capital costs

   $ 1,193.9  
  

 

 

 

Notes:

 

  1.

Presented as total cost to the McArthur River Joint Venture.

 

  2.

Mine development includes delineation drilling, mine development, probe and grout drilling, freeze drilling, and minor support infrastructure.

Estimated capital costs to the MRJV include sustaining costs for both McArthur River and Key Lake, as well as underground development at McArthur River to bring mineral reserves into production. Overall, the largest segment of capital at McArthur River is mine development. Other significant capital includes freeze infrastructure costs.

The economic analysis, effective as of December 31, 2018, being the effective date of the technical report for McArthur River and Key Lake operations, resulted in an estimated pre-tax net present value (NPV) (at a discount rate of 8%) to Cameco for net cash flows from January 1, 2019 forward of $2.97 billion for its share of the current McArthur River mineral reserves. Using the total capital invested to December 31, 2018, along with the operating and capital estimates for the remainder of the mineral reserves, the pre-tax internal rate of return (IRR) was estimated to be 11.6%.

The analysis was from the point of view of Cameco, which owns 69.805% of the MRJV, and incorporated a projection of Cameco’s sales revenue from its proportionate share of the related production, less its share of related operating and capital costs of the MRJV, as well as royalties and surcharges that will be payable on the sale of concentrates.

For the purpose of the economic analysis, the projected impact of income taxes was excluded due to the nature of the required calculations. McArthur River operates as an unincorporated joint venture and is, therefore, not subject to direct income taxation at the joint venture level. It is not practical to allocate a resulting income tax cost to Cameco’s portion of the McArthur River operation, as Cameco’s tax expense is a function of several variables, most of which are independent of its investment in McArthur River.

 

2023 ANNUAL INFORMATION FORM    Page 37


Economic Analysis ($Cdn M)

  Year 0     Year 1     Year 2     Year 3     Year 4     Year 5     Year 6     Year 7     Year 8     Year 9     Year 10     Year 11     Year 12  

Production volume (000’s Ibs U3O8)

    —        2,78.8       12,508       12,550       12,653       12,591       12,621       12,611       12,550       12,556       12,587       12,553       12,569  

Sales revenue

  $ —      $ 131.7     $ 572.2     $ 577.5     $ 602.8     $ 618.7     $ 635.0     $ 651.6     $ 662.9     $ 683.3     $ 698.0     $ 709.1     $ 719.4  

Operating costs

    68.2       137.5       171.1       169.5       169.0       168.9       170.1       172.9       177.5       177.9       179.3       179.9       180.0  

Capital costs

    3.7       31.1       36.7       31.9       31.0       42.9       36.8       34.7       35.0       42.6       43.6       74.4       32.0  

Basic royalty

    —        5.6       24.3       24.5       25.6       26.3       27.0       27.7       28.2       29.0       29.7       30.1       30.6  

Resource surcharge

    —        3.9       17.2       17.3       18.1       18.6       19.0       19.5       19.9       20.5       20.9       21.3       21.6  

Profit royalty

    —        —        42.6       49.7       53.5       54.1       57.3       59.6       60.4       62.3       64.1       61.1       69.1  

Net pre-tax cash flow

  $ (71.9   $ (46.5   $ 280.2     $ 284.6     $ 305.5     $ 307.9     $ 324.8     $ 337.2     $ 341.8     $ 351.0     $ 360.4     $ 342.3     $ 386.2  

 

Economic Analysis ($Cdn M)

  Year 13     Year 14     Year 15     Year 16     Year 17     Year 18     Year 19     Year 20     Year 21     Year 22     Year 23     Total  

Production volume [000’s Ibs U3O8)

    12,567       12,630       12,618       12,602       12,591       12,603       12,611       12,649       12,779       11,705       6,060       272,553  

Sales revenue

  $ 748.7     $ 757.8     $ 772.9     $ 787.6     $ 780.6     $ 787.7     $ 794.5     $ 796.9     $ 805.1     $ 737.4     $ 381.8     $ 15,413.2  

Operating costs

    182.1       184.7       185.3       184.5       184.0       182.1       181.8       178.8       175.4       171.0       148.6       4,080.3  

Capital costs

    33.3       23.6       21.7       21.4       21.6       21.9       17.7       11.9       6.4       1.4       —        657.5  

Basic royalty

    31.8       32.2       32.8       33.5       33.2       33.5       33.8       33.9       34.2       31.3       16.2       655.1  

Resource surcharge

    22.5       22.7       23.2       23.6       23.4       23.6       23.8       23.9       24.2       22.1       11.5       462.4  

Profit royalty

    73.1       75.7       78.1       80.5       79.5       80.8       82.5       84.2       86.6       78.5       31.7       1,465.0  

Net pre-tax cash flow

  $ 405.9     $ 418.9     $ 431.7     $ 444.1     $ 438.9     $ 445.7     $ 454.9     $ 464.3     $ 478.2     $ 433.0     $ 173.8     $ 8,092.9  

Pre-tax NAV (8%) to January 1, 2019

  $ 2,973.3                        

Pre-tax IRR (%)

    11.6                      

Notes:

 

  1.

Production volume does not include recycled product received from the Blind River Refinery and the Port Hope Conversion Facility.

Our expectations and plans regarding McArthur River/Key Lake, including forecasts of operating and capital costs, net cash flow, production and mine life are forward-looking information and are based specifically on the risks and assumptions discussed on pages 3, 4 and 5. We may change our operating or capital spending plans in 2024, depending upon uranium markets, our financial position, results of operation, or other factors. Estimates of expected future production, and capital and operating costs are inherently uncertain, particularly beyond one year, and may change materially over time.

Exploration, drilling, sampling, data quality and estimates

There are no historical mineral resource estimates within the meaning of NI 43-101 to report. The original McArthur River mineral resource estimates were derived from surface diamond drilling from 1980 to 1992. In 1988 and 1989, this drilling first revealed significant uranium mineralization and by 1992, we had delineated the mineralization over a strike length of 1,700 metres at depths of between 500 to 640 metres. Following the drillhole results, development of an underground exploration project was undertaken in 1993.

Exploration

Drilling has been carried out extensively from both surface and underground to locate and delineate mineralization. Surface exploration drilling is initially used in areas where underground access is not available. The results are used to guide future underground exploration activities.

Drilling

Surface drilling

We have carried out surface drilling since 2004, to test the extension of mineralization identified from the historical surface drillholes, to test new targets along the strike, and to evaluate the P2 trend northeast and southwest of the mine. Surface drilling since 2004 has extended the potential strike length to more than 2,700 metres.

We have completed preliminary drill tests of the P2 trend at 300 metre intervals or less over 11.5 kilometres (5.0 kilometres northeast and 6.4 kilometres southwest of the McArthur River deposit) of the total 13.75 kilometres strike length of the P2 trend. Surface exploration drilling in 2015 focused on additional evaluation in the southern part of the P2 trend south of the P2 main mineralization. Starting in 2016, exploration efforts shifted away from the P2 trend to the north part of the property.

 

2023 ANNUAL INFORMATION FORM    Page 38


Underground drilling

In 1993, regulators approved an underground exploration program, consisting of shaft sinking, lateral development and drilling. We completed the shaft in 1994.

We have drilled more than 1,280 underground drillholes since 1993 to get detailed information along 1,800 metres of strike length. The drilling was primarily completed from the 530 and 640 metre levels.

Other data

In addition to the exploration drilling, geological data has been collected from the underground probe and grout, service, drain, freeze, and geotechnical drill programs.

Recent activity

Underground exploration at McArthur River resumed in June 2023 with the resumption of infill drilling of Zone B. Infill drilling of Zone B will continue in 2024.

Sampling, analysis and data verification

Surface samples

Surface holes were generally drilled on sections spaced between 50 and 200 metres with 12 to 25 metres between holes on a section when necessary. Drilled depths average 670 metres.

The orientation of mineralization is variable but, in general, vertical holes generally intersect mineralization at angles of 25 to 45 degrees, resulting in true widths being 40 to 70% of the intersected width. Angled holes usually intercept mineralization closer to perpendicular, giving intercepts that are closer to true width.

Any stratigraphy exhibiting noteworthy alteration, structures or radiometric anomalies is split and sampled.

Given that the vast majority of the deposit has been delineated from underground, few surface holes are used for mineral resource and reserve estimation purposes.

Underground samples

Underground drilling is generally planned to provide close to true thicknesses results. All underground exploration holes are core drilled and gamma probed whenever possible. McArthur River uses a high-flux gamma probe designed and constructed by alphaNUCLEAR, a member of the Cameco group of companies. This high-flux gamma probe utilizes two Geiger Müller tubes to detect the amount of gamma radiation emanating from the surroundings. The count rate obtained from the high-flux probe is compared against chemical assay results to establish a correlation to convert corrected probe count rates into equivalent % U3O8 grades for use when assay results are unavailable. The consistency between probe data and chemical assays demonstrates that secular equilibrium exists within the deposit. A small portion of the data used to estimate mineral resources is obtained from assays, and in these cases, the core depth is validated by comparing the downhole gamma survey results with a hand-held scintillometer on core before it is logged, photographed, and then sampled for uranium analysis. Attempts are made to avoid having samples cross geological boundaries.

When sampled, the entire core from each sample interval is taken for assay or other measurements to characterize the physical and geochemical properties of the deposit. This reduces the potential sample bias inherent when splitting core. Core recovery throughout the deposit has generally been very good. However, in areas of poor core recovery, uranium grade determination is generally based on radiometric probe results.

The typical sample collection process at our operations is performed by or under the supervision of a qualified geoscientist and includes the following procedures:

 

   

marking the sample intervals on the core boxes at nominal 0.5 metre sample lengths

 

   

collection of the samples in plastic bags, taking the entire core

 

   

documentation of the sample location, assigning a sample number, and description of the sample, including radiometric values from a hand-held device

 

2023 ANNUAL INFORMATION FORM    Page 39


   

bagging and sealing, with sample tags inside bags and sample numbers on the bags; and

 

   

placement of samples in steel drums for shipping

Sample security

Current sampling protocols dictate that all samples are collected and prepared in a restricted core processing facility. The core samples are collected and transferred from the core boxes to high-strength plastic sample bags, then sealed. The sealed bags are then placed in steel drums and shipped in compliance with the Transport of Dangerous Goods regulations with tamper-resistant security seals. Chain of custody documentation is present from inserting samples into steel drums to the final delivery of results by the Saskatchewan Research Council Geoanalytical Laboratories (SRC).

All samples collected are prepared and analysed under the close supervision of qualified personnel at SRC, which is a restricted access laboratory licensed by the CNSC.

Analysis

Drill core assay sample preparation is performed at SRC’s main laboratory, which is independent of the participants of the MRJV. It involves jaw crushing to 80% passing at less than 2 mm and splitting out a 100 – 200 g sub-sample using a riffle splitter. The sub-sample is pulverized to 90% at less than 106 microns using a puck and ring grinding mill. The pulp is then transferred to a bar coded plastic snap top vial. Assaying by SRC involves digesting an aliquot of pulp in concentrated 3:1 HCL:HNO3, on a hot plate for approximately one hour. The volume is then made up in a 100 ml volumetric flask using deionized water prior to analysis by ICP-OES. Instruments used in the analysis are calibrated using certified commercial solutions. This method is ISO/IEC 17025:2017 accredited by the Standards Council of Canada.

Quality control and data verification

The quality assurance and quality control procedures used during early drilling programs were typical for the time. Many of the original signed assay certificates from surface drilling are available and have been reviewed by Cameco geologists.

More recent sample preparation and assaying was completed under the supervision of qualified personnel at SRC and includes preparing and analysing standards, duplicates and blanks. At least two standards are analysed for each 40-sample batch. We also include a pulp repeat and 1 split sample repeat with every group. Samples that fail quality controls are re-analyzed.

In 2013, McArthur River implemented an SQL server based centralized geological data management system to manage all drillhole and sample related data. All core logging, sample collection, downhole probing and sample dispatching activities are carried out and managed within this system. All assay, geochemical and physical analytical results obtained from the external laboratory are uploaded directly into the centralized database, thereby mitigating the potential for manual data transfer errors. The database used for the current mineral resource and mineral reserve estimates was validated by Cameco qualified geoscientists.

Additional data quality control measures include:

 

   

surveyed drillhole collar coordinates and downhole deviations are entered into the database and visually validated and compared to the planned location of the holes

 

   

comparison of the information in the database against the original data, including paper logs, assay certificates and original probing data files as required

 

   

validation of core logging information in plan and section views, and review of logs against photographs of the core

 

   

checking for data entry errors such as overlapping intervals and out of range values

 

   

radiometric probes undergo annual servicing and re-calibration as well as additional checks including control probing to ensure precision and accuracy of the probes. Servicing and re-calibration of the probes were performed to support 2023 drilling activities.

 

   

validating uranium grades comparing radiometric probing, core radioactivity measurements and chemical assay results. New measurement data collected in 2023 was reviewed. No issues were observed.

No mineral resource estimation work was performed in 2023. Remaining quality control and data verification activities described above will be performed prior to the next resource estimate update.

 

2023 ANNUAL INFORMATION FORM    Page 40


Since the start of commercial production, we have regularly compared information collected from production activities, such as freeze holes, raisebore pilot holes, radiometric scanning of scoop tram buckets and mill feed sampling, to the drillhole data informed models. We also compare the uranium block model with mine production results on a quarterly basis to ensure an acceptable level of accuracy is maintained.

Our geoscientists, including a qualified person as such term is defined in NI 43-101, have witnessed or reviewed drilling, core handling, radiometric probing, logging, sampling facilities, sampling and data verification procedures employed at the McArthur River operation and consider the methodologies to be satisfactory and the results representative and reliable. There has been no indication of significant inconsistencies in the data used or verified nor any failures to adequately verify the data.

Accuracy

We are satisfied with the quality of data and consider it valid for use in the estimation of mineral resources and reserves for McArthur River. Comparison of the actual mine production with the expected production supports this opinion.

Mineral reserve and resource estimates

Please see page 87 for our mineral reserve and resource estimates for McArthur River.  

Uranium – Tier-one operations

Cigar Lake

 

LOGO   

2023 Production (our share)

 

8.2M lbs

 

2024 Production Outlook (our share)

 

9.8M lbs

 

Estimated Reserves (our share)

 

113.8M lbs

 

Estimated Mine Life

 

2036

Cigar Lake is the world’s highest grade uranium mine. We are a 54.5% owner and the mine operator. Cigar Lake uranium is milled at Orano’s McClean Lake mill.

Cigar Lake is considered a material uranium property for us. There is a technical report dated March 22, 2024 (effective December 31, 2023) that can be downloaded from SEDAR+ (sedarplus.com) or from EDGAR (sec.gov).

 

2023 ANNUAL INFORMATION FORM    Page 41


Location    Saskatchewan, Canada
Ownership    54.547%
Mine type    Underground
Mining method    Jet boring system
End product    Uranium concentrate
Certification    ISO 14001 certified
Estimated reserves    113.8 million pounds (proven and probable), average grade U3O8: 17.03%
Estimated resources    14.7 million pounds (measured and indicated), average grade U3O8: 5.32%
  

 

10.9 million pounds (inferred), average grade U3O8: 5.55%

Licensed capacity    18.0 million pounds per year (our share 9.8 million pounds per year)
Licence term    Through June, 2031
Total packaged production: 2014 to 2023    138.4 million pounds (100% basis)
2023 production    8.2 million pounds (15.1 million pounds on 100% basis)
2024 production outlook    9.8 million pounds (18.0 million pounds on 100% basis)
Estimated decommissioning cost    $73.8 million (100% basis)1

All values shown, including reserves and resources, represent our share only, unless otherwise indicated.

 

1 

This amount represents the submitted, but not yet approved, PDP and PDCE value.

Business structure

Cigar Lake is owned by a joint venture of three companies (CLJV):

 

   

Cameco – 54.547% (operator)

 

   

Orano – 40.453%

 

   

TEPCO Resources Inc. – 5.000%

History

 

1976   

•  Canadian Kelvin Resources and Asamera Oil Corporation form an exploration joint venture, which includes the lands that the Cigar Lake mine was built on

1977   

•  SMDC, one of our predecessor companies, acquires a 50% interest

1980   

•  Waterbury Lake joint venture formed, includes lands now called Cigar Lake

1981   

•  Deposit discovered by surface drilling – it was delineated by a surface drilling program between 1982 and 1986

1985   

•  Reorganization of the Waterbury Lake joint venture – Cigar Lake Mining Corporation becomes the operator of the Cigar Lake lands and a predecessor to Orano becomes the operator of the remaining Waterbury Lake lands

 

•  SMDC has a 50.75% interest

1987-1992   

•  Test mining, including sinking shaft 1 to 500 metres and lateral development on 420 metre, 465 metre and 480 metre levels

1988   

•  Eldorado Resources Limited merges with SMDC to form Cameco

1993-1997   

•  Canadian and Saskatchewan governments authorize the project to proceed to regulatory licensing stage, based on recommendation of the joint federal-provincial panel after public hearings on the project’s environmental impact

2000   

•  JBS tested in waste and frozen ore

2001   

•  Joint venture approves a feasibility study and detailed engineering begins in June

2002   

•  Joint venture is reorganized, new joint venture agreement is signed, Rabbit Lake and JEB toll milling agreements are signed, and we replace Cigar Lake Mining Corporation as Cigar Lake mine operator

2004   

•  Environmental assessment process is complete

 

•  CNSC issues a construction licence

 

2023 ANNUAL INFORMATION FORM    Page 42


2005   

•  Development begins in January

2006   

•  Two water inflow incidents delay development:

  

•  in April, shaft 2 floods

  

•  in October, underground development areas flood

  

•  In November, we begin work to remediate the underground development areas

2008   

•  Remediation interrupted by another inflow in August, preventing the mine from being dewatered

2009   

•  Remediation of shaft 2 completed in May

  

•  We seal the 2008 inflow in October

2010   

•  We finish dewatering the underground development areas in February, establish safe access to the 480 metre level, the main working level of the mine, and backfill the 465 metre level

  

•  We substantially complete clean-up, inspection, assessment and securing of underground development and resume underground development in the south end of the mine

2011   

•  We begin to freeze the ground around shaft 2 and restart freezing the orebody from underground and from the surface

  

•  We resume the sinking of shaft 2 and early in 2012 achieve breakthrough to the 480 metre level, establishing a second means of egress for the mine

  

•  We receive regulatory approval of our mine plan and begin work on our Seru Bay project

  

•  Agreements are signed by the Cigar Lake and McClean Lake joint venture participants to mill all Cigar Lake ore at the McClean Lake mill and the Rabbit Lake toll milling agreement is terminated

2012   

•  We achieve breakthrough to the 500 metre level in shaft 2

  

•  We assemble the first JBS unit underground and move it to a production tunnel where we commence preliminary commissioning

2013   

•  CNSC issues an eight-year operating licence

  

•  We begin jet boring in ore

2014   

•  First Cigar Lake ore shipped to McClean Lake mill

  

•  McClean Lake mill starts producing uranium concentrate from Cigar Lake ore

2015   

•  We declared commercial production in May

2016   

•  We updated the CNSC on our commissioning activities to satisfy a condition in our federal licence

2020   

•  In March, production is temporarily suspended as a precautionary measure due to the COVID-19 pandemic

  

•  In September, production resumes

  

•  In December, production is temporarily suspended as a precautionary measure due to the COVID-19 pandemic

2021   

•  In April, we announce plans to restart production

  

•  In June, CNSC granted a 10-year renewal of Cigar Lake’s uranium operating licence

2022   

•  In February, we announce plans to reduce production at Cigar Lake in 2024 to 13.5 million pounds per year (100% basis), 25% below its annual licensed capacity

  

•  In May, we acquire an additional 4.522 percentage interest in Cigar Lake, increasing our interest to 54.547%

2023   

•  We updated our production plans for Cigar Lake to maintain production of 18 million pounds per year (100% basis) in 2024

 

2023 ANNUAL INFORMATION FORM    Page 43


Technical report

 

This description is based on the project’s technical report: Cigar Lake Operation, Northern Saskatchewan, Canada, dated March 22, 2024 (effective December 31, 2023) except for some updates that reflect developments since the technical report was published. The report was prepared for us in accordance with NI 43-101, by or under the supervision of Biman Bharadwaj, P. Eng., Scott Bishop, P. Eng., Alain D. Renaud, P. Geo., and Lloyd Rowson, P. Eng. The following description has been prepared under the supervision of the above qualified persons within the meaning of NI 43-101. They are not independent of us.

