Hold. Cameco Inc. Spencer Finch Analyst June 8th, Recommendation: Pros: Cons: Porter s Five Forces: Classification Capital Appreciation

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1 Cameco Inc. Spencer Finch Analyst June 8th, 2010 Recommendation: Hold Pros: Highest-grade uranium ore on Earth Supply & demand dynamics No carbon emissions Increased Construction of New Reactors Mans insatiable demand for energy Nuclear Power is the most cost effective fuel source on the planet Bargaining Power Ticker CCJ Exchange NYSE Industry Metals & Mining Sector Materials Classification Capital Appreciation Market Cap. $9.05Billion 52 Week Price range $22.41-$33.74 Recent Price $22.58 (06/8/2010) Current P/E Projected 2011 P/E 20x 2009 EPS $2.69 Projected 2011 EPS 1.28 Dividend Yield 1% Debt Rating BBB+ Beta 1.48 Cons: Geopolitical Risk Volatility in Uranium prices Disposal of Nuclear Waste Economic Uncertainty Increased Competition Flooding at Cigar Lake Lack of leverage to Uranium price upside Porter s Five Forces: Threat of Competition: Low to Moderate Threat of New Entrants: Low Threat of Substitutes: Moderate Power of Suppliers: Moderate Power of Buyers: Low Brief Overview Cameco is one of the world s largest uranium producers, accounting for 15% of world production from its mines in Canada and the US. Our leading position is backed by about 500 million pounds of proven and probable reserves. Cameco holds premier land positions in the world s most promising areas for new uranium discoveries in Canada and Australia as part of an intensive global exploration program. Cameco is also a leading provider of processing services required to produce fuel for nuclear power plants, and generates 1,000 MW of clean electricity through a partnership in North America s largest nuclear generating station located in Ontario, Canada.

2 **I included a glossary on the last page that will help make sense of some of the technical stuff below if need be** PORTFOLIO CONSIDERATIONS Cameco (CCJ) falls under the Materials sector of the EIF portfolio and is classified in the Metals and Mining Industry. The materials sector encompasses industries focused on the discovery, development, and processing of raw materials, as well as those involved in the manufacture of other product inputs that are included in, or used during, the production of finished goods. The sector consists of industries focused on chemicals, metals and mining, containers and packaging, forestry and paper products, and construction materials. Currently the EIF s holdings within the materials sector are Freeport-McMoran (FCX), and Cameco (CCJ). Freeport derives virtually all of its revenues from copper and gold, and thus the company s performance is closely related to those commodities. On the other hand, Cameco is more vertically integrated, and while the price of Uranium is one of the main drivers of revenue for Cameco, they have still been able to diversify themselves well throughout the Uranium fuel cycle. The EIF s current target weighting for materials is 5% which is 157 bps above the current S&P weighting of 3.43%. The funds current holdings in the sector, FCX and CCJ, comprises 5.59% of the equity in the portfolio which is 59 bps above the target of 5%. Ticker Shares Cost Per Share Holding Cost Basis Current Price Gain/ Loss Since Purchase % Dividend Yield % CCJ 860 $26.25 $22, $ % 1.00% FCX 271 $ $28, $ % 0.90% Cameco has dividend yield of 1.00 % and thus is classified as a capital appreciation stock in the EIF portfolio. The current target for capital appreciation is 45% while our actual equity allocated to capital appreciation stocks is 48.89%, leaving the fund 389 bps above the target. INDUSTRY OVERVIEW Cameco is classified as a diversified metals and mining company under the materials sector. Year to date, diversified metals and mining industry is down 11.1% compared to the S&P500 down 2.3%. The diversified metals and mining industry has underperformed the S&P 500 substantially and has lagged the materials sector as a whole. The recent downside movement can be attributed to the current strength of the US dollar and the fact that the industry outperformed the S&P 500. Somewhat of a reversion to the mean is a viable explanation for the sector s current weakness.

3 Based in Canada, Cameco, is an integrated nuclear energy company involved in Uranium mining, conversion, and power generation. The company is the world s largest uranium producer, with ~75%- 80% of their revenues tied to their uranium business. They previously had a 52.7% stake in Centerra Gold a publicly traded gold miner, however as of December 31 st 2009 they have sold their position in the Centerra Gold in an attempt to be a more pure play integrated Uranium firm. The content of the industry overview/analysis for CCJ will focus on the Uranium mining and conversion business (the Nuclear Fuel Cycle), as well nuclear power generation. Nuclear Fuel To better understand the industry it s important to have some sort of foundation as to what uranium is and how it is used to generate electricity. Uranium is a element found in nature, and in its naturally occurring state it is made up primarily of two different uranium isotopes. Approximately 99.3% of all uranium is (U-238), and 0.7% is (U-235). Under certain conditions the nucleus of U-235 can be made to split, or fission and