 

The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the technical report except as such qualifications, assumptions and exclusions may be modified in this AIF. We recommend you read the technical report in its entirety to fully understand the project. You can download a copy from SEDAR+ (sedarplus.com) or from EDGAR (sec.gov).

  

For information about uranium sales see pages 19 to 21, environmental matters see Our ESG principles and practices and The regulatory environment starting on pages 92 and 96, and taxes see page 104.

 

For a description of royalties payable to the province of Saskatchewan on the sale of uranium extracted from orebodies within the province, see page 103.

 

For a description of risks that might affect access, title or the right or ability to perform work on the property, see Governance and compliance risks starting at page 121, Social risks starting at page 123 and Environmental risks starting at page 124.

About the Cigar Lake property

We began developing the Cigar Lake underground mine in 2005, but development was delayed due to water inflows. In October 2014, the McClean Lake mill produced the first uranium concentrate from ore mined at the Cigar Lake operation. Commercial production was declared in May 2015. Since that time, mine operation has achieved full nameplate capacity.

Location

The Cigar Lake mine site is located near Waterbury Lake, approximately 660 kilometres north of Saskatoon. The mine site is near other uranium production operations: McClean Lake mill is 69 kilometres northeast by road and McArthur River mine is 46 kilometres southwest by air from the mine site.

Access

Access to the property is by an all-weather road and by air. Site activities occur year-round, including supply deliveries. There is an unpaved airstrip and air terminal east of the mine site.

Saskatoon, a major population centre south of the Cigar Lake deposit, has highway and air links to the rest of North America.

Leases

Surface lease

The CLJV acquired the right to use and occupy the lands necessary to mine the deposit under a surface lease agreement with the province of Saskatchewan. The lease covers approximately 715 hectares and expires in May 2044.

We are required to report annually on the status of the environment, land development and progress on northern employment and business development.

Mineral lease

We have the right to mine the deposit under ML 5521, granted to the CLJV by the province of Saskatchewan. The lease covers 308 hectares and expires on November 30, 2031. The CLJV has the right to renew the lease for further 10-year terms.

Mineral claims

A mineral claim gives us the right to explore for minerals and to apply for a mineral lease. There are 38 mineral claims totaling 95,293 hectares, adjoining the mineral lease and surrounding the site. The mineral claims are in good standing until 2037 or later.

 

2023 ANNUAL INFORMATION FORM    Page 44


Environment, social and community factors

The climate is typical of the continental sub-arctic region of northern Saskatchewan. Summers are short and cool even though daily temperatures can sometimes reach above 30°C. The mean daily temperature for the coldest month is below -20°C, and winter daily temperatures can reach below -40°C.

The deposit is 40 kilometres west of the eastern margin of the Athabasca Basin in northern Saskatchewan. The topography and environment are typical of the taiga forested lands in the Athabasca Basin. This area is covered with 30 to 50 metres of overburden. Vegetation is dominated by black spruce and jack pine. There is a lake known as “Cigar Lake” which, in part, overlays the deposit.

We are committed to building long-lasting and trusting relationships with the communities in which we operate. For more information, see Our ESG principles and practices at page 92.

The closest inhabited site is Points North Landing, 56 kilometres northeast by road. The community of Wollaston Lake is approximately 80 kilometres by air to the east of the mine site.

Athabasca Basin community resident employees and contractors fly to the mine site from designed pick-up points. Other employees and contractors fly to site from Saskatoon with pickup points in Prince Albert and La Ronge.

Geological setting

The deposit is at the unconformity contact separating late Paleoproterozoic to Mesoproterozoic sandstone of the Athabasca Group from middle Paleoproterozoic metasedimentary gneiss and plutonic rocks of the Wollaston Group. The Key Lake, McClean Lake and Collins Bay deposits all have a similar structural setting. While Cigar Lake shares many similarities with these deposits, it is distinguished by its flat-lying geometry, size, the intensity of its alternation process, the high degree of associated hydrothermal clay alteration and the presence of massive, extremely rich, high-grade uranium mineralization.

Cigar Lake’s geological setting is similar to McArthur River’s: the permeable sandstone, which overlays the deposit and basement rocks, contains large volumes of water at significant pressure. Unlike McArthur River, however, the deposit is flat-lying with the ore zone being overlain by variably developed clay alteration as opposed to silica enrichment.

Mineralization

The Cigar Lake deposit has the shape of a flat- to cigar-shaped lens and is approximately 1,950 metres in length, 20 to 100 metres in width, and ranges up to 15.7 metres thick, with an average thickness of about 5.4 metres. It occurs at depths ranging between 410 to 450 metres below the surface. The eastern part of Cigar Lake (CL Main) is approximately 670 metres long by 100 metres wide and the western part (CLEXT) is approximately 1,280 metres long by 75 metres wide.

The deposit has two distinct styles of mineralization:

 

   

high-grade mineralization at or proximal to the unconformity which includes all of the mineral resources and mineral reserves

 

   

low-grade, fracture controlled, vein-like mineralization which is located either higher up in the sandstone or in the basement rock mass

The uranium oxide in the form of uraninite and pitchblende occurs as disseminated grains in aggregates ranging in size from millimetres to decimetres, and as massive lenses of mineralization up to a few metres thick in a matrix of sandstone and clay. Coffinite (uranium silicate) is estimated to form less than 3% of the total uranium mineralization.

Geochemically, the deposit contains quantities of the elements nickel, copper, cobalt, lead, zinc, molybdenum, arsenic and rare earth elements, but in non-economic concentrations. Higher concentrations of these elements are associated with massive pitchblende or massive sections of arseno-sulfides.

Deposit type

Cigar Lake is an unconformity-related uranium deposit. Deposits of this type are believed to have formed through a redox reaction at a contact where oxygenated fluids met with reducing fluids. The geological model was confirmed by surface drilling, development, and production activities.

 

2023 ANNUAL INFORMATION FORM    Page 45


About the Cigar Lake operation

Cigar Lake is a developed property with sufficient surface rights to meet current mining operation needs. We are currently mining in the CL Main ore body.

Permits

Please see page 51 for more information about regulatory approvals for Cigar Lake.

Infrastructure

Surface facilities are 490 metres above sea level. The site includes:

    an underground mine with two shafts

 

    access road joining the provincial highway and McClean Lake

 

    site roads and site grading

 

    airstrip and terminal

 

    employee residence and construction camp

 

    Shaft No. 1 and No. 2 surface facilities

 

    freeze plants and brine distribution equipment

 

    surface freeze pads

 

    water supply, storage and distribution for industrial water, potable water and fire suppression

 

    propane, diesel and gasoline storage and distribution

 

    electrical power substation and distribution
    compressed air supply and distribution

 

    mine water storage ponds and water treatment

 

    sewage collection and treatment

 

    surface and underground pumping system installation

 

    surface runoff containment infrastructure

 

    waste rock stockpiles and aggregate processing infrastructure

 

    garbage disposal landfill

 

    administration, maintenance and warehousing facilities

 

    ore load out facility

 

    concrete batch plant

 

    Seru Bay treated water effluent pipeline

 

    emergency power generating facilities
 

 

The Cigar Lake mine site contains all the necessary services and facilities to operate a remote underground mine, including personnel accommodation, access to water, airport, site roads and other necessary buildings and infrastructure.

Water, power and heat

Waterbury Lake, which is nearby, provides water for the industrial activities and the camp. The site is connected to the provincial electricity grid, and it has standby generators in case there is an interruption in grid power.

Cigar Lake operates throughout the year despite cold winter conditions. During the winter, we use propane-fired burners to heat the fresh air necessary to ventilate the underground workings.

Employees

Employees are recruited with preference given to residents of northern Saskatchewan.

Mining

The Cigar Lake deposit presents unique challenges that are not typical of traditional hard or soft rock mines. These challenges are the result of mining in or near high-pressure ground water in challenging ground conditions with significant radiation concerns due to the high-grade uranium and elements of concern in the orebody with respect to water quality. We take significant steps and precautions to reduce the risks. Mine designs and the mining method are selected based on their ability to mitigate hydrological, radiological, and geotechnical risks. Operational experience gained since the start of production has resulted in a significant reduction in risk. However, there is no guarantee that our efforts to mitigate risk will be successful.

Mining methods

We use the JBS method to mine the Cigar Lake deposit.

Artificial ground freezing (AGF)

The current method of mining the Cigar Lake orebody uses progressive block freezing of portions of the mineralized zone and adjacent host rock. Freezing the orebody reduces the risk of potential inflow of groundwater and release of radon gas into the workplace, while increasing cavity stability and standup time during mining. The freezing strategy is to bulk freeze the ore zone

and the surrounding area prior to start of mining in a given area. Frozen cavity criteria are applied to each cavity prior to mining to ensure it meets the minimum standard prior to excavation.

 

2023 ANNUAL INFORMATION FORM    Page 46


This AGF system freezes the deposit and surrounding rock to between -5°C and -25°C in two to four years, depending on freeze pipe geometry and ground properties such as water content and thermal conductivity.

JBS mining

As a result of the unique geological conditions at Cigar Lake, we are unable to utilize traditional mining methods that require access above the ore, which necessitated the development of a non-entry mining method specifically adapted for this deposit. After many years of test mining, we selected jet boring, a non-entry mining method, and it has been used since we began mining in 2014. This method involves:

 

   

drilling a pilot hole into the frozen orebody, inserting a high-pressure water jet and cutting a cavity out of the frozen ore;

 

   

collecting the ore and water mixture (slurry) from the cavity and pumping it to a storage sump, allowing it to settle;

 

   

using a clamshell, transporting the ore from the storage sump to an underground comminution and processing circuit;

 

   

once mining is complete, filling each cavity in the orebody with concrete; and

 

   

starting the process again with the next cavity

 

LOGO

This is a non-entry method, which means mining is carried out from headings in the basement rock below the deposit, so employees are not exposed to the ore. This mining approach is highly effective at managing worker exposure to radiation levels. Combined with ground freezing and the cuttings collection and hydraulic conveyance system, jet boring reduces radiation exposure to acceptable levels that are below regulatory limits.

The mine equipment fleet is currently comprised of three JBS units plus other equipment to support mine development, drilling and other services. Two additional scooptrams, plus some smaller ancillary equipment, will be added to the current equipment fleet to meet the production and development requirements for the remainder of the mine life.

We have divided the orebody into production panels. At least three production panels need to be frozen at one time to achieve the full annual production rate of 18 million pounds. One JBS machine will be located below each frozen panel and the three JBS machines required are currently in operation. Two machines actively mine at any given time while the third is moving, setting up, or undergoing maintenance.

Mine development

Mine development for construction and operation uses two basic approaches: drill and blast with conventional ground support is applied in areas with a competent rock mass. Most permanent areas of the mine, which contain the majority of the installed equipment and infrastructure, are hosted in competent rock mass and are excavated and supported conventionally. The production tunnels immediately below the orebody are primarily in poor, weak rock mass and are excavated and supported using the New Austrian Tunnelling Method (NATM). NATM was adopted as the primary method of developing new production cross-cuts, replacing the former Mine Development System (MDS).

NATM, as applied at Cigar Lake, involves a multi-stage sequential mechanical excavation, extensive external ground support and a specialized shotcrete liner. The liner system incorporates yielding elements which permit controlled deformation required to accommodate additive pressure from mining and ground freezing activities. The production tunnels have an inside diameter of five metres and are approximately circular in profile.

 

2023 ANNUAL INFORMATION FORM    Page 47


We plan our mine development to take place away from known groundwater sources whenever possible. In addition, we assess all planned mine development for relative risk and apply extensive additional technical and operating controls for all higher risk development.

In order to successfully achieve the planned production schedule, we must continue to successfully transition into new mining areas, which includes mine development and investment in critical support infrastructure. If development work is delayed for any reason, including availability of storage capacity for waste rock, our ability to meet our future production plans may be impacted.

Mine access

There are two main levels in the mine: the 480 and 500 metre levels. Both levels are in the basement rocks below the unconformity. Mining is conducted from the 480-metre level which is located approximately 40 metres below the ore zone. The main underground processing and infrastructure facilities are located on this level. The 500-metre level is accessed via a ramp from the 480-metre level. The 500-metre level provides for the main ventilation exhaust drift for the mine, the mine dewatering sump and additional processing facilities. All construction required for production has been completed.

Processing

Cigar Lake ore is processed at two locations:

Comminution is conducted underground at Cigar Lake, while leaching, purification and final yellowcake production and packaging occurs at the McClean Lake mill. The ore is trucked as a finely ground slurry from Cigar Lake to the McLean Lake mill in purpose-built containers identical to those used to transport McArthur River ore slurry to the Key Lake mill.

Recovery and metallurgical testing

Extensive metallurgical test work was performed on core samples of Cigar Lake ore from 1992 to 1999 in France at Orano’s CIME test centre. Samples used for the metallurgical test work during this period may not have been representative of the deposit as a whole. Additional test work completed by Orano in 2012 with drill core samples verified that a high uranium recovery rate could be achieved regardless of the variability of the ore. Test work also concluded that more hydrogen gas evolution took place than previously anticipated, which resulted in safety related modifications being implemented in the leaching circuit. Leaching modifications began in 2013 and were completed in 2014, with mill start-up in September 2014.

The results of this test work program provided the process design criteria for the additions and modifications required at the McClean Lake mill for processing Cigar Lake ore. Since 2014, the McClean Lake mill has processed on a daily basis a range of ore grades, at times in excess of 28% U. Additional testing was completed by Orano in 2018 and 2019 on samples from CLEXT. The test work, combined with ongoing optimization and operating experience at the McClean Lake mill, confirmed that no modifications would be required to the mill circuits to process CLEXT ore. Tailings neutralization and aging tests also completed during this period verified that the current operating practices at the McClean Lake mill will produce tailings that are stable over the long-term.

Based on the test results and past mill performance, an overall uranium recovery of 98.8% for CL Main and 98.5% for CLEXT is expected for the remainder of the mine life.

Specific ore induced risks include:

 

   

Elevated arsenic concentration in the mill feed may result in increased leaching circuit solution temperatures. This could result in a reduction in mill feed rates and additional capital and operating expense to modify the leaching process.

 

   

Hydrogen evolution rates in leaching may exceed the design capacity of the hydrogen gas control system resulting in reduced leach feed rates. Additional capital expense may be required to increase the capacity of the hydrogen gas control system.

Tailings

Cigar Lake site does not have a TMF. The ore is processed at the McClean Lake mill. See Toll milling agreement below for a discussion of the McClean Lake TMF.

 

2023 ANNUAL INFORMATION FORM    Page 48


Waste rock

The waste rock piles are separated into three categories:

 

   

clean waste – will remain on the mine site for use as aggregate for roads, concrete backfill and future site reclamation

 

   

mineralized waste (>0.03% U3O8) – will be disposed of underground at the Cigar Lake mine; and

 

   

waste with acid-generating potential – temporarily stored on lined pads

The latter two stockpiles are contained on lined pads; however, no significant mineralized waste has been identified during development to date.

Production

The mine plan is designed to extract all current Cigar Lake mineral reserves. The following is a general summary of the mine plan production schedule parameters on a 100% basis for these mineral reserves:

 

Total mill production   

•  205.9 million pounds of U3O8, based on current mineral reserves and an overall milling recovery of 98.8% for CL Main and 98.5% for CLEXT

 

•  Full annual production of 18 million pounds of U3O8

Total mine production   

•  554,500 tonnes of ore

Average annual mine production   

•  115 to 160 tonnes per day during peak production, depending on ore grade

Average mill feed grade   

•  17.0% U3O8

Total packaged production from Cigar Lake in 2023 was 15.1 million pounds U3O8 (8.2 million pounds our share) compared to 18.0 million pounds U3O8 (9.8 million pounds our share) in 2022. In 2022, we were successful in catching up on development work that had been deferred from 2021. In 2023, productivity was impacted as we completed development and commissioning activities in the first quarter and achieved first production from a new mining area. We had expected to recover from these delays in the second half of the year. However, in the third quarter, we determined maintenance work was required on one of the underground circuits, which had not been planned. The additional time required to complete this work did not allow for the delayed production volumes to be recovered prior to year-end.

In 2024, we expect to produce at the licensed rate of 18 million pounds (100% basis) per year.

Inflation, the availability of personnel with the necessary skills and experience, and the impact of supply chain challenges on the availability of materials and reagents carry with them the risk of not achieving our production plans, production delays and increased costs in 2024 and future years.

Decommissioning and financial assurances

An updated preliminary decommissioning plan for Cigar Lake was submitted in 2017 and 2018 as part of the regular five-year update schedule. Prior to revising the letters of credit, approval of the updated plan is required from the province and CNSC staff as well as formal approval from the CNSC through a Commission proceeding. The necessary approvals were received. The document included our estimated cost for implementing the plan and addressing known environmental liabilities.

The reclamation and remediation activities associated with waste rock and tailings at the McClean Lake mill are covered by the plans and cost estimates for this facility.

In 2022, as part of the required five-year update schedule, we submitted a revised preliminary decommissioning estimate for Cigar Lake, which is currently being reviewed by the province and CNSC staff.

For more information, see Nuclear waste management and decommissioning.

Water inflow and mine/mill development

Cigar Lake water inflow incidents

From 2006 through 2008, the Cigar Lake project suffered several setbacks because of three water inflow incidents. The first occurred in 2006, resulting in the flooding of the then partially completed Shaft No. 2. The two subsequent incidents involved inflows in the mine workings connected to Shaft No. 1 and resulted in flooding of the mine workings. We executed recovery and remediation plans for all three inflows. Re-entry into the main mine workings was achieved in 2010 and work to secure the mine was completed in 2011. The mine is fully remediated and entered commercial production in 2015.

 

2023 ANNUAL INFORMATION FORM    Page 49


Lessons learned from the inflows have been applied to the subsequent mine plan and development to reduce the risk of future inflows and improve our ability to manage them should they occur.

Increased pumping capacity

In 2012, we increased the installed mine dewatering capacity to 2,500 cubic metres per hour. Mine water treatment capacity has been increased to 2,550 cubic metres per hour, and regulatory approval to discharge routine and non-routine treated water to Seru Bay is in place. As a result, we believe we have sufficient pumping, water treatment and surface storage capacity to handle the estimated maximum inflow.

Current status of development

Construction of all major permanent underground development and process facilities required for the duration of the mine life is complete. A number of underground access drifts and production crosscuts remain to be driven as part of ongoing mine development to sustain production rates.

On surface, construction of all permanent infrastructure required to achieve nameplate capacity has been completed.

Underground mine development continued in 2023. We completed our second production crosscut in the western portion of the CL Main in preparation for ore mining starting in the second quarter of 2024.

During 2023, we:

 

   

executed planned 21-day annual maintenance activities in September

 

   

executed production activities from four production tunnels in the CL Main part of the orebody and one, for the first time, from the CLEXT part of the orebody

 

   

in alignment with our long-term production planning, brought two new panels online

 

   

continued underground header construction activities and expanded our ground freezing program to ensure continued frozen ore inventory

 

   

completed our freeze hole drilling program in the second quarter

In 2024, we plan to:

 

   

continue production activities focused on bringing one new production panel online

 

   

complete construction and commissioning of freeze distribution infrastructure expansion in support of future production

 

   

continue underground mine development on two new production tunnels as well as expand ventilation and access drifts in alignment with the long-term mine plan

 

   

commission the surface backfill batch plant to support ongoing operations

 

   

execute an underground geotechnical drilling program

The McClean Lake mill has been expanded to process and package all Cigar Lake ore.

Toll milling agreement

The McClean Lake joint venture agreed to process Cigar Lake’s ore slurry at its McClean Lake mill, according to the terms in its agreement with the CLJV: JEB toll milling agreement (effective January 1, 2002 and amended and restated effective November 30, 2011), dedicating the necessary McClean Lake mill capacity to process and package 18 million pounds of Cigar Lake uranium concentrate annually.

The CLJV pays a toll milling fee and its share of milling expenses.

The McClean Lake mill started receiving Cigar Lake ore in March 2014 and produced its first drum of Cigar Lake yellowcake in October 2014. All of Cigar Lake’s ore slurry from current mineral reserves will be processed at the McClean Lake mill, operated by Orano. Orano does not expect any new major infrastructure is necessary at McClean Lake mill to receive and process Cigar Lake’s mineral reserves. Minor upgrades related to throughput optimisation were completed in 2020.

The McClean Lake joint venture commenced work in 2012 to optimize its TMF to accommodate all of Cigar Lake’s current mineral reserves. This optimization included periodic raising of a bentonite amended liner, the most recent of which was completed in 2023.

 

2023 ANNUAL INFORMATION FORM    Page 50


In 2022, Orano received regulatory approval for the expansion of the JEB TMF.

The expansion will be achieved by the continued construction of an engineered embankment and placement of a bentonite amended liner. Following the staged expansion, the TMF is expected to have capacity to receive tailings from processing all of Cigar Lake’s current mineral reserves.

The McClean Lake joint venture is responsible for all costs of decommissioning the McClean Lake mill. As well, the joint venture is responsible for the liabilities associated with tailings produced from processing Cigar Lake ore at the McClean Lake mill.

The collective agreement with unionized employees at the McClean Lake mill ends on May 31, 2025.

Regulatory approvals

There are three key permits that are required to operate the mine.

Operating and processing licences

Federally, Cigar Lake holds a “Uranium Mine Licence” from the CNSC with a corresponding Licence Conditions Handbook (LCH). Provincially, Cigar Lake holds an “Approval to Operate Pollutant Control Facilities” from the SMOE and a “Water Rights Licence to Use Surface Water and Approval to Operate Works” from the Saskatchewan Watershed Authority.

The CNSC licence expires on June 30, 2031. The SMOE approval was extended to January 31, 2024 and then renewed in 2024 and the current approval now expires in 2030. The Saskatchewan Watershed Authority water rights licence was obtained in 1988 and was amended in 2023 and now expires in 2028.

The current Cigar Lake LCH authorizes an annual production rate up to 18 million pounds per year. The CNSC licence and LCH for the McClean Lake operation, issued by the CNSC in 2017, authorizes the production of up to 24 million pounds U3O8 annually. The licence and LCH were amended in 2022 to authorize the expansion of the JEB TMF.

Approvals, issued by the SMOE pursuant to the Saskatchewan Environmental Assessment Act, for Cigar Lake are based on estimated annual production rates of 18 million pounds U3O8 for CL Main and 6 million pounds U3O8 for CLEXT. As such, it is anticipated that the planned annual production rate of 18 million pounds U3O8 for CLEXT represents a change to the approved development that will require Ministerial Approval. Cameco plans to submit the information required to obtain this approval in 2025.

Water treatment/effluent discharge system

The mine dewatering system was designed and constructed to handle both routine and non-routine water treatment and effluent discharge, and it has been approved and licensed by the CNSC and the SMOE.

We began discharging treated water to Seru Bay in August 2013 following the receipt of regulatory approvals.

The Cigar Lake orebody contains elements of concern with respect to the water quality and the receiving environment. The distribution of elements such as arsenic, molybdenum, selenium and others is non-uniform throughout the orebody, and this can present challenges in attaining and maintaining the required effluent concentrations.

There have been ongoing efforts to optimize the current water treatment process and water handling systems to ensure acceptable environmental performance.

Operating and capital costs

The following is a summary of the Cigar Lake operating and capital cost estimates for the remaining life of mine, stated in constant 2023 dollars and reflecting a forecast life-of-mine mill production of 205.9 million pounds.

 

2023 ANNUAL INFORMATION FORM    Page 51


Operating Costs ($Cdn million)

   Total
(2024 – 2036)
 

Cigar Lake Mining

  

Site administration

   $ 665.5  

Mining costs

     1,016.5  

Process

     359.8  

Corporate overhead

     163.0  
  

 

 

 

Total mining costs

   $ 2,204.8  
  

 

 

 

McClean Lake Milling

  

Administration

   $ 623.8  

Milling costs

     1,109.1  

Corporate overhead

     102.8  

Toll milling

     196.1  
  

 

 

 

Total milling costs

   $ 2,031.8  
  

 

 

 

Total operating costs

   $ 4,236.6  
  

 

 

 

Total operating cost per pound U3O8

   $ 20.58  
  

 

 

 

Note: presented as total cost to the CLJV (100% basis)

Operating costs consist of annual expenditures at Cigar Lake to mine the ore, treat the ore underground, including crushing, grinding and density control, followed by pumping the resulting slurry to surface for transportation to McClean Lake.

Operating costs at McClean Lake consist of the cost of offloading and leaching the Cigar Lake ore slurry into uranium solution and further processing into calcined U3O8 product.

 

Capital Costs ($Cdn million)

   Total
(2024 – 2036)
 

Cigar Lake Mine Development

   $ 378.7  

Cigar Lake Mine Capital

  

Production tunnel outfitting

Ground freezing system

   $

 

138.5

129.9

 

 

Other mine capital

     319.9  
  

 

 

 

Total mine capital

   $ 588.3  
  

 

 

 

Tailings Expansion

   $ 52.6  

Other mill capital

     227.7  
  

 

 

 

Total mill capital

   $ 280.3  
  

 

 

 

Total capital costs

   $ 1,247.3  
  

 

 

 

Note: presented as total cost to the CLJV (100% basis)

Estimated capital costs to the CLJV include sustaining capital for Cigar Lake and McClean Lake mill, as well as underground development at Cigar Lake to bring mineral reserves into production. Overall, the largest capital cost at Cigar Lake is surface freeze drilling and brine distribution infrastructure. Other significant capital includes tunnel outfitting and mine development costs.

Our expectations and plans regarding Cigar Lake, including forecasts of operating and capital costs, production and mine life are forward-looking information, and are based specifically on the risks and assumptions discussed on pages 3, 4 and 5. We may change operating or capital spending plans in 2024, depending upon uranium markets, our financial position, results of operation and other factors. Estimates of expected future production and capital and operating costs are inherently uncertain, particularly beyond one year, and may change materially over time.

 

2023 ANNUAL INFORMATION FORM    Page 52


Exploration, drilling, sampling, data quality and estimates

There are no historical estimates within the meaning of NI 43-101 to report. The Cigar Lake uranium deposit was discovered in 1981 by surface exploration drilling.

We focus most of our exploration activities on mineral lease ML 5521. Orano is responsible for exploration activity on the 38 surrounding mineral claims. The data from the exploration program on the 38 mineral claims is not part of the database used for the estimate of the mineral resources and mineral reserves at Cigar Lake.

Exploration

After the 2006 water inflow events, it was recognized that more detailed geophysical information in the immediate deposit area was required. Since 2006, a number of geophysical surveys over the Cigar Lake deposit provided additional knowledge on geological structures and fault zones. In the fall of 2007, a supplementary geophysical program was conducted over a portion of the CL Main area of the deposit to identify major structures within the sandstone column. In 2015, Cameco conducted a geotechnical drill program consisting of nine surface diamond holes (drilled to a vertical depth of 525 metres) over the western portion of the CL Main area of the deposit. Downhole cross-well seismic was done within these boreholes to image major fault structures and geotechnical characteristics of this portion of the deposit.

This information has since been incorporated into our geological models. These are regularly updated as additional information is collected, allowing for better mine planning and mitigation of potential risk.

Drilling

Surface drilling – mineral lease

The last diamond drillhole of the 1981 program was located south of Cigar Lake and was the discovery hole for the Cigar Lake uranium deposit. The deposit was subsequently delineated by surface drilling between 1982 and 1986, and followed by several small drilling campaigns to gather geotechnical and infill data between 1986 and 2007. Additional drilling campaigns were conducted by Cameco after 2007 which targeted a broad range of technical objectives, including geotechnical, geophysical, delineation and ground freezing. Since 2012, diamond drilling managed by Cameco has mainly focused on underground geotechnical and surface ground freezing programs on CL Main along with continued delineation drilling on CLEXT. Drill depths for surface delineation holes range from approximately 460 to 550 metres.

Delineation drilling in the CL Main zone was originally completed at a nominal drillhole fence spacing of 25 to 50 metres (east-west), with holes at 20 to 25 metres (north-south) spacing on the fences. Since then, the entire portion of the CL Main deposit has had surface freezeholes installed at a nominal 7 x 7 metre pattern.

The CLEXT zone was historically drilled at a nominal drillhole fence spacing of 200 metres, with holes at 20 metre spacing on the fences. Subsequent drill programs occurring between 2011 and 2023 have since reduced the drillhole spacing down to approximately 15 x 15 metres in local areas of the deposit.

Drilling results have been used to delineate and interpret the 3-dimensional geometry of the mineralized areas, the lithostructural settings, the geotechnical conditions, and to estimate the distribution and content of uranium and other elements.

Surface freeze hole drilling over the CL Main zone, ongoing since 2012, has been completed. Drilling results obtained between September 2022 and end of 2023, representing 98 additional freeze holes and six new delineation holes, are reflected in the CL Main mineral resource and reserve estimates.

Underground drilling – mineral lease

Diamond drilling from underground is primarily to ascertain rock mass characteristics in advance of development and mining. Cigar Lake Mining Corporation, the previous operator, and Cameco have conducted underground geotechnical drilling since 1989. A total of 519 underground geotechnical holes have been completed on CL Main. In addition, 24 geotechnical holes have been completed with respect to the CLEXT.

At one time, freeze holes were drilled from underground into the deposit for the purpose of freezing the ground prior to mining. No underground freeze holes have been drilled since 2006. None of them are currently used for freezing or for mineral resource and reserve estimation purposes.

 

2023 ANNUAL INFORMATION FORM    Page 53


Sampling, analysis and data verification

Sampling

Vertical surface drilling generally represents the true thickness of the zone given the flat-lying mineralization. All holes are core drilled and gamma probed whenever possible. Cigar Lake uses a high-flux gamma probe designed and constructed by alphaNUCLEAR, a member of the Cameco group of companies. This high-flux gamma probe utilizes two Geiger Müller tubes to detect the amount of gamma radiation emanating from the surroundings. The count rate obtained from the high-flux probe is compared against chemical assay results to establish a correlation to convert corrected probe count rates into equivalent % U3O8 grades for use when assay results are unavailable.

The consistency between probe data and chemical assays demonstrates that secular equilibrium exists within the deposit. Approximately 25% of the data used to estimate mineral resources is obtained from assays in CL Main, while for CLEXT, all core has been assayed. In these cases, the core depth is validated by comparing the downhole gamma survey results with a hand-held scintillometer on core before it is logged, photographed, and then sampled for uranium analysis. Attempts are made to avoid having samples cross geological boundaries.

When sampled, the entire core from each sample interval is taken for assay or other measurements to characterize the physical and geochemical properties of the deposit, except for some of the earliest sampling in 1981 and 1982 (which were validated or removed following subsequent delineation drilling and whole core assay measurements). This was done to reduce the potential for sampling bias, given the high-grade nature and variability of the grades of the mineralization, and to minimize human exposure to gamma radiation and radon gas during the sampling process.

The typical sample collection process at our operations is performed by or under the supervision of a qualified geoscientist and includes the following procedures:

 

   

marking the sample intervals on the core boxes at nominal 0.5 metre sample lengths

 

   

collection of the samples in plastic bags, taking the entire core

 

   

documentation of the sample location, assigning a sample number, and description of the sample, including radiometric values from a hand-held device

 

   

bagging and sealing, with sample tags inside bags and sample numbers on the bags

 

   

placement of samples in steel drums for shipping

Sample security

Current sampling protocols dictate that all samples are collected and prepared in a restricted core processing facility. Core samples are collected and transferred from core boxes to high-strength plastic sample bags, then sealed. The sealed bags are then placed in steel drums and shipped in compliance with the Transport of Dangerous Goods regulations with tamper-resistant security seals. Chain of custody documentation is present from inserting samples into steel drums to final delivery of results by SRC.

All samples collected are prepared and analysed under close supervision of qualified personnel at SRC, which is a restricted access laboratory licensed by the CNSC.

Analysis

Since 2002, assay sample preparation has been done at SRC, which is independent of the participants of CLJV. It involves jaw crushing to 80% passing at less than two millimetres and splitting out a 100-to-200-gram sub-sample using a riffle splitter. The sub-sample is pulverized to 90% at less than 106 microns using a puck and ring grinding mill. The pulp is then transferred to a bar coded plastic snap top vial. Assaying by SRC involves digesting an aliquot of pulp in concentrated 3:1 HCL:HNO3 on a hot plate for approximately one hour. The volume is then made up in a 100-millilitre volumetric flask using deionized water prior to analysis by ICP-OES. Instruments used in the analysis are calibrated using certified commercial solutions. This method is ISO/IEC 17025:2017 accredited by the Standards Council of Canada.

Quality control and data verification

The quality assurance and quality control procedures used during the early drilling programs were typical for the time. The majority of uranium assays in the database from the early drilling programs were obtained from Loring Laboratories Ltd., which was independent of the participants of CLJV. For uranium assays up to 5% U3O8, 12 standards and two blanks were run with each batch of samples and for uranium assays over 5% U3O8, a minimum of four standards were run with each batch of samples.

 

2023 ANNUAL INFORMATION FORM    Page 54


More recent sample preparation and assaying is being completed under the close supervision of qualified personnel at SRC and includes preparing and analysing standards, duplicates, and blanks. At least two standards are analysed for each 40-sample batch. We also include a pulp repeat and one split sample repeat with every group. Samples that fail quality controls are re-analyzed.

The original database, which forms part of the database used for the current mineral resource and mineral reserve estimates, was compiled by previous operators. Many of the original signed assay certificates are available and have been reviewed by Cameco geologists.

In 2013, Cigar Lake implemented an SQL server based centralized geological data management system to manage all drillhole and sample related data. All core logging, sample collection, downhole probing and sample dispatching activities are carried out and managed within this system. All assay and geochemical analytical results obtained from the external laboratory are uploaded directly into the centralized database, thereby mitigating potential for manual data transfer errors. The database used for the current mineral resource and mineral reserve estimates was validated by Cameco qualified geoscientists.

Additional data verification measures taken on the data collected at Cigar Lake are as follows:

 

   

surveyed drillhole collar coordinates and downhole deviations are entered into the database and visually validated and compared to the planned location of the holes. Most results were within acceptable tolerances. Holes that exceeded the thresholds were reviewed resulting in two holes being adjusted.

 

   

comparison of the information in the database against the original data, including paper logs, assay certificates and original probing data files as required. Approximately 5% of holes in the resource estimate updates were compared against the assay certificates with no discrepancies observed. We have observed no discrepancies of note since implementation of the centralized geological data management system.

 

   

validation of core logging information in plan and section views, and review of logs against photographs of the core. Core logging information was reviewed during geological modelling. No issues were observed.

 

   

checking for data entry errors such as overlapping intervals and out of range values. No issues of note were observed in 2023.

 

   

radiometric probes undergo annual servicing and re-calibration as well as additional checks including control probing to ensure precision and accuracy of the probes. All probes were serviced and re-calibrated. Control probing results were within acceptable tolerances.

 

   

validating uranium grades comparing radiometric probing, core radioactivity measurements and chemical assay results. A review of the correlation to convert corrected probe count rates into equivalent % U3O8 grades was completed in 2023. Following this review, an adjustment to the correlation was applied to address a slight U3O8 overestimation bias.

Since the start of commercial production, we have compared the uranium block model with mine production results on a quarterly basis to ensure an acceptable level of accuracy is maintained. Historically, we have seen acceptable variances, but in 2022, we saw apparent model overperformance variances justifying further review. Results from the resulting investigation completed in 2023 identified a local issue with the model. We do not expect further impact.

Our geoscientists, including a qualified person as such term is defined in NI 43-101, have witnessed or reviewed drilling, core handling, radiometric probing, logging, sampling facilities, sampling and data verification procedures employed at the Cigar Lake operation and consider the methodologies to be satisfactory and the results representative and reliable. There has been no indication of significant inconsistencies in the data used or verified nor any failures to adequately verify the data.

Accuracy

We are satisfied with the quality of data and consider it valid for use in the estimation of mineral resources and reserves for Cigar Lake. Comparison of the actual mine production with the expected production supports this opinion.

Mineral reserve and resource estimates

Please see page 87 for our mineral reserve and resource estimates for Cigar Lake.

 

2023 ANNUAL INFORMATION FORM    Page 55


Uranium – Tier-one operations

Inkai

 

LOGO   

2023 Production (100% basis)

 

8.3M lbs

 

2024 Production Outlook (100% basis)

 

8.3M lbs

 

(See Production 2024 Production on page 63)

 

Estimated Reserves (our share)

 

104.7M lbs

 

Estimated Mine Life

 

2045 (based on licence term)

Inkai is a very significant uranium deposit, located in Kazakhstan. The operator is JV Inkai limited liability partnership, which we jointly own (40%)1 with Kazatomprom (60%).

Inkai is considered a material uranium property for us. There is a technical report dated January 25, 2018 (effective January 1, 2018) that can be downloaded from SEDAR+ (sedarplus.com) or from EDGAR (sec.gov).

 

Location    South Kazakhstan
Ownership    40%1
Mine type    In situ recovery (ISR)
End product    Uranium concentrate
Certifications    BSI OHSAS 18001
   ISO 14001 certified
Estimated reserves    104.7 million pounds (proven and probable), average grade U3O8: 0.04%
Estimated resources    35.6 million pounds (measured and indicated), average grade U3O8: 0.03%
   9.6 million pounds (inferred), average grade U3O8: 0.03%
Licensed capacity (wellfields)    10.4 million pounds per year (our share 4.2 million pounds per year)1
Licence term    Through July 2045
Total packaged production: 2009 to 2023    89.3 million pounds (100% basis)
2023 production    8.3 million pounds (100% basis)1
2024 production outlook   

8.3 million pounds (100% basis)1

See Production 2024 Production on page 63

Estimated decommissioning cost (100% basis)    $33.6 million (US) (100% basis)

All values shown, including reserves and resources, represent our share only, unless indicated.

 

1 

Our ownership interest in the joint venture is 40% and we equity account for our investment. As such, our share of production is shown as a purchase.

Business structure

JV Inkai is a Kazakhstan limited liability partnership between two companies:

 

   

Cameco – 40%

 

   

Kazatomprom (KAP) – 60%

 

2023 ANNUAL INFORMATION FORM    Page 56


History

 

1976-78   

•  Deposit is discovered

  

•  Exploration drilling continues until 1996

1979   

•  Regional and local hydrogeology studies begin

  

•  Borehole tests characterize the four aquifers within the Inkai deposit (Uvanas, Zhalpak, Inkuduk and Mynkuduk)

1988   

•  Pilot test in the northeast area of block 1 begins, lasts 495 days and recovers 92,900 pounds of uranium

1993   

•  First Kazakhstan estimates of uranium resources for block 1

1996   

•  First Kazakhstan estimates of uranium resources for block 2

  

•  Kazakhstan regulators registers JV Inkai, a joint venture among us, Uranerzbergbau-GmbH and KATEP

1997   

•  KAP is established

1998   

•  KATEP transfers all of its interest in JV Inkai to KAP

  

•  We acquire all of Uranerzbergbau-GmbH’s interest in JV Inkai, increasing our interest to 66 2/3%

  

•  We agree to transfer a 6 2/3% interest to KAP, reducing our holdings to a 60% interest

1999   

•  JV Inkai receives a mining licence for block 1 and an exploration with subsequent mining licence for blocks 2 and 3 from the government of Kazakhstan

2000   

•  JV Inkai and the government of Kazakhstan sign a subsoil use contract (called the resource use contract), which covers the licences issued in 1999 (see above)

2002   

•  Pilot leach test in the north area of block 2 begins

2005   

•  Construction of ISR commercial processing facility at block 1 begins

2006   

•  Complete pilot leach test at block 2

  

•  Exploration-delineation drilling initiated at block 3

2007   

•  Sign Amendment No.1 to the resource use contract, extending the exploration period at blocks 2 and 3

2008   

•  Commission front half of the main processing plant in the fourth quarter, and begin processing solution from block 1

2009   

•  Sign Amendment No. 2 to the resource use contract, which approves the mining licence at block 2, extends the exploration period for block 3 to July 13, 2010, and requires JV Inkai to adopt the new tax code and meet the Kazakhstan content thresholds for human resources, goods, works and services

  

•  Commission the main processing plant, and started commissioning the first satellite plant

2010   

•  Receive regulatory approval for commissioning of the main processing plant

  

•  File a notice of potential commercial discovery at block 3

  

•  Receive approval in principle for the extension of block 3 exploration for a five-year appraisal period that expires July 2015, and an increase in annual production from blocks 1 and 2 to 3.9 million pounds (100% basis)

2011   

•  Receive regulatory approval for commissioning of the first satellite plant

  

•  Sign Amendment No. 3 to the resource use contract, which extends the exploration period for block 3 to July 2015 and provides government approval to increase annual production from blocks 1 and 2 to 3.9 million pounds (100% basis)

  

•  Sign a memorandum of agreement with KAP to increase annual production from blocks 1 and 2 from 3.9 million pounds to 5.2 million pounds (100% basis)

2012   

•  Sign a memorandum of agreement with KAP setting out the framework to increase annual production from blocks 1 and 2 to 10.4 million pounds (100% basis), to extend the term of JV Inkai’s resource use contract through 2045 and to cooperate on the development of uranium conversion capacity, with the primary focus on uranium refining rather than uranium conversion

  

•  Start construction of a test leach facility at block 3

2013   

•  Sign Amendment No. 4 to the resource use contract, which provides government approval to increase annual production from blocks 1 and 2 to 5.2 million pounds (100% basis)

2015   

•  At block 3, construction of the test leach facility is completed and the pilot leach test initiated

 

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2016   

•  Sign an agreement with KAP and JV Inkai to restructure and enhance JV Inkai, subject to closing, increasing KAP’s holdings to a 60% interest and reducing our holdings to a 40% interest

  

•  Sign Amendment No. 5 to the resource use contract, which extends the exploration period for block 3 to July 2018

2017   

•  In December, close the agreement with KAP and JV Inkai to restructure and enhance JV Inkai. Under the agreement, effective January 1, 2018, our ownership interest dropped to 40% and we will equity account for our investment.

  

•  Sign Amendment No. 6 to the resource use contract, which grants JV Inkai the right to produce up to 10.4 million pounds per year and extends the term of the resource use contract until July 13, 2045

Technical report

 

This description is based on the project’s technical report: Inkai Operation, South Kazakhstan Oblast, Republic of Kazakhstan, dated January 25, 2018 (effective January 1, 2018) except for some updates that reflect developments since the technical report was published. The report was prepared for us in accordance with NI 43-101, by or under the supervision of Darryl Clark, PhD, FAusIMM, Alain G. Mainville, P. Geo., Stuart B. Soliz, P. Geo., and Robert J. Sumner, PhD, P. Eng. The following description has been prepared under the supervision of Biman Bharadwaj, P. Eng., Scott Bishop, P. Eng., Sergey Ivanov, P. Geo., and Alain D. Renaud, P. Geo. They are all qualified persons within the meaning of NI 43-101 but are not independent of us.

 

The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the technical report except as such qualifications, assumptions and exclusions may be modified in this AIF. We recommend you read the technical report in its entirety to fully understand the project. You can download a copy from SEDAR+ (sedarplus.com) or from EDGAR (sec.gov).

  

For information about environmental matters, see Our ESG principles and practices and The regulatory environment starting on pages 92 and 96.

 

For a description of royalties payable to the government of Kazakhstan on the sale of uranium extracted from orebodies within the country and taxes, see page 104.

 

For a description of risks that might affect access, title or the right or ability to perform work on the property, see Strategic risksForeign investments and operations and Kazakhstan at pages 129 and 130, Operational risks – Permitting and licensing at page 113, Governance and compliance risks starting at page 121, Social risks starting at page 123, and Environmental risks starting at page 124.

About the Inkai property

Location

Inkai is in the Suzak District of Turkestan Oblast, Kazakhstan near the town of Taikonur, 350 kilometres northwest of the city of Shymkent and 155 kilometres east of the city of Kyzyl-Orda. JV Inkai’s corporate office is in Shymkent.

Access

The road to Taikonur is the primary road for transporting people, supplies and uranium product to and from the mine. It is a paved road that crosses the Karatau Mountains. Rail transportation is available from Almaty to Shymkent, then northwest to Shieli, Kyzyl-Orda and beyond. A rail line also runs from the town of Dzhambul to a KAP facility to the south of Taikonur. From Almaty and Astana, commercial airline services are available to Shymkent and Kyzyl-Orda.

Property tenure – MA area and mining allotment

The resource use contract between the Republic of Kazakhstan and JV Inkai (the resource use contract) grants JV Inkai the rights to explore for and to extract uranium from the subsoil contained in the Mining Allotment Area (the MA Area). The MA Area is the 139 square kilometres area in which JV Inkai currently has the right to mine, as covered by the Mining Allotment, which includes block 1 and portions of blocks 2 and 3. The Mining Allotment was the document issued by the Geology Committee of the Republic of Kazakhstan to JV Inkai in July 2017, which graphically and descriptively defines the area in which JV Inkai has the right to mine. As provided for in Amendment No. 6, it is part of the resource use contract. JV Inkai owns uranium extracted from the subsoil contained in the MA Area and has the right to use the surface of the MA Area. JV Inkai has obligations under the resource use contract which it must comply with to maintain these rights.

In addition to complying with its obligations under the resource use contract, JV Inkai, like all subsoil users, is required to abide by the work program appended to its resource use contract, which relates to its mining operations.

 

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Under Kazakhstan law, subsoil and mineral resources belong to the state. Currently, the state provides access to subsoil and mineral resources under a resource use contract (hydrocarbons and uranium only) and a licence (the rest of mineral resources). Minerals extracted from the subsoil by a subsoil user under a resource use contract are the property of the subsoil user unless the subsoil code (as defined below) or a resource use contract provides otherwise.

A resource use contract gives the contractor a right to use the surface of the property while exploring, mining, and reclaiming the land. However, this right must be set forth in a land lease agreement with the applicable local administrative authorities.

On a regular basis, JV Inkai obtains from local authorities the necessary land lease agreements for new buildings and infrastructure. JV Inkai does not hold land leases for the entire MA Area. JV Inkai obtains land leases gradually only for surface area required for exploration, mining, or construction of new infrastructure.

Environment, social and community factors

Inkai lies in the Betpak Dala Desert, which has a semi-arid climate, minimal precipitation, and relatively high evaporation. The average precipitation varies from 130 to 140 millimetres per year, and 22 to 40% of this is snow. The surface elevation within the MA Area ranges from 140 to 300 metres above mean sea level.

The area also has strong winds. The prevailing winds are northeast. Dust storms are common. The major water systems in the area include the Shu, Sarysu and Boktykaryn rivers.

The resource use contract prescribes that a certain level of employees be from Kazakhstan. See Resource use contract on page 63 for more information.

JV Inkai must give preference to local businesses. See Kazakhstan government and legislation – local content on page 66 for more information.

In accordance with JV Inkai’s corporate responsibility strategy and to comply with its obligations under the resource use contract, JV Inkai finances projects and provides goods and services to support the district’s social infrastructure.

Geological setting

South-central Kazakhstan geology is comprised of a large relatively flat basin of Cretaceous to Quaternary age continental clastic sedimentary rocks. The Chu-Sarysu basin extends for more than 1,000 kilometres from the foothills of the Tien Shan Mountains located on the south and southeast sides of the basin, and merges into the flats of the Aral Sea depression to the northwest. The basin is up to 250 kilometres wide, bordered by the Karatau Mountains on the southwest and the Kazakh Uplands on the northeast. The basin is composed of gently dipping to nearly flat-lying fluvial-derived unconsolidated sediments composed of inter-bedded sand, silt, and local clay horizons.

The Cretaceous and Paleogene sediments contain several stacked and relatively continuous, sinuous “roll-fronts” or oxidation reduction (redox) fronts hosted in the more porous and permeable sand and silt units. Several uranium deposits and active uranium ISR mines are located at these regional redox roll-fronts, developed along a regional system of superimposed mineralization fronts. The overall stratigraphic horizon of interest in the basin is approximately 200 to 250 metres in vertical section.

The Inkai deposit is one of these roll-front deposits. It is hosted within the Lower and Middle Inkuduk horizons and Mynkuduk horizon which comprise fine, medium, and coarse-grained sands, gravels and clays. The redox boundary can be readily recognised in core by a distinct colour change from grey and greenish-grey on the reduced side to light-grey with yellowish stains on the oxidized side, stemming from the oxidation of pyrite to limonite.

The sands have high horizontal hydraulic conductivities. Hydrogeological parameters of the deposit play a key role in ISR mining. Studies and mining results indicate Inkai has favourable hydrogeological conditions for ISR mining.

Mineralization

Mineralization in the Middle Inkuduk horizon occurs in the central, western, and northern parts of the MA Area. The overall strike length is approximately 35 kilometres. Width in plan view ranges from 40 to 1,600 metres and averages 350 metres. The depth ranges from 262 to 380 metres, averaging 314 metres.

 

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Mineralization in the Lower Inkuduk horizon occurs in the southern, eastern, and northern parts of the MA Area. The overall strike length is approximately 40 kilometres. Width in plan view ranges from 40 to 600 metres and averages 250 metres. The depth ranges from 317 to 447 metres, averaging 382 metres.

Mineralization in the Mynkuduk horizon stretches from south to north in the eastern part of the MA Area. The overall strike length is approximately 40 kilometres. Width in plan view ranges from 40 to 350 metres and averages 200 metres. The depth ranges from 350 to 528 metres, averaging 390 metres.

Mineralization comprises sooty pitchblende (85%) and coffinite (15%). The pitchblende occurs as micron-sized globules and spherical aggregates, while the coffinite forms tiny crystals. Both uranium minerals occur in pores on interstitial materials such as clay minerals, as films around and in cracks within sand grains, and as replacements of rare organic matter, and are commonly associated with pyrite.

Deposit type

The Inkai uranium deposit is a roll-front type deposit. Roll-front deposits are a common example of stratiform deposits that form within permeable sandstones at the interface between oxidized and reduced environments. The Cretaceous and Paleogene sediments contain several stacked and relatively continuous, sinuous “roll-fronts”, or redox fronts hosted in the more porous and permeable sand and silt units. Microcrystalline uraninite and coffinite are deposited during diagenesis by ground water, in a crescent-shaped lens that cuts across bedding and forms at the interface between oxidized and reduced ground. Sandstone host rocks are medium to coarse grained were highly permeable at the time of mineralization. There are several uranium deposits and active ISR uranium mines at these regional oxidation roll-fronts, developed along a regional system of superimposed mineralization fronts.

About the Inkai operation

Inkai is a developed producing property with sufficient surface rights to meet future mining operation needs for the current mineral reserves. It has site facilities and infrastructure. Plans are progressing to expand the operation to give it the capability to produce up to 10.4 million pounds per year.

Licences

The resource use contract grants JV Inkai the rights to explore for and to extract uranium from the subsoil contained in the MA Area until July 13, 2045. Other material licences JV Inkai currently holds relating to its mining activities are:

 

   

“Licence for radioactive substances handling” valid until December 31, 2024

 

   

“Licence for operation of mining production and mineral raw material processing” with an indefinite term

 

   

“Licence for transportation of radioactive substances within the territory of the Republic of Kazakhstan” valid until December 30, 2024

 

   

“Licence for radioactive waste handling” valid until December 30, 2024

JV Inkai’s material environmental permits are described on page 64.

Infrastructure

There are three processing facilities on the MA Area: the Main Processing Plant (MPP) and two satellite plants, Sat1 and Sat2.

As part of the expansion, the following upgrades were completed:

 

   

addition of new pumping stations and sand ponds at Sat2

 

   

expansion of the processing facilities to add processing capacity at Sat2

The existing MPP, Sat1 and Sat2 circuit capacities were estimated using Inkai daily process summaries, which were subsequently demonstrated since 2019 by actual annual production. The MPP has an ion exchange (IX) capacity of 2.7 million pounds U3O8 per year and a product drying and packaging capacity of 8.3 million pounds U3O8 per year. Sat1 and Sat2 have respective IX capacities of 6.0 and 4.5 million pounds U3O8 per year.

The following infrastructure currently exists on the MA Area: administrative, engineering and construction offices, a laboratory, shops, garages, holding ponds and reagent storage tanks, enclosures for low-level radioactive waste and domestic waste, an emergency response building, food services facilities, roads and power lines, wellfield pipelines and header houses.

 

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As part of the expansion, the following upgrades are planned:

 

   

addition of calcining capability and processing capacity at the MPP

 

   

expansion of office buildings and the laboratory

At Taikonur, JV Inkai has an employee residence camp with catering and leisure facilities. As part of the expansion, the following upgrades are planned:

 

   

expansion of the camp in a phased approach with construction of two residential blocks for 165 people each and addition of a dining room for 150 people

 

   

construction of a 24-kilometre asphalt paved road connecting the camp to the three processing facilities

Water, power and heat

Groundwater wells provide sufficient water for all planned industrial activities. Potable water for use at the camp and at site facilities is supplied from shallow wells on the site. The site is connected to the national power grid. In case of power outages, there are standby generators. Operations continue throughout the year despite cold winters (lows of -35°C) and hot summers (highs of +40°C).

Employees

Taikonur has a population of about 680 who are mainly employed in uranium development and exploration. Whenever possible, JV Inkai hires personnel from Taikonur and surrounding villages.

Mining

Mining at Inkai is based upon a conventional and well-established ISR process. ISR mining of uranium is defined by the IAEA as:

“The extraction of ore from a host sandstone by chemical solutions and the recovery of uranium at the surface. ISR extraction is conducted by injecting a suitable leach solution into the ore zone below the water table; oxidizing, complexing and mobilizing the uranium; recovering the pregnant solutions through production wells; and finally, pumping the uranium bearing solution to the surface for further processing.”

ISR mining at Inkai is comprised of the following components to produce a uranium-bearing lixiviant (an aqueous solution which includes sulfuric acid), which goes to settling ponds and then to the processing plants for production as yellowcake:

 

   

Determination of the GT (grade x thickness) cut-off for the initial design and the operating period. The design sets a lower limit to the pounds per pattern required to warrant installation of a pattern before funds are committed, and the operating cut-off applies to individual producer wells and dictates the lower limit of operation once a well has entered production.

 

   

Preparation of a production sequence, which will deliver the uranium-bearing lixiviant to meet production requirements, considering the rate of uranium recovery, lixiviant uranium head grades, and wellfield flow rates.

 

   

Wellfield development practices, using an optimal pattern design, distribute barren lixiviant to the wellfield injectors, and then collect lixiviant, which carries the dissolved uranium, back to the MPP, Sat1 or Sat2, as the case may be.

The above factors are used to estimate the number of operating wellfields, wellfield patterns and wellfield houses over the production life. They also determine the unit cost of each of the mining components required to achieve the production schedule, including drilling, wellfield installation and wellfield operation.

There is ongoing wellfield development to support the current production plan. The mining project documents are being updated following the 2021 completion of the resource estimate report as described in Exploration on page 69 below.

Processing

As a result of extensive test work and operational experience, a very efficient process of uranium recovery has been established. The process consists of the following major steps:

 

   

uranium in situ leaching with a lixiviant

 

   

uranium adsorption from solution with IX resin

 

   

elution of uranium from resin with ammonium nitrate

 

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precipitation of uranium as yellowcake with hydrogen peroxide and ammonia

 

   

yellowcake thickening, dewatering, and drying

 

   

packaging of dry yellowcake product in containers

All plants load and elute uranium from resin while the resulting eluate is converted to yellowcake at the MPP. Inkai is designed to produce a dry uranium product that meets the quality specifications of uranium refining and conversion facilities. Overall recovery in 2023 slightly exceeded our target of 85%.

Production

Total production

Based on current mineral reserves and resource use contract term, we expect Inkai to produce a total of 216 million pounds U3O8 (100% basis, recovered after processing) over the life of the mine from January 2024 to mid-2045.

Average annual production

Collectively the MPP, Sat1 and Sat2 have the capacity to produce about 8.3 million pounds U3O8 per year (100% basis) depending on the grade of the production solution. Construction work for a process expansion of the Inkai circuit to 10.4 million pounds U3O8 per year is in progress. The expansion project includes an upgrade to the yellowcake filtration and packaging units and the addition of a pre-dryer and calciner.

Production increase and restructuring – Implementation Agreement

In 2016, we signed an agreement with KAP and JV Inkai to restructure and enhance JV Inkai (the implementation agreement). The restructuring closed in December 2017 and took effect January 1, 2018. This restructuring was subject to obtaining all required government approvals, including an amendment to the resource use contract, which were obtained. The restructuring consisted of the following:

 

   

JV Inkai has the right to produce 10.4 million pounds of U3O8 per year, an increase from the prior licensed annual production of 5.2 million pounds

 

   

JV Inkai has the right to produce until 2045 (previously, the licence terms, based on the boundaries prior to the restructuring, were to 2024 and 2030)

 

   

our ownership interest in JV Inkai is 40% and KAP’s ownership interest is 60%. However, during production ramp up to the licensed limit of 10.4 million pounds, we are entitled to purchase 57.5% of the first 5.2 million pounds, and, as annual production increases above 5.2 million pounds, we are entitled to purchase 22.5% of any incremental production, to the maximum annual share of 4.2 million pounds. Once the ramp up to 10.4 million pounds annually is complete, we will be entitled to purchase 40% of such annual production, matching our ownership interest

 

   

a governance framework that provides protection for us as a minority owner

 

   

the boundaries of the MA Area match the agreed production profile for JV Inkai to 2045

 

   

priority payment of the loan that our subsidiary made to JV Inkai to fund exploration and evaluation of the historically defined block 3 area (in 2019, the loan was repaid)

With KAP, we completed and reviewed a feasibility study for the purpose of evaluating the design, construction, and operation of a uranium refinery in Kazakhstan. In accordance with the agreement, a decision was made not to proceed with construction of the uranium refinery as contemplated in the feasibility study. We subsequently signed an agreement to licence our proprietary UF6 conversion technology to KAP, which will allow KAP to examine the feasibility of constructing and operating its own UF6 conversion facility in Kazakhstan.

The subsoil code allows producers to deviate within 20% (above or below) from the production parameters (including annual production levels) set out in the state approved project documentation, without triggering a mandatory amendment process.

With the change in ownership interests, we account for JV Inkai on an equity basis.

2023 Production

Total 2023 production from Inkai was 8.3 million pounds (100% basis). In 2023, Inkai experienced a number of operational issues related to interruptions in reagent delivery and wellfield drilling.

 

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The first shipment, containing approximately two thirds of our share of JV Inkai’s 2023 production arrived in the fourth quarter of 2023. The second shipment with the rest of our share of 2023 production arrived in early 2024. We continue to work closely with JV Inkai and our joint venture partner, KAP, to receive our share of production via the Trans-Caspian International Transport Route, which does not rely on Russian rail lines or ports.

Based on an adjustment to the production purchase entitlement under the 2016 implementation agreement, for 2023 we were entitled to purchase 4.2 million pounds, or 50% of JV Inkai’s planned 2023 production of 8.3 million pounds. Timing of our JV Inkai purchases will fluctuate during the quarters and may not match production, and, in particular, in 2023, timing was impacted by shipping delays.

2024 Production

Based on KAP’s announcement on February 1, 2024, production in Kazakhstan is expected to remain approximately 20% below the level stipulated in subsoil use agreements, primarily due to the sulfuric acid shortage in the country and delays in development of new deposits.

Our current target for production at Inkai in 2024 is 8.3 million pounds of U3O8 (100% basis). However, this target is tentative and contingent upon receipt of sufficient quantities of sulfuric acid. In addition, the allocation of such production between the JV Inkai participants is currently under discussion by Cameco and KAP.

Sales

There are annual uranium sales contracts entered into between JV Inkai and a Cameco subsidiary to purchase Cameco’s share of Inkai production for each year, as well as similar contracts between JV Inkai and KAP. JV Inkai currently has no other forward-sales commitments for its uranium production.

In accordance with the Kazakhstan government’s resolution on uranium concentrate pricing regulations, product is currently purchased from JV Inkai at a price equal to the uranium spot price, less a 5% discount.

Cash distribution

Excess cash, net of working capital requirements, will be distributed to the partners as dividends. In 2023, we received dividend payments from JV Inkai totaling $79 million (US), net of withholdings. Our share of dividends follows our production purchase entitlements as described above.

Resource use contract

The resource use contract was signed by the Republic of Kazakhstan and JV Inkai and then registered on July 13, 2000 based on the licence granted on April 20, 1999. The resource use contract provides for JV Inkai’s mining rights to the MA Area, as well as containing obligations with which JV Inkai must comply in order to maintain such rights. There have been six amendments to the resource use contract, the most recent in November 2017, being Amendment No. 6 to:

 

   

define the boundaries of the MA Area to match the agreed production profile for JV Inkai to 2045

 

   

increase the annual production rate from the MA Area to 10.4 million pounds U3O8

 

   

extend the extraction term from the MA Area until July 13, 2045

The other prior significant amendments to the resource use contract are as follows:

 

   

In 2007, Amendment No. 1 to the resource use contract was signed, extending the exploration period of blocks 2 and 3 for two years.

 

   

In 2009, Amendment No. 2 to the resource use contract was signed, adopting the 2009 Tax Code, implementing local content and employment requirements, and extending the exploration period at block 3.

 

   

In 2011, Amendment No 3 to the resource use contract was signed, increasing production and giving JV Inkai government approval to carry out a five-year assessment program on block 3 that included delineation drilling, uranium resource estimation, construction and operation of a processing plant at block 3, and completion of a feasibility study.

 

   

In 2013, Amendment No. 4 to the resource use contract was signed to increase annual production from blocks 1 and 2 to 5.2 million pounds U3O8.

 

   

In 2016, Amendment No. 5 to the resource use contract was signed, extending the exploration period at block 3 to July 13, 2018.

 

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In addition to complying with its obligations under the resource use contract, JV Inkai, like all subsoil users, is required to abide by the work program appended to the resource use contract, which relates to its mining operations. The current work program, to increase the annual production rate to 10.4 million pounds U3O8, is attached to Amendment No. 6.

Environment

JV Inkai has to comply with environmental requirements during all stages of the operation, and develop an environmental impact assessment for examination by a state environmental expert before making any legal, organizational, or economic decisions that could have an effect on the environment and public health.

As required under Kazakhstan law, JV Inkai has a permit for environmental emissions and discharges for the operation that is valid until December 31, 2030. JV Inkai also holds certain water use permits which have various expiry dates.

JV Inkai carries environmental insurance, as required by the resource use contract and environmental law.

Decommissioning

JV Inkai’s decommissioning obligations are defined by the resource use contract and the subsoil code. JV Inkai is required to maintain a fund, which is capped at $500,000 (US), as security for meeting its decommissioning obligations. Under the resource use contract, JV Inkai must submit a plan for decommissioning the property to the government six months before mining activities are complete.

JV Inkai has developed a preliminary decommissioning plan to estimate total decommissioning costs, and updates the plan annually, or when there is a significant change at the operation that could affect decommissioning estimates. The preliminary decommissioning estimate is $33.6 million (US).

Groundwater is not actively restored post-mining in Kazakhstan. See page 101 for additional details.

Kazakhstan government and legislation

Subsoil law

The principal legislation governing subsoil exploration and mining activity in Kazakhstan is the Code of the Republic of Kazakhstan on Subsoil and Subsoil Use No. 125-VI dated December 27, 2017 (which became effective on June 28, 2018), as amended (the subsoil code). It replaced the Law on the Subsoil and Subsoil Use dated June 24, 2010, as amended.

In general, the rights held by JV Inkai are governed by the old subsoil law that was in effect at the time of the resource use contract registration in July 2000. The subsoil use rights held by JV Inkai came into effect upon the initial issuance of these licences (April 1999) and the execution and the state registration of the resource use contract (July 2000).

The subsoil code defines the framework and procedures connected with the granting, transfer and termination of subsoil rights, and the regulation of the activities of subsoil users. The subsoil, including mineral resources in their underground state, are the property of the people of Kazakhstan and the people’s property rights are exercised by the state by the regime of state property. Resources brought to the surface belong to the subsoil user, unless otherwise provided by the subsoil code. The state has priority and approval rights with regards to strategic deposits with some exceptions (for example, for inter-group transfers in certain circumstances), if a subsoil user transfers its subsoil rights or if there is a transfer (direct or indirect) of an ownership interest in a subsoil user.

Subsoil rights go into effect when a contract with the competent authority is finalized and registered. Pursuant to the subsoil code, the subsoil user is given, among other things, the exclusive right to conduct mining operations, to build production facilities, to freely dispose of its share of production and to negotiate extensions of the contract, subject to restrictions and requirements set out in the subsoil code.

Currently, the Ministry of Energy of the Republic of Kazakhstan is the competent authority on hydrocarbons and uranium under the subsoil code.

Stabilization

The subsoil code provides, subject to a number of exceptions, that any licences issued and contracts executed before the enactment of the subsoil code remain valid. Therefore, the resource use contract remains valid. Most of the general provisions of the subsoil code apply to subsoil contracts concluded and licences issued before the subsoil code enactment. At the same time, the subsoil code’s special provisions on uranium generally do not have retrospective effect except for certain rules such as obligations in the spheres of education, science and social, regional economic development during production, procurement, environmental protection, and contract termination rules.

 

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Given that some subsoil use contracts (including the resource use contract) contain the legislation stability guarantee and the latter is also provided for by both the stabilized law and the subsoil code, any retrospective provisions of the subsoil code do not override such stability guarantee unless an exception applies. For example, environmental regulations of the subsoil code are an exception to the stability guarantee and apply to subsoil users operating under old contracts.

Overall, the Republic of Kazakhstan has gradually weakened the stabilization guarantee, particularly in relation to the new projects, and the national security exception in the subsoil code is applied broadly to encompass security over strategic national resources.

Amendment No. 2 to the resource use contract eliminated the tax stabilization provision that applied to JV Inkai.

Transfer of subsoil rights and priority rights

The subsoil code liberates to some extent the regime of regulatory approvals by requiring the consent for the transfer of an object connected with the subsoil use right only in relation to hydrocarbons, uranium and deposits under a solid minerals licence. In addition, it abolished the requirement to obtain consent in case of a charter capital increase without change in shareholding and a transaction with government, state body, national management holding or national company. As previously, failing to obtain the consent of the competent authority makes the transaction void.

Similar to the old subsoil law, the subsoil code provides the state with the priority right with respect to the following transfers related to strategic subsoil areas: (i) transfers of a subsoil use right related to a strategic subsoil area, (ii) transfers (direct or indirect) of an ownership interest in a subsoil use, and (iii) initial public offering of shares and other securities in a subsoil user at an organized securities market, as such ownership interests, shares, or securities constitute an object connected with the subsoil use right related to the strategic subsoil area. The exemptions from the requirement to obtain the consent of the competent authority discussed above also exempts a transaction from the requirement to obtain a waiver of the priority right of the state.

The subsoil code has introduced a new requirement, which is a change of control notification to be made within 30 calendar days from such change. The subsoil code provides that control means inter alia holding more than 25% shares (participatory interests or securities convertible in shares), having voting rights for more than 25% of all votes in the highest management body.

Dispute resolution

The subsoil code contains provisions on resolution of disputes by a court order (meaning state courts) on a number of specific issues such as disputes regarding revocation of licences or termination of resource use contracts. Pursuant to amendments to the subsoil code that came into effect on January 10, 2023, disputes under contracts related to complex hydrocarbon projects are expressly allowed to be referred to international arbitration under UNCITRAL rules.

The subsoil code is silent on the status of arbitration clauses contained in uranium resource use contracts currently in effect. Therefore, strictly speaking, the subsoil code does not disallow international arbitration for uranium resource use contracts.

The resource use contract contains a dispute resolution clause referring contractual disputes to international arbitration. We believe the subsoil code does not affect this right.

Contract termination

The subsoil code introduces specific grounds for unilateral termination of subsoil use contracts (hydrocarbons and uranium).

Due to March 2021 amendments to the subsoil code, the provisions on termination of resource use contracts were given retrospective effect. Generally, however, those retrospective provisions should not override the stability guarantee and should not apply to the resource use contract.

The subsoil code applies some general grounds for unilateral repudiation retrospectively. Those are (i) a breach of the requirement to obtain the competent authority’s consent for transfer of a subsoil use right or an object connected with subsoil use right for hard minerals containing a major or strategic deposit which lead to a threat to national security; and (ii) actions of subsoil user during subsoil use operations at major deposits of hard minerals leading to a change in the economic interest of the Republic of Kazakhstan which creates a threat to national security. To the extent these grounds for unilateral termination relate to national security which is an area not covered by the stability guarantee, they apply to resource use contracts entered into before the subsoil code came into effect.

 

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Local content

The subsoil code imposes local content requirements for works, services and employees.

The resource use contract imposes local content requirements on JV Inkai with respect to employees, goods, works and services. As such, at least 40% of the costs of the acquired goods and equipment, 90% of contract works and 100%, 70% and 60% of employees, depending on their qualifications (workers, engineers, and management, respectively), must be of local origin. Effective January 1, 2021, under Kazakhstan law this local content requirement ceased to apply to goods procured by JV Inkai.

Strategic deposits

The subsoil code provides that all uranium deposits are strategic deposits. According to a governmental resolution On Determination of the Strategic Subsoil Areas Importance dated June 28, 2018 No. 389, 137 areas are strategic deposits, including Inkai’s blocks.

Transfer of subsoil use rights on strategic areas is subject to the priority right and the competent authority’s consent, as described above.

Reintroduction of the licensing regime

The subsoil code reintroduces the licensing regime for widespread and solid minerals except uranium. The regime of the resource use contracts only applies to exploration and production rights for hydrocarbons and uranium. As such, the rights to explore and produce uranium will continue to be provided based on a resource use contract.

Decommissioning

The subsoil code modified the general provisions related to decommissioning. Some of them are applied retroactively. One such modification introduces a new requirement to provide financial security for a subsoil user’s decommissioning obligations in the form of a guarantee, insurance and/or bank deposit. As per the transitional provisions of the subsoil code, the mechanism of the decommissioning fund was preserved for old resource use contracts.

The subsoil code also contains special provisions on decommissioning of uranium wellfields. They do not have retroactive effect. However, because they fall within the sphere of environmental protection, they are not covered by the stability guarantee.

Uranium special regulations

The subsoil code differentiates uranium from the rest of solid minerals and provides an additional and distinct set of rules to govern uranium mining specifically.

The subsoil code provides that a uranium deposit is granted for mining only to a uranium national company (a joint stock company created by a decree of the government of Kazakhstan with the controlling stock belonging to the state or the national management fund on the basis of direct negotiations).

The subsoil code further stipulates that a subsoil use right for uranium mining (or a share in such subsoil use right) granted to a uranium national company on the basis of direct negotiations may only be further transferred to its subsidiary entities where the uranium national company holds more than 50% of the shares (participating interests) directly or indirectly. Such a transferee, in turn, may only transfer the subsoil use right (or share in the subsoil use right) to the uranium national company’s subsidiary entities where the uranium national company holds more than 50% of the shares (participating interests) directly or indirectly.

The uranium special rules also regulate issues such as termination of the uranium subsoil use right, provision of a uranium deposit and its extension/reduction, conditions, and periods of mining and project and design documents. The subsoil code does not make these special uranium rules retroactive, subject to a few exceptions.

 

2023 ANNUAL INFORMATION FORM    Page 66


Currency control regulations

Under the Law of the Republic of Kazakhstan “On Currency Regulation and Currency Control” No. 167-VI dated July 2, 2018, as amended (the Currency Control Law), the Kazakhstan Government – based on a joint recommendation from the National Bank of Kazakhstan (the NBK) and another competent state authority – Is entitled to introduce a “special currency regime” if: (a) there is a serious threat to the stability of the country’s balance of payments, the local foreign exchange market, or the economic security of the Republic of Kazakhstan; and (b) such situation (such threat) cannot be resolved by other measures of economic policy. A “special currency regime” is defined as a special regime for conducting currency transactions, which provides for a set of regulatory measures: (a) aimed at creating conditions for eliminating threats to the economic security, and the stability of the financial system, of Kazakhstan, and (b) allowing the introduction of the additional currency control restrictions on the conduct of residents and non-residents of Kazakhstan. Currency control restrictions, which could be imposed under the special currency regime, shall be temporary measures with non-discriminatory nature. These restrictions shall be cancelled as soon as the circumstances that caused their establishment are eliminated.

The restrictions, which may be introduced under the special currency regime, include:

 

   

the requirement to place for a specified period a deposit (without payment of interest) in the amount determined as a percentage of the value of a designated currency transaction with a Kazakh bank or the NBK;

 

   

the requirement to obtain a special permit from the NBK to conduct a currency transaction;

 

   

the requirement for the mandatory sale of foreign currency received by a resident of Kazakhstan; and/or

 

   

restrictions on the use of accounts with foreign banks, as well as settling for residents of Kazakhstan a timing to return foreign currency earnings, as well as limits on volume, amount and currency of settlement on currency transactions

The Kazakhstan Government – based on a joint recommendation from the NBK and other competent state authorities – may introduce other temporary currency control measures.

Under the Currency Control Law, the requirements of the special currency regime cannot restrict:

 

   

fulfillment by residents of Kazakhstan of their obligations to non-residents that arose as a result of the fulfillment by non-residents of their obligations under currency transactions before the introduction of the special currency regime; and

 

   

transfer abroad by non-residents of their dividends, remuneration and other income received on deposits and securities

The resource use contract grants JV Inkai a measure of protection from currency control regulations, granting it the right to freely transfer funds, in state and other currencies, inside and outside of Kazakhstan with the exception that financial transactions within Kazakhstan must be concluded in the national currency.

Operating, capital costs and economic analysis

The following is a summary of the operating and capital cost estimates for the remaining life of mine, stated in constant 2023 dollars and reflecting a forecast life-of-mine production of 216 million pounds U3O8 and a 367 Kazakhstan Tenge to 1 Cdn dollar exchange rate assumption.

 

Operating Costs ($Cdn million)

   Total
(2024 – 2045)
 

Site administration

   $ 519.3  

Processing costs

     382.4  

Mining costs

     950.3  

Corporate overhead

     830.3  
  

 

 

 

Total operating costs

   $ 2,682.3  
  

 

 

 

Average cost per pound U3O8

   $ 12.42  
  

 

 

 

Note: presented as total cost to JV Inkai (100% basis).

Estimated operating costs consist of annual expenditures to mine and process the mineral reserves into U3O8 as well as site administration and corporate overhead costs.

 

2023 ANNUAL INFORMATION FORM    Page 67


Capital Costs ($Cdn million)

   Total
(2024 – 2045)
 

Total wellfield development

   $ 994.9  

Construction and maintenance capital

     70.4  

Sustaining capital

     86.9  
  

 

 

 

Total capital costs

   $ 1,152.2  
  

 

 

 

Note: presented as total cost to JV Inkai (100% basis).

The economic analysis, effective as of January 1, 2018 being the effective date of the technical report for Inkai, undertaken from the perspective of JV Inkai, based on JV Inkai’s share (100%) of Inkai mineral reserves, results in an after tax NPV of $2.2 billion (at a discount rate of 12%), for the net annual cash flows from January 1, 2018 to mid-2045 totaling $8.9 billion. Using the total capital invested, along with the operating and capital cost estimates for the remainder of mineral reserves, the after tax IRR is estimated to be 27.1%. Payback for JV Inkai, including all actual costs was achieved in 2015, on an undiscounted, after tax basis. All future capital expenditures are forecasted to be covered by operating cash flow.

Annual Cash Flows – 100% JV Inkai basis

 

Annual cash flows

($Cdn M)

  2018     2019     2020     2021     2022     2023     2024     2025     2026     2027     2028     2029     2030  

Production volume

(000’s lbs U3O8)

    6,896       8,351       10,406 1      10,399 1      10,399 1      10,293 1      9,305 1      9,445       8,526       7,979       7,417       5,776       6,134  

Sales Revenue

  $ 229.3     $ 337.2     $ 531.4     $ 642.1     $ 679.2     $ 696.7     $ 629.8     $ 639.3     $ 577.1     $ 540.1     $ 502.0     $ 391.0     $ 415.2  

Operating Costs

    67.0       77.5       89.8       86.0       86.6       87.8       82.0       82.3       79.1       77.2       76.2       69.0       70.0  

Capital Costs

    59.4       81.1       75.3       45.0       49.9       37.6       36.9       37.9       43.0       34.5       32.7       25.2       28.0  

Mineral Extraction Tax

    14.2       18.3       20.5       19.2       19.6       19.0       16.1       16.4       14.4       14.0       13.3       9.8       10.4  

Corporate Income Tax

    23.7       39.7       74.9       96.9       103.8       107.9       97.6       99.3       89.0       82.2       75.5       57.1       61.2  

Net cash flow

  $ 65.1     $ 120.6     $ 271.0     $ 395.1     $ 419.3     $ 444.5     $ 397.2     $ 403.4     $ 351.5     $ 332.2     $ 304.5     $ 230.0     $ 245.7  

 

2031

  2032     2033     2034     2035     2036     2037     2038     2039     2040     2041     2042     2043     2044     2045     Total  

6,986

    7,908       9,650       8,389       7,522       6,186       6,917       7,321       9,115       9,412       8,876       8,762       8,892       8,421       3,475       229,159  

$472.9

  $ 535.3     $ 653.2     $ 567.8     $ 509.1     $ 418.7     $ 468.2     $ 495.5     $ 617.0     $ 637.1     $ 600.8     $ 593.1     $ 601.8     $ 570.0     $ 235.2     $ 14,786.1  

73.8

    75.3       80.7       78.5       74.3       71.8       73.9       75.2       81.3       83.3       81.2       80.0       81.3       82.3       65.3       2,188.5  

27.6

    30.3       37.7       34.8       29.9       26.0       31.2       29.9       39.5       38.4       36.0       34.9       35.2       34.3       11.5       1,063.5  

11.5

    12.5       15.3       12.7       10.7       9.4       10.4       10.7       13.4       14.2       13.1       13.0       13.1       13.0       5.5       383.5  

71.3

    82.5       102.8       88.6       79.0       62.6       71.3       76.3       97.4       100.6       94.5       93.0       96.0       90.2       30.8       2,245.5  

$288.7

  $ 334.7     $ 416.7     $ 353.2     $ 315.2     $ 248.9     $ 281.5     $ 303.5     $ 385.4     $ 400.6     $ 376.1     $ 372.1     $ 376.2     $ 350.2     $ 122.1     $ 8,905.1  

Note: Effective January 1, 2018 and presented from the perspective of JV Inkai and based on JV Inkai’s share (100%) of the mineral reserves at an 85% recovery.

 

1 

Based on KAP’s announcement on February 1, 2024, production in Kazakhstan is expected to remain approximately 20% below the level stipulated in subsoil use agreements, primarily due to the sulfuric acid shortage in the country and delays in development of new deposits. Our current target for production at Inkai in 2024 is 8.3 million pounds of U3O8 (100% basis). However, this target is tentative and contingent upon receipt of sufficient quantities of sulfuric acid. In addition, the allocation of such production between the JV Inkai participants is currently under discussion by Cameco and KAP. 2021 production was 9.0 million pounds, 2022 production was 8.3 million pounds and 2023 production was also 8.3 million pounds.

 

2023 ANNUAL INFORMATION FORM    Page 68


Estimated capital costs include wellfield development to mine the mineral reserves as well as construction and maintenance capital along with sustaining capital. Construction capital was originally heavily weighted to 2019 to 2020 due to the capital required for the production ramp up to 10.4 million pounds annually as well as upgrades to existing facilities. The spending during those years was somewhat lower than projected as the construction capital will continue through 2024 to coincide with the ramp up of production in 2025.

The current forecast production is now 216 million pounds U3O8 for the remaining term of the resource use contract, ending mid-2045. Operating costs are expected to increase by approximately 59% as compared to the 2022 AIF and increase by approximately 30% compared to the 2018 technical report as a result of the valuation of the Kazakhstan Tenge, expected adjustments to remuneration programs, and inflationary factors. There is considerable uncertainty regarding the future political and economic landscape in Kazakhstan, which could impact capital and operating cost estimates (for additional information see a discussion of Financial risks starting on page 114 and Strategic risks – Foreign investments and operations and Kazakhstan on page 129 and page 130).

Our expectations and plans regarding Inkai, including forecasts of operating and capital costs, net annual cash flow, production and mine life are forward-looking information, and are based specifically on the risks and assumptions discussed on pages 3, 4 and 5. Operating or capital spending plans may change in 2024, depending on uranium markets and other factors. Estimates of expected future production, net annual cash flows, and capital and operating costs are inherently uncertain, particularly beyond one year, and may change materially over time.

Exploration, drilling, sampling, data quality and estimates

Exploration at Inkai began in the 1970s and progressed until 1996. Since 2006, exploration and delineation drilling is conducted by JV Inkai, with the focus on block 3. From 2013 to 2016, delineation drilling was conducted at block 1 and block 2 to better establish the mineralization distribution and to support further development and wellfield design. In 2018 and 2019 JV Inkai carried out infill drilling program in the central and western parts of the MA Area (referred to as Sat1 area).

We have relied on historical data to estimate mineral reserves and resources for portions of the MA Area that came from block 1. Extensive exploration and delineation work was completed in the portion of the MA Area that came from block 3. It was used to estimate mineral reserves and resources. There are no historical mineral resources and reserves estimates within the meaning of NI 43-101 to report.

Exploration

Exploration drilling

JV Inkai’s uranium exploration and delineation drilling programs were conducted by drilling vertical holes from surface. Delineation of the deposit on the MA Area and its geological structural features was carried out by drilling on a grid at prescribed density of 3.2 to 1.6-kilometre line spacing and 200 to 50-metre hole spacing with coring. Increasing level of geological knowledge and confidence is obtained by further drilling at grids of 800 to 400 x 200 to 50 metre with coring and 200 to 100 x 50 to 25 metre grid, usually without core.

Vertical holes are drilled with a triangular drill bit for use in unconsolidated formations down to a certain depth and the rest of the hole is cored. At the Inkai deposit, approximately 50% of all exploration holes are cored through the entire mineralized interval, and 70% core recovery is required for assay sampling. Radiometric probing, hole deviation, geophysical and hole diameter surveys are done by site crews and experienced contractors.

As the mineralized horizons lie practically horizontal and the drillholes are nearly vertical, the mineralized intercepts represent the true thickness of the mineralization.

The total number of exploration holes drilled before 2018 on the MA Area was approximately 4,500.

The drilling results were used for the identification of the horizons and mineralization encountered and served for the geological modelling, the estimation of uranium distribution and content, and the understanding of hydrogeological and metallurgical characteristics.

 

2023 ANNUAL INFORMATION FORM    Page 69


In 2019, JV Inkai continued the infill drilling program started in 2018 in the Sat1 area aimed at upgrading the inferred and indicated resources and probable reserves to higher categories. From the beginning of the drilling program, a total of 1,208 drillholes (487,638 metres) were drilled, including 482 core holes (196,727 metres) and 716 non-core holes (290,910 metres). Drilling was carried out by progressively tightening from 400 by 100 metres to 200 by 50 metres grids. The infill drilling program was completed in September 2019. Preparation of a resource estimate report was initiated in October 2019 and was completed in 2021, incorporating the infill drilling results from 2018 and 2019. These results have been assessed and went through the local governmental approval process. The report is being used to update the mining project documents. This update also involves updating the work program for mining operations by amendment to the resource use contract and obtaining the required government approvals. This process is ongoing and at this stage JV Inkai has retained a local engineering firm to update the mining project documents.

Sampling analysis and data verification

The sampling, sample preparation, analyses, and geophysical downhole logging during the exploration and delineation programs follow the procedures and manuals which adhere to the requirements set out in the State Reserves Commission guidelines.

Sampling

 

   

Detailed sampling procedures guide the sampling interval within the mineralization. Holes are drilled on progressively tightening grids: 3.2 to 1.6 kilometre x 200-50 metre, 800-400 metre x 200-50 metre and 200-100 metre x 50-25 metre. When core recoveries are higher than 70% and radioactivity greater than a certain threshold, core samples are taken at intervals of 0.2 to 1.2 metres. Sample intervals are also differentiated by barren or low permeability material.

 

   

The drillholes are nearly vertical and the mineralized horizons are almost horizontal, so the mineralized intercepts represent the true thickness of the mineralization.

 

   

JV Inkai surveys the drillholes, logging radiometric, electrical (spontaneous potential and resistivity), caliper and deviation data.

 

   

Sampling is done on half of the core. The average core sample length is 0.4 metre.

 

   

The split core is tested for grainsize and carbonate content.

 

   

Core recovery is considered acceptable given the unconsolidated state of the mineralized material.

Sample security

JV Inkai’s current sampling process follows the strict regulations imposed by the Kazakhstan government, and includes the highest level of security measures, quality assurance and quality control. We have not been able to locate the documents describing sample security for historical Kazakhstan exploration on the MA Area, but we believe the security measures taken to store and ship samples were of the same high quality.

Analysis

 

   

The core samples for uranium and radium determination are ground down to 1.0 mm grain size and are further subdivided by one or three times quartering until the final representative weight of samples and duplicates is reached (0.2 kg).

 

   

The laboratory tests for uranium and radium were performed by the Central Analytical Laboratory of JSC Volkovgeology, a company related to KAP, the other owner of JV Inkai. The laboratory is certified and licensed by the National Centre for Accreditation of the Republic of Kazakhstan.

 

   

The uranium content was determined by using the X-ray fluorescence spectrum analysis. The radium content was determined from the gamma-X-ray spectrum analysis.

Quality control and data verification

 

   

The sampling reproducibility for the uranium and radium assays was determined by two methods: (1) having the remaining half of the core sampled by another sampler and by (2) by compositing samples consisting of the original sample rejects and samples of the remaining half of the core. Reproducibility of uranium and radium assays were within acceptable tolerances.

 

   

Internal laboratory control of the uranium and the radium grade determination is performed by comparing the results of the sample and its blind duplicate. The mean square error between sample and duplicate was calculated by measuring the deviation to ensure it stayed within the prescribed limits.

 

   

External (inter-laboratory) controls for the uranium and radium assays were carried out at the VIMS laboratory in Moscow, Russia, Nevskoe PGO laboratory in Saint-Petersburg, Russia and Kyzyltepageologiya Laboratory in Navoi, Uzbekistan. The number of control samples was approximately 2% of all samples for uranium and approximately 1% of all samples for radium.

 

2023 ANNUAL INFORMATION FORM    Page 70


   

All of the drillhole information in use at Inkai is regularly provided to Cameco. The current database has been validated a number of times by geologists with JV Inkai, JSC Volkovgeology, the State Reserve Commission, Two Key LLP, and Cameco, and is considered relevant and reliable.

 

   

Our geoscientists, including qualified persons as such term is defined in NI 43-101, have witnessed or reviewed drilling, core handling, radiometric probing, logging and sampling facilities used at the Inkai mine and consider the methodologies to be satisfactory and the results representative and reliable.

 

   

We confirmed the correlation between radioactive readings and calculated radium grades.

 

   

We carried out data verification processes that validated the mineral resource and reserve estimates. Our geoscientists, including qualified persons as such term is defined in NI 43-101, consider the data verification processes employed to be representative and reliable. There has been no indication of significant inconsistencies in the data used or verified nor any failures to adequately verity the data.

 

   

All drilling, logging, core drilling, and subsequent core splitting and assaying, were completed under the direction of various geological expeditions of the USSR Ministry of Geology and later under the supervision of JSC Volkovgeology.

 

   

Based on numerous quality assurance and quality controls applied by JSC Volkovgeology, including internal checks and inter-laboratory checks, the repeatability of the results for uranium and radium confirmed the accuracy required and no significant systematic deviations were found.

 

   

Sampling and analysis procedures have been examined by an independent consultant and found to be detailed and thorough.

 

   

The findings are supported by results of the leach tests and wellfield drilling results on the MA Area.

Accuracy

We are satisfied with the quality of data and consider it valid for use in the estimation of mineral resources and reserves for the MA Area. Comparison of the actual mine production with the expected production supports this opinion.

Mineral reserve and resource estimates

Please see page 87 for our mineral reserve and resource estimates for Inkai.

Uranium – Tier-two operations

Rabbit Lake

Located in Saskatchewan, Canada, our 100% owned Rabbit Lake operation opened in 1975, and has the second largest uranium mill in the world. Due to market conditions, we suspended production at Rabbit Lake during the second quarter of 2016.

 

2023 ANNUAL INFORMATION FORM    Page 71


Location    Saskatchewan, Canada
Ownership    100%
End product    Uranium concentrates
ISO certification    ISO 14001 certified
Mine type    Underground
Estimated reserves   
Estimated resources    38.6 million pounds (indicated), average grade U3O8: 0.95%
   33.7 million pounds (inferred), average grade U3O8: 0.62%
Mining methods    Vertical blasthole stoping
Licensed capacity    Mill: maximum 16.9 million pounds per year; currently 11 million
Licence term    Through October 2038
Total production: 1975 to 2023    202.2 million pounds
2023 production    0 million pounds
2024 production outlook    0 million pounds
Estimated decommissioning cost    $294.8 million1

 

1 

This amount represents the submitted, but not yet approved, PDP and PDCE value.

Production suspension

The facilities remained in a safe state of care and maintenance throughout 2023.

While in standby, we continue to evaluate our options in order to minimize care and maintenance costs. We expect care and maintenance costs to range between $28 million and $32 million annually.

In October 2023, the CNSC granted a 15-year renewal of the operating licence for Rabbit Lake, extending the licence term to October 2038.

Future production

We do not expect any production from Rabbit Lake in 2024.

US ISR Operations

Located in Nebraska and Wyoming in the US, the Crow Butte and Smith Ranch-Highland (including the North Butte satellite) operations began production in 1991 and 1975, respectively. Each operation has its own processing facility. Due to market conditions, we curtailed production and deferred all wellfield development at these operations during the second quarter of 2016.

 

2023 ANNUAL INFORMATION FORM    Page 72


Ownership     100%
End product     Uranium concentrates
ISO certification     ISO 14001 certified
Estimated reserves   Smith Ranch-Highland:  
  North Butte-Brown Ranch:  
  Crow Butte:  
Estimated resources   Smith Ranch-Highland:   24.9 million pounds (measured and indicated), average grade U3O8: 0.06%
    7.7 million pounds (inferred), average grade U3O8: 0.05%
  North Butte-Brown Ranch:   9.4 million pounds (measured and indicated), average grade U3O8: 0.07%
    0.4 million pounds (inferred), average grade U3O8: 0.06%
  Crow Butte:   13.9 million pounds (measured and indicated), average grade U3O8: 0.25%
    1.8 million pounds (inferred), average grade U3O8: 0.16%
Mining methods     In situ recovery (ISR)
Licensed capacity   Smith Ranch-Highland:1   Wellfields: 3 million pounds per year; processing plants: 5.5 million pounds per year
  Crow Butte:   Processing plants and wellfields: 2 million pounds per year
Licence term   Smith Ranch-Highland:   Through September 2028
  Crow Butte:   Through October 2024
Total production: 2002 to 2023   33.0 million pounds
2023 production     0 million pounds
2024 production outlook     0 million pounds
Estimated decommissioning cost   Smith Ranch-Highland: $239 million (US), including North Butte
  Crow Butte: $62 million (US)

 

1 

Including Highland mill.

Production and curtailment

As a result of our 2016 decision, commercial production at the US operations ceased in 2018.

We expect ongoing cash and non-cash care and maintenance costs to range between $12.5 million (US) and $14.5 million (US) for 2024.

The current operating licence for Crow Butte expires in October 2024. Efforts are underway for re-licensing with the NRC.

Future production

We do not expect any production in 2024.

Uranium – Advanced projects

Our advanced projects are part of our project pipeline and these resources are supportive of growth beyond our existing suite of tier-one and tier-two assets. We plan to advance them at a pace aligned with market opportunities.

 

Millennium   
Location    Saskatchewan, Canada
Ownership    69.9%
End product    Uranium concentrates
Potential mine type    Underground
Estimated resources (our share)   

53.0 million pounds (indicated), average grade U3O8: 2.39%

 

20.2 million pounds (inferred), average grade U3O8: 3.19%

Background

The Millennium deposit was discovered in 2000 and was delineated through geophysical surveys and surface drilling work between 2000 and 2013.

 

2023 ANNUAL INFORMATION FORM    Page 73


Yeelirrie   
Location    Western Australia
Ownership    100%
End product    Uranium concentrates
Potential mine type    Open pit
Estimated resources    128.1 million pounds (measured and indicated), average grade U3O8: 0.15%

Background

The Yeelirrie deposit was discovered in 1972 and is a near-surface calcrete-style deposit that is amenable to open pit mining techniques. It is one of Australia’s largest undeveloped uranium deposits.

 

Kintyre   
Location    Western Australia
Ownership    100%
End product    Uranium concentrates
Potential mine type    Open pit
Estimated resources (our share)   

53.5 million pounds (indicated), average grade U3O8: 0.62%

 

6.0 million pounds (inferred), average grade U3O8: 0.53%

Background

The Kintyre deposit was discovered in 1985 and is amenable to open pit mining techniques.

2023 project updates

We believe that we have some of the best undeveloped uranium projects in the world. However, our primary focus is on producing from our tier-one uranium assets at a pace aligned with our contract portfolio and market opportunities.

Planning for the future

2024 Planned activity

No work is planned at Millennium, Yeelirrie or Kintyre in 2024.

Project approval

The approval received for Kintyre from the prior state government required substantial commencement of the project by March 2020, being within five years of the grant of the approval, and this was not achieved. The current government declined to grant us an extension to achieve it. In the future, we can apply for an extension of time to achieve substantial commencement of the project. If granted by a future government we could commence the Kintyre project, provided we have all other required regulatory approvals.

The approval for the Yeelirrie project, received from the prior state government, required substantial commencement of the project by January 2022, and this was not achieved. The current government declined to grant us an extension to achieve it. In the future, we can again apply for an extension of time to achieve substantial commencement of the project. If granted by a future government we could commence the Yeelirrie project, provided we have all other required regulatory approvals. Approval for the Yeelirrie project at the federal level was granted in 2019 and extends until 2043.

Uranium – Exploration

Our exploration program is focused on replacing mineral reserves as they are depleted by our production, which is key to sustaining our business, meeting our commitments, and ensuring long-term growth. Our global exploration activity is adjusted annually in line with market signals and at a pace aligned with Cameco’s mining plans and sourcing needs. In recent years, we have increased exploration spending in response to the significant positive momentum in the nuclear fuel market that has provided a clear signal that more uranium production will be required in the next decade, setting the stage for a renewed exploration cycle.

 

2023 ANNUAL INFORMATION FORM    Page 74


Our position as one of the world’s largest uranium producers and our continued growth across the nuclear fuel cycle has been driven by decades of experience and our history of exploration, discovery and mining success. Our land position totals 740,000 hectares (1.8 million acres) that cover exploration and development prospects in Canada, Australia, Kazakhstan and the US that are among the best in the world. In northern Saskatchewan alone, we have direct interests in 650,000 hectares (1.6 million acres) that cover many of the most prospective areas of the prolific Athabasca Basin.

In northern Saskatchewan, our well-established infrastructure includes fully licensed and fully permitted uranium mills and mines in the eastern Athabasca basin, along with a supporting network of roads, airstrips and electricity supply. That infrastructure provides us with an advantage that not only underpins the potential development of our advanced exploration projects, but also supports our ongoing work to both delineate existing prospects and deposits, and to identify future undiscovered uranium potential of the region. Additionally, our decades of work to establish a positive corporate reputation by prioritizing our relationships with northern Saskatchewan Indigenous communities, confirms our long-term commitment to continually engage and provide ongoing benefits to the people that call the region home.

The uranium endowment of the Athabasca Basin, where we are involved in 39 projects (including partner-operated joint ventures), is well known and combined with the basin’s unique geological history, it creates a remarkable mining jurisdiction hosting the highest uranium grades and some of the largest uranium deposits in the world. On our projects, we have identified numerous uranium occurrences, prospects, and undeveloped deposits of variable grades and sizes that have progressed through multiple stages of evaluation. Depending on the potential deposit size, ore and ground quality, evolving mining technologies and the uranium market environment, some of these prospects are expected to become viable, economic deposits in a uranium market and price environment that supports new primary production and provides an adequate risk-adjusted return.

The combination of our large land position and proven expertise in discovering and developing world class uranium mines provides the foundation for future mill-supposed exploration projects, ranging from early to advanced stages of greenfield exploration and for brownfield opportunities to extend the lives of our existing operations.

 

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2023 UPDATE

Brownfield exploration

Brownfield and advanced exploration activities include exploration near our existing operations and expenses for maintaining advanced projects and delineation drilling where uranium mineralization is being defined. In 2023, we spent about $4.5 million in Saskatchewan, $1 million in Australia and $1 million in the US on brownfields and advanced exploration projects. The spending in Saskatchewan was primarily focused on advancing the extension of the mine life at Cigar Lake and advanced exploration on the Dawn Lake project.

The Dawn Lake project is located approximately 45 km northwest of the Rabbit Lake operation, on the La Rocque Lake corridor which hosts several historic discoveries and deposits. In 2023, exploration drilling at Dawn Lake expanded the footprint of known uranium mineralization with mineralized intercepts in excess of 60% U3O8 over several metres. Although the deposit remains at a very early stage of exploration, the high-grade results and geological conditions observed to date are comparable to those of other mines and known deposits in the Athabasca Basin, generating interest and a focused effort to better understand its potential.

 

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Regional exploration

Regional exploration is defined as projects that are considered greenfield. In 2023, we spent about $11 million on regional exploration programs that are comprised of target generation geophysical surveys and diamond drilling primarily in northern Saskatchewan.

PLANNING FOR THE FUTURE

We plan to continue to focus on our core projects in Saskatchewan under our long-term exploration framework. Our leadership position and industry expertise in both exploration and corporate social responsibility makes us a partner of choice and for properties and projects that meet our investment criteria, we may partner with other companies through strategic alliances, equity holdings and traditional joint venture arrangements to optimize our exploration activity and spending.

Brownfield exploration

In 2024, we plan to spend about $7 million on brownfields and advanced Exploration, primarily to expand the footprint of the mineralization identified on in the La Rocque Lake corridor of the Dawn Lake project.

Regional exploration

We plan to spend about $13 million on diamond drilling and target generation geophysical surveys on our core regional projects in Saskatchewan, in 2024.

Fuel services

Refining, conversion and fuel manufacturing

We have about 21% of world UF6 primary conversion capacity and are a supplier of natural UO2. Our focus is on cost-competitiveness and operational efficiency, as well as increasing our production of UF6 in line with our contract portfolio and market opportunities.

Our fuel services segment is strategically important because it helps capture full-cycle value by supporting the growth of the uranium segment and by providing our customers with access to refining and conversion services for both heavy-water and light-water reactors, and CANDU fuel and reactor component manufacturing for heavy water reactors. Offering a range of products and services to customers helps us broaden our business relationships and meet customer needs.

As in our uranium segment, we are focused on securing new long-term contracts and on aligning our production decisions with our contract portfolio that will allow us to continue to produce and consistently support the long-term needs of our customers.

In addition, we are pursuing non-traditional markets for our UO2 and fuel fabrication business and have been actively securing new contracts for reactor components to support refurbishment of Canadian reactors.

In 2023, fuel services produced 13.3 million kgU, 2% higher than 2022.

We plan to produce between 13.5 million and 14.5 million kgU in 2024. This includes increasing annual production at our Port Hope UF6 conversion facility to 12,000 tonnes to satisfy our book of long-term business and demand for conversion services.

Inflation, the availability of personnel with the necessary skills and experience, aging infrastructure, and the potential impact of supply chain challenges on the availability of materials and reagents carry the risk of not achieving our production plans, production delays, and increased costs in 2024 and future years.

 

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Blind River Refinery

 

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Licensed Capacity

 

24.0M kgU as UO3

 

Licence renewal in

 

February 2032

Blind River is the world’s largest commercial uranium refinery, refining uranium concentrates from mines around the world into UO3.

 

Location    Ontario, Canada
Ownership    100%
End product    UO3
ISO certification    ISO 14001 certified
Licensed capacity    18.0 million kgU as UO3 per year, approved to 24.0 million subject to the completion of certain equipment upgrades (advancement depends on market conditions)
Licence term    Through February 2032
Estimated decommissioning cost    $57.5 million

Markets

UO3 is shipped to Port Hope for conversion into either UF6 or UO2.

Capacity

In 2012, the CNSC granted an increase to our annual licensed production capacity from 18 million kgU per year as UO3 to 24 million kgU as UO3, subject to the completion of certain equipment upgrades. These upgrades will be advanced based on market conditions.

Licensing

In February 2022, the CNSC granted our Blind River refinery a 10-year operating licence, which will expire in February 2032.

Port Hope Conversion Services

 

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Licensed Capacity

 

12.5M kgU as UF6

 

2.8M kgU as UO2

 

Licence renewal in

 

February 2027

Port Hope is the only uranium conversion facility in Canada and a supplier of UO2 for Canadian-made CANDU heavy-water reactors.

 

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Location    Ontario, Canada
Ownership    100%
End product    UF6, UO2
ISO certification    ISO 14001 certified
Licensed capacity   

12.5 million kgU as UF6 per year

 

2.8 million kgU as UO2 per year

Licence term    Through February 2027
Estimated decommissioning cost    $138.2 million1

 

1 

This amount is to be reviewed at the 2024 Commission hearing.

Conversion services

At our UO2 plant, we convert UO3 to UO2 powder, used to make pellets for Canadian CANDU reactors and CANDU reactors in other countries and blanket fuel for light water nuclear reactors.

At our UF6 plant, we convert UO3 to UF6, and then ship it to enrichment plants primarily in the US and Europe. There, it is processed to become low enriched UF6, which is subsequently converted to enriched UO2 and used as reactor fuel for light water nuclear reactors.

Anhydrous hydrofluoric acid (AHF) is a primary feed material for the production of UF6. We have agreements with more than one supplier of AHF to provide us with diversity of supply.

Port Hope conversion facility clean-up and modernization (Vision in Motion)

Vision in Motion is a unique opportunity that demonstrates our continued commitment to a clean environment. It has been made possible by the opening of a long-term waste management facility by the Government of Canada’s Port Hope Area Initiative project. There is a limited opportunity during the life of this project to engage in clean-up and renewal activities that address legacy waste at the Port Hope Conversion facility inherited from historic operations. Good progress was made over the past year with the removal of old buildings and structures on site, and the project will continue to be active in the year ahead.

Licensing

In February 2017, the CNSC approved a ten-year operating licence for the Port Hope conversion facility.

Labour relations

The current collective bargaining agreement with the unionized employees at our Port Hope conversion facility ends on June 30, 2025.

Cameco Fuel Manufacturing Inc. (CFM)

 

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Licensed Capacity

 

1.65M kgU as UO2 fuel pellets

 

Licence renewal in

 

February 2043

CFM produces fuel bundles and reactor components for CANDU reactors.

 

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Location    Ontario, Canada
Ownership    100%
End product    CANDU fuel bundles and components
ISO certification    ISO 9001 certified, ISO 14001 certified
Licensed capacity    1.65 million kgU as UO2 fuel pellets
Licence term    Through February 2043
Estimated decommissioning cost    $10.8 million

Fuel manufacturing

CFM’s main business is making fuel bundles for CANDU reactors. CFM presses UO2 powder into pellets that are loaded into tubes, manufactured by CFM, and then assembled into fuel bundles. These bundles are ready to insert into a CANDU reactor core. CFM also produces many different zirconium-based reactor components for CANDU reactors.

Manufacturing services agreements

A substantial portion of CFM’s business is the supply of fuel bundles to the Bruce Power A and B nuclear units in Ontario. We supply the UO2 for these fuel bundles.

Licensing

In January 2023, the CNSC granted a 20-year renewal to the licence for CFM. The licence renewal also granted CFM’s request for a slight production increase to 1,650 tonnes as UO2 fuel pellets.

Labour relations

The collective agreement with unionized employees at our fuel manufacturing operations in Port Hope and Cobourg expires in June 2024. Negotiations are taking place in Q2 2024. There is a risk to the production plan if we are unable to reach an agreement and there is a labour dispute.

Westinghouse Electric Company

Westinghouse is a nuclear reactor technology original equipment manufacturer (OEM) and a leading provider of highly technical aftermarket products and services to its customer base which includes commercial nuclear power utilities and government agencies globally. Westinghouse’s history in the energy industry stretches back over a century, during which time the company became a pioneer in nuclear energy.

It is the OEM or a technology provider to about 50% of the global nuclear reactor fleet, delivering capacity of about 190,000 carbon-free Mwe.

It has three fuel fabrication facilities, one in the US, one in Sweden and one in the United Kingdom (UK). In addition, it has about 90 facilities, engineering centers, and workshops, with a presence in more than 20 countries, including major nuclear component fabrication facilities in the US and Italy.

 

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Corporate headquarters    Cranberry Township, Pennsylvania (United States)
Ownership    49% - equity-accounted
Employees    ~ 10,000
Business activities    Operations and maintenance of installed base (core business): Designs and manufactures nuclear fuel supplies and services for light water reactors. Provides outage and maintenance services, engineering support, instrumentation and controls equipment, plant modifications, and components and parts to nuclear reactors.
   New build: Designs, develops and procures equipment for new nuclear plant projects. This also includes design for new small and micro reactors.
Certifications    ISO 14001
   ISO 45001
Estimated decommissioning cost    $231.1 million (US)

Background

On November 7, 2023, we announced the closing of the acquisition of Westinghouse in partnership with Brookfield. Brookfield beneficially owns a 51% interest in Westinghouse, and we beneficially own 49%. Bringing together Cameco’s expertise in the nuclear industry with Brookfield’s expertise in clean energy positions nuclear power at the heart of the energy transition and creates a powerful platform for strategic growth across the nuclear sector.

To finance Cameco’s 49% share of the purchase price, equaling $2.1 billion (US), we used $1.5 billion (US) of cash and drew the full amount of both $300 million (US) tranches of the term loan put in place concurrently with the execution of the acquisition agreement, and which mature two years and three years from the date of close. The $280 million (US) bridge commitment that we also secured concurrently with the acquisition agreement was not required to complete the transaction and was terminated.

The acquisition of Westinghouse was completed in the form of a limited partnership with Brookfield. The board of directors governing the limited partnership consists of six directors, three appointed by Cameco and three appointed by Brookfield. Decision-making by the board corresponds to percentage ownership interests in the limited partnership (51% Brookfield and 49% Cameco). However, decisions with respect to certain reserved matters under the partnership agreement, such as the approval of the annual budget, require the presence and support of both Cameco and Brookfield appointees to the board as long as certain ownership thresholds are met.

 

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We believe Westinghouse is well-positioned for long-term growth driven by the expected increase in global demand for nuclear power. As of November 7, 2023, we receive the economic benefit of our ownership in Westinghouse. We account for our proportionate interest in Westinghouse on an equity basis.

We expect this strategic acquisition will be transformative and accretive to Cameco. We are enhancing our ability to compete for more business by investing in additional nuclear fuel cycle assets that we expect will augment the core of our business and offer more solutions to our customers across the nuclear fuel cycle. Like Cameco, Westinghouse has nuclear assets that are strategic, proven, licensed and permitted, and that are in geopolitically attractive jurisdictions. We expect these assets, like ours, will participate in the growing demand profile for nuclear energy.

Cash distributions

Annually, Cameco and Brookfield (the partners) approve a budget and business plan which outline Westinghouse’s financial projections and capital allocation priorities. The determination of whether to make cash distributions to the partners will be reviewed quarterly based on the approved budgeted expenditures and capital allocation priorities, including growth investment opportunities, as well as available cash balances. However, the timing of cash distributions is expected to be aligned with the timing of Westinghouse’s cash flows, which are typically higher in the fourth quarter.

The financial information in the sections below is derived from the annual consolidated financial statements of Westinghouse, which are reported in US dollars and prepared in accordance with US GAAP. Such numbers have been updated to reflect IFRS differences to conform with Cameco’s accounting convention and are reflected on a 100% basis due to Cameco using equity accounting for its acquisition of a 49% interest in Westinghouse as of November 7, 2023.

Westinghouse debt

As at December 31, 2023, Westinghouse had the following outstanding debt:

 

   

$3.5 billion (US) term loan with a maturity of August 2025

 

   

credit facilities of $400 million (US), which had drawings of $115 million (US) and mature in June 2026

 

   

drawn financial assurances including letters of credit of $474 million (US) and surety bonds of $262 million (US)

Effective January 25, 2024, Westinghouse refinanced its existing debt and entered into various credit agreements, which now provide total borrowing capacity of $4.6 billion (US), comprised of:

 

   

$3.5 billion (US) term loan which now matures on January 25, 2031, and has quarterly repayments of $8.75 million (US), with any remaining amounts due at maturity. The term loan is priced at the applicable term SOFR rate plus a margin that is currently 2.75%

 

   

credit facilities totaling $500 million (US), which mature in January 2029

 

   

financial assurances including letters of credit in the amount of about $570 million (US) and surety bonds of $262 million (US)

The credit agreements are non-recourse to Cameco, but come with certain covenants, which if breached, could result in all amounts outstanding thereunder to be immediately due and payable by Westinghouse. We expect Westinghouse to continue to comply with these covenants in 2024.

Cameco filed a Form 51-102F4 business acquisition report in respect of its acquisition of Westinghouse on January 19, 2024. The report is available on Cameco’s issuer profile on SEDAR+ at www.sedarplus.com.

Business activities

Westinghouse’s main business activities span two key stages of the life cycle of a nuclear reactor: (i) the operations and maintenance of the installed base (core business), and (ii) the design and build of new nuclear reactors.

 

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Westinghouse’s 2023 revenue by region was as follows:

 

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*

EMEA means Europe, Middle East and Africa.

Core business

Westinghouse’s core business covers two main business units: Operating plant services (OPS) and nuclear fuel.

Operating plant services

Westinghouse’s largest business unit is OPS, which accounted for approximately $2.5 billion (US) of Westinghouse’s 2023 revenue, representing about 55% of such revenue. This business unit generates revenue through four business lines:

(i) outage and maintenance services; (ii) engineering services; (iii) instrumentation and controls; and (iv) parts. Through these four business lines, Westinghouse provides services including refueling, maintenance, inspection and repair during regulation-mandated outages. Westinghouse also offers solutions to enhance the reliability, safety, lifespan, and cost-effectiveness of customer operations and supplies replacement parts and products as well as operational and technical support.

Outage and maintenance services generates revenue entirely from providing refueling, maintenance, inspection and repair services to the existing global installed reactor base and is not reliant on new plant projects. These services are provided under long-term customer relationships and demand is driven by safety related maintenance, regulatory compliance, and asset performance.

Engineering services generates stable revenue by engineering bespoke replacement components or equipment, and engineering studies to validate that changes to plant operation are within plant design safety margins, and through studies designed to establish the best course of action to improve plant performance (e.g. do nothing, repair, replace) for emergent issues. Demand for these services is driven by the long-term relationships OPS has built with its customers through prompt response to emergent business needs for customers and through providing services to recently completed nuclear units.

Instrumentation and controls generates revenue by providing advanced digital systems that include core safety and non-safety instrumentation, automation, and control systems through product development, design, assembly and testing of advanced products. This business line also provides simulation services for multiple nuclear reactor technologies.

Parts generates revenue by providing specialized manufacturing and commercial dedication capabilities to support Westinghouse’s ability to make tailored parts that are challenging to replicate. Westinghouse can offer qualified replacement parts (e.g., control rod drives) and products (safety and non-safety), as well as operational and technical support. Demand is largely driven by the need for consumables used during and between outages to maintain safe and efficient operation of nuclear power plants.

 

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Westinghouse’s 2023 revenue by region for OPS was as follows:

 

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*

EMEA means Europe, Middle East and Africa.

Nuclear fuel

The 2023 revenue from the nuclear fuel business unit was approximately $1.4 billion (US), representing approximately 33% of Westinghouse’s total 2023 revenue.

The nuclear fuel business unit designs and fabricates highly engineered fuel assemblies that maximize power in a specific reactor. Westinghouse supplies fuel assemblies for a variety of reactor technologies, including pressurized water reactors (PWRs), boiling water reactors, advanced gas-cooled reactors and water-water energetic reactors (VVER). Although Westinghouse’s business in this space is largely focused on PWRs at this time, Westinghouse has made advancements and it is expected to continue to grow in a number of non-PWR technologies, including VVER.

The nuclear fuel business unit enjoys long-term customer relationships and has predictable demand for its products and services. To allow consistent power generation these reactors require an outage to refuel every 18 to 24 months during which one-third of the fuel assemblies are replaced.

Westinghouse’s 2023 revenue by region for nuclear fuel was as follows:

 

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*

EMEA means Europe, Middle East and Africa.

 

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New build

In addition to growth in its core business, the focus on the importance of nuclear power in providing carbon-free, secure and affordable baseload power as an essential part of the electricity grid in many countries is creating new opportunities for Westinghouse’s proven AP1000 reactor design, as well as the smaller reactor designs it has in development. Its technology and experience provide a competitive advantage as the engineering and procurement aspects of new build programs are initiated.

Westinghouse’s new build business unit covers the design, development and procurement of equipment for new plant projects. It provides large plant Gen III and AP1000 nuclear technology globally. In addition to its AP1000 reactor design, Westinghouse has submitted its pre-application Regulatory Engagement Plan with the NRC for the development of its AP300™ small modular reactor, which is based on the proven and licensed AP1000 reactor design. Its eVinci™ microreactor design was recently awarded US Department of Energy funding for a test reactor FEED (front-end engineering design) at Idaho National Lab. The AP300 small modular reactor and the eVinci microreactor are expected to offer the same carbon-free baseload benefits as larger nuclear reactor technologies, but are tailored for specific applications, including industrial, remote mining, off-grid communities, defense facilities and critical infrastructure. As with the AP1000 reactor, they are expected to have applications beyond electricity generation, including district and process heat, desalination and hydrogen production. We are optimistic about the future competitiveness of these technologies and their potential to make a meaningful contribution to Westinghouse’s long-term financial performance. However, they are presently still in the development phase.

The 2023 revenue from the new build business unit was approximately $300 million (US) representing approximately 7% of Westinghouse’s total 2023 revenue.

Westinghouse’s 2023 revenue by region for the new build business was as follows:

 

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*

EMEA means Europe, Middle East and Africa.

Contracting status

Following an announcement of a successful bid, there are a number of contracts that must be signed before work commences and revenue is realized. Once contracts are signed and work begins, new build projects are expected to generate multi-year revenue streams and EBITDA for Westinghouse. In addition to the AP1000 reactors already deployed in the US and China, Poland recently signed an engineering services contract for three AP1000 reactors for its new nuclear energy program. Ukraine has also selected the AP1000 reactor for nine units and has signed an engineering services contract for the first unit, and Bulgaria has chosen the AP1000 reactor for two units at the Kozloduy nuclear site and signed a front-end engineering and design (FEED) contract. FEED contracts often precede engineering services contracts, which are required before work can begin.

Westinghouse undertakes its role in the design, development, engineering and procurement of equipment for new reactors. It does not provide construction services or assume any construction risk. This business unit has the potential to add significant long-term value during the construction phase, and then to the core of the business through reactor services and fuel supply contracts once the reactor begins commercial operation.

 

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See the section titled New build framework starting on page 97 of Cameco’s 2023 annual MD&A for more information.

Competitive position

Demand for Westinghouse’s products and services is being driven by the increasing recognition by policy makers, industry, and general public of the critical role for nuclear energy in providing clean, secure and affordable baseload electricity.

Westinghouse has several critical-to-business suppliers with unique capabilities that are key to delivering Westinghouse’s products to its operating plant and new plant customers. It has long-standing relationships with its key suppliers, and generally has secured long-term agreements with these suppliers to solidify Westinghouse’s business relationships and security of supply. Westinghouse works closely with these suppliers to ensure that pricing and lead times from these suppliers are in line with the market expectations.

Westinghouse’s core business relies heavily on a small number of customers in 46 countries, consisting primarily of utility companies that own nuclear reactors around the globe. Westinghouse’s five largest customers accounted for nearly 30% of Westinghouse’s contracted sales.

Westinghouse’s primary competitors vary based on business unit. For OPS, the market is fragmented with several competitors globally for each business line. For nuclear fuels, Westinghouse has two primary competitors serving the same global customer base. For new build, Westinghouse has two primary competitors that offer similar services.

Business cycles

Westinghouse has a stable and predictable core business generating durable cash flows. Westinghouse’s core business is characterized by recurring and predictable revenue and cash flow streams, the majority of which are secured in advance under long-term contracts with durations that can range from three to more than ten years, depending on the product or service being provided. The 18 to 24 month outage cycle for most reactors drives some variability in its annual cash flow, which tends to be higher in the fourth quarter.

Market opportunities

Amid the ongoing demand growth and global energy security concerns, Westinghouse expects there will be new opportunities to compete for and win new business. Westinghouse’s reputation as a global leader in the nuclear industry and its position as a non-Russian alternative supplier for certified VVER fuel assemblies are expected to benefit its core business as Eastern European countries seek to develop a reliable fuel supply chain independent of Russia.

Intangible assets

Upon acquisition, the fair value of intangible assets was determined as part of the purchase price allocation. Intangible assets includes customer relationships and contracts, developed technology, the Westinghouse trade name, and product development costs.

Estimating decommissioning and environmental remediation costs

Westinghouse’s decommissioning provisions relate to the decommissioning of its fuel fabrication facilities, other licensed nuclear facilities and contaminated equipment at those locations.

Westinghouse develops conceptual decommissioning plans for its operating sites and uses them to estimate its decommissioning costs. The plans are submitted to regulators to determine the amount of financial assurance it must provide to secure its decommissioning obligations. Its plans include reclamation techniques that Westinghouse believes will generate reasonable environmental and radiological performance. Regulators give “conceptual approval” to a decommissioning plan if they believe the concept is reasonable.

The decommissioning plans are reviewed every one to five years. The cost estimates for both accounting purposes and licence applications are also reviewed. As properties approach or go into decommissioning, regulators review the detailed decommissioning plans. This can result in additional regulatory process, requirements, costs, and financial assurances.

 

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At the end of 2023, Westinghouse had estimated total decommissioning and reclamation costs of $231.1 million (US). This is the discounted value of the obligation and is based on its current operations. Regulatory approval is required prior to beginning decommissioning. The expected timing for these costs is based on each facility’s expected operating life. The required costs for decommissioning and reclamation in each of the next five years are not expected to be material.

Westinghouse provides financial assurances using surety bonds for decommissioning liabilities to regulatory authorities, as required. It had a total of about $227 million (US) in surety bonds supporting decommissioning liabilities at the end of 2023. All of its fuel fabrication facilities have financial assurances in place in connection with the preliminary plans for decommissioning each of the sites.

In addition to these decommissioning obligations, Westinghouse has environmental remediation obligations associated with the discharge of pollutants and the disposal of waste associated with ongoing operations at its sites. At the end of 2023, Westinghouse had estimated total environmental and waste liabilities of $43.7 million (US).

Complying with regulations

Nuclear safety regulators licence Westinghouse site activities worldwide and oversee the work done with customers. Licencing requires compliance with stringent regulations, advanced training, and comprehensive programs.

Westinghouse’s US fabrication facilities are licenced by the NRC and are fully compliant with Federal Regulations. Westinghouse’s non-US fabrication facilities are compliant with regulators in their respective regions. In addition, Westinghouse voluntarily implements industry best practices and standards for safety established by the Institute for Nuclear Power Operations (INPO) and the World Association of Nuclear Operators (WANO).

Other nuclear fuel cycle investments

Global Laser Enrichment

GLE is the exclusive licensee of the proprietary Separation of Isotopes by Laser Excitation (SILEX) laser enrichment technology, a third-generation uranium enrichment technology. We are the commercial lead for the GLE project with a 49% interest and we hold an option to attain a majority interest of 75% ownership. Silex Systems Ltd. (Silex Systems) owns the other 51% interest in GLE and is the licensor of the SILEX laser enrichment technology and the technology lead for GLE.

Subject to completion of the technology development program, and its progression through to commercialization, GLE has the potential to offer a variety of advantages to the global nuclear energy sector, including:

 

   

re-enriching depleted uranium tails leftover as a by-product of first-generation gaseous diffusion enrichment operation, repurposing legacy waste into a commercial source of uranium and conversion products to fuel nuclear reactors and aiding in the responsible clean-up of legacy tails inventories, as per GLE’s agreement with the US Department of Energy (DOE);

 

   

producing commercial low-enriched uranium (LEU) to fuel the world’s existing and future fleet of large-scale light-water reactors (and depending on market developments, SMR’s that also require LEU-based fuel) with greater efficiency and flexibility than current enrichment technologies; and

 

   

producing high-assay low-enriched uranium (HALEU), if a market for that fuel stock develops to serve a number of small modular reactor (SMR) and advanced reactor designs that might be commercially deployed and require HALEU-based fuel

Our view is that re-enriching US government inventories of depleted uranium tails into a commercial source of uranium and conversion is GLE’s lowest-risk path to the market. This opportunity is underpinned by an agreement GLE has with the DOE to upgrade depleted uranium tails leftover from DOE’s historic enrichment operations, which may help address the growing supply gap for Western nuclear fuel supplies and services.

With the support of both Cameco and Silex Systems, GLE has accelerated its technology demonstration project activities to target an earlier delivery of the successful demonstration of Technology Readiness Level 6 (TRL-6). TRL-6 achievement will confirm large-scale system performance under relevant conditions (pilot-scale demonstration), which represents a major step up in a technology’s demonstrated readiness. Of note, GLE received the second full-scale laser system module from Silex Systems last year, which was installed in GLE’s pilot demonstration facility in the US. GLE’s efforts to bring forward planned activities and expenditures under the technology demonstration program are intended to demonstrate TRL-6 this year. Earlier TRL-6 demonstration may provide optionality for GLE to pursue government and industry support and funding related to potential commercial deployment opportunities (LEU and, potentially, HALEU) that could precede tails re-enrichment if the right conditions exist.

 

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Unless another commercial deployment opportunity materializes, GLE will continue its work to complete the technology demonstration project with the potential to deploy its enrichment technology at a commercial scale in Western Kentucky under its agreement with the DOE no later than 2030. GLE’s path to commercialization depends on several factors, including but not limited to the successful progression and completion of GLE’s technology demonstration and maturation program, a clear commercial use case, sound market fundamentals, clarity regarding future Russian fuel imports, the ability to secure substantial government support and funding (specifically, accelerated commercial pathways related to LEU and, potentially, HALEU are reliant on government funding) and long-term industry support.

Mineral reserves and resources

Our mineral reserves and resources are the foundation of our company and fundamental to our success.

We have interests in a number of uranium properties. The tables in this section show the estimates of the proven and probable mineral reserves, and measured, indicated, and inferred mineral resources at those properties. However, only three of the properties listed in those tables are material uranium properties for us: McArthur River/Key Lake, Cigar Lake and Inkai. Mineral reserves and resources are all reported as of December 31, 2023.

We estimate and disclose mineral reserves and resources in five categories, using the definition standards adopted by the Canadian Institute of Mining, Metallurgy and Petroleum Council, and in accordance with NI 43-101. You can find out more about these categories at www.cim.org.

About mineral resources

Mineral resources do not have to demonstrate economic viability but have reasonable prospects for eventual economic extraction. They fall into three categories: measured, indicated and inferred. Our reported mineral resources are exclusive of mineral reserves.

 

   

Measured and indicated mineral resources can be estimated with sufficient confidence to allow the appropriate application of technical, economic, marketing, legal, environmental, social, and governmental factors to support evaluation of the economic viability of the deposit.

 

   

measured resources: we can confirm both geological and grade continuity to support detailed mine planning

 

   

indicated resources: we can reasonably assume geological and grade continuity to support mine planning

 

   

Inferred mineral resources are estimated using limited geological evidence and sampling information. We do not have enough confidence to evaluate their economic viability in a meaningful way. You should not assume that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource, but it is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated mineral resources with continued exploration.

Our share of uranium in the following mineral resource tables is based on our respective ownership interests. Mineral resources that are not mineral reserves have no demonstrated economic viability.

About mineral reserves

Mineral reserves are the economically mineable part of measured and/or indicated mineral resources demonstrated by at least a preliminary feasibility study. The reference point at which mineral reserves are defined is the point where the ore is delivered to the processing plant, except for ISR operations where the reference point is where the mineralization occurs under the existing or planned wellfield patterns. Mineral reserves fall into two categories:

 

   

proven reserves: the economically mineable part of a measured resource for which at least a preliminary feasibility study demonstrates that, at the time of reporting, economic extraction could be reasonably justified with a high degree of confidence

 

   

probable reserves: the economically mineable part of a measured and/or indicated resource for which at least a preliminary feasibility study demonstrates that, at the time of reporting, economic extraction could be reasonably justified with a degree of confidence lower than that applying to proven reserves

For properties for which we are the operator, we use current geological models, an average uranium price of $54 (US) per pound U3O8, and current or projected operating costs and mine plans to estimate our mineral reserves, allowing for dilution and mining losses. We apply our standard data verification process for every estimate. For properties in which we have an interest but are not the operator, we take reasonable steps to ensure that the reserve and resource estimates we report are reliable.

 

2023 ANNUAL INFORMATION FORM    Page 87


Our share of uranium in the mineral reserves table below is based on our respective ownership interests.

 

LOGO

Qualified persons

The technical and scientific information discussed in this AIF, including mineral reserve and resource estimates, for our material properties (McArthur River/Key Lake, Cigar Lake and Inkai) was approved by the following individuals who are qualified persons for the purposes of NI 43-101:

 

McArthur River/Key Lake    Cigar Lake

•  Greg Murdock, general manager, McArthur River, Cameco

 

•  Daley McIntyre, general manager, Key Lake, Cameco

 

•  Alain D. Renaud, principal resource geologist, technical services, Cameco

 

•  Biman Bharadwaj, principal metallurgist, technical services, Cameco

  

•  Lloyd Rowson, general manager, Cigar Lake, Cameco

 

•  Scott Bishop, director, technical assurance & mineral reserves, technical services, Cameco

 

•  Alain D. Renaud, principal resource geologist, technical services, Cameco

 

•  Biman Bharadwaj, principal metallurgist, technical services, Cameco

Inkai   

•  Sergey Ivanov, deputy general director, technical services, Cameco Kazakhstan LLP

 

•  Alain D. Renaud, principal resource geologist, technical services, Cameco

 

•  Scott Bishop, director, technical assurance & mineral reserves, technical services, Cameco

 

•  Biman Bharadwaj, principal metallurgist, technical services, Cameco

  

Important information about mineral reserve and resource estimates

Although we have carefully prepared and verified the mineral reserve and resource figures in this document, the figures are estimates, based in part on forward-looking information.

Estimates are based on our knowledge, mining experience, analysis of drilling results, the quality of available data and management’s best judgment. They are, however, imprecise by nature, may change over time, and include many variables and assumptions including:

 

•  geological interpretation

 

•  extraction plans

 

•  commodity prices and currency exchange rates

  

•  recovery rates

 

•  operating and capital costs

 

2023 ANNUAL INFORMATION FORM    Page 88


There is no assurance that the indicated levels of uranium will be produced, and we may have to re-estimate our mineral reserves based on actual production experience. Changes in the price of uranium, production costs or recovery rates could make it unprofitable for us to operate or develop a particular site or sites for a period of time. See page 1 for information about forward-looking information, and page 107 for a discussion of the risks that can affect our business.

Please see pages 91 and 92 for the specific assumptions, parameters and methods used for the McArthur River, Cigar Lake and Inkai mineral reserve and resource estimates.

Our estimate of mineral resources and mineral reserves may be materially affected by the occurrence of one or more of the risks described under the heading Reserve and resource estimates are not precise on page 116. In addition to those risks, our estimates of mineral resources and mineral reserves for certain properties may be materially affected by the occurrence of one or more of the following risks or factors:

McArthur River and Cigar Lake mineral resource and reserve estimates

 

   

Water inflows – see Flooding at McArthur River and Cigar Lake at page 108

 

   

Technical challenges – see Technical challenges at Cigar Lake and McArthur River at page 109

Inkai mineral resource and reserve estimates

 

   

Political risks – see Foreign investments and operations at page 129 and Kazakhstan at page 130

The extent to which our estimates of mineral resources and mineral reserves may be affected by the foregoing issues could vary from material gains to material losses.

Important information for US investors

We present information about mineralization, mineral reserves and resources as required by NI 43-101 of the Canadian Securities Administrators, in accordance with applicable Canadian securities laws. As a foreign private issuer filing reports with the US Securities and Exchange Commission (SEC) under the Multijurisdictional Disclosure System, we are not required to comply with the SEC’s disclosure requirements relating to mining properties. Investors in the US should be aware that the disclosure requirements of NI 43-101 are different from those under applicable SEC rules, and the information that we present concerning mineralization, mineral reserves and resources may not be comparable to information made public by companies that comply with the SEC’s reporting and disclosure requirements for mining companies.

Mineral reserves

As of December 31, 2023 (100% – only the shaded column shows our share)

Proven and probable

(tonnes in thousands; pounds in millions)

 

            PROVEN      PROBABLE      TOTAL MINERAL RESERVES      OUR
SHARE
RESERVES
        

PROPERTY

   MINING
METHOD
     TONNES      GRADE
% U3O8
     CONTENT
(LBS U3O8)
     TONNES      GRADE
% U3O8
     CONTENT
(LBS U3O8)
     TONNES      GRADE
% U3O8
     CONTENT
(LBS U3O8)
     CONTENT
(LBS U3O8)
     METALLURGICAL
RECOVERY (%)
 

Cigar Lake

     UG        338.1        18.11        135.0        217.5        15.36        73.7        555.6        17.03        208.6        113.8        98.7  

Key Lake

     OP        61.1        0.52        0.7        —         —         —         61.1        0.52        0.7        0.6        95.0  

McArthur River

     UG        2,047.3        7.02        316.8        520.7        5.55        63.8        2,568.0        6.72        380.5        265.6        99.0  

Inkai

     ISR        239,588.4        0.04        208.8        66,046.9        0.04        52.9        305,635.3        0.04        261.7        104.7        85.0  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

        242,035.0        —         661.2        66,785.0        —         190.3        308,820.1        —         851.5        484.7        —   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(UG – underground, OP – open pit, ISR – in situ recovery)

Note that the estimates in the above table:

 

   

use a constant dollar average uranium price of approximately $54 (US) per pound U3O8

 

   

are based on exchange rates of $1.00 US=$1.26 Cdn and $1.00 US=450 Kazakhstan Tenge

Metallurgical recovery

We report mineral reserves as the quantity of contained ore supporting our mining plans and provide an estimate of the metallurgical recovery for each uranium property. The estimate of the amount of valuable product that can be physically recovered by the metallurgical extraction process is obtained by multiplying the quantity of contained metal (content) by the planned metallurgical recovery percentage. The content and our share of uranium in the table above are before accounting for estimated metallurgical recovery.

 

2023 ANNUAL INFORMATION FORM    Page 89


Changes this year

Our share of proven and probable mineral reserves increased from 469 million pounds U3O8 at the end of 2022, to 485 million pounds at the end of 2023. The change was primarily the result of:

 

   

mineral resource estimate update at Cigar Lake Extension and subsequent conversion of indicated mineral resources adding 40 million pounds to probable reserves.

partially offset by:

 

   

production at Cigar Lake, Inkai and McArthur River, which removed 22 million pounds of proven and probable reserves from our mineral inventory

The remaining changes are attributable to other adjustments based on the mineral resource and reserve estimate updates at Cigar Lake, McArthur River and Inkai.

Mineral resources

As of December 31, 2023 (100% – only the shaded columns show our share)

Measured, indicated and inferred

(tonnes in thousands; pounds in millions)

 

     MEASURED RESOURCES (M)      INDICATED RESOURCES (I)             OUR
SHARE
     INFERRED RESOURCES      OUR
SHARE
 
                                               TOTAL M+I      TOTAL M+I                           INFERRED  
            GRADE      CONTENT             GRADE      CONTENT      CONTENT      CONTENT             GRADE      CONTENT      CONTENT  

PROPERTY

   TONNES      % U3O8      (LBS U3O8)      TONNES      % U3O8      (LBS U3O8)      (LBS U3O8)      (LBS U3O8)      TONNES      % U3O8      (LBS U3O8)      (LBS U3O8)  

Cigar Lake

     86.3        5.32        10.1        143.6        5.33        16.9        27.0        14.7        163.4        5.55        20.0        10.9  

Fox Lake

     —         —         —         —         —         —         —         —         386.7        7.99        68.1        53.3  

Kintyre

     —         —         —         3,897.7        0.62        53.5        53.5        53.5        517.1        0.53        6.0        6.0  

McArthur River

     78.7        2.27        3.9        60.6        2.30        3.1        7.0        4.9        37.2        2.90        2.4        1.7  

Millennium

     —         —         —         1,442.6        2.39        75.9        75.9        53.0        412.4        3.19        29.0        20.2  

Rabbit Lake

     —         —         —         1,836.5        0.95        38.6        38.6        38.6        2,460.9        0.62        33.7        33.7  

Tamarack

     —         —         —         183.8        4.42        17.9        17.9        10.3        45.6        1.02        1.0        0.6  

Yeelirrie

     27,172.9        0.16        95.9        12,178.3        0.12        32.2        128.1        128.1        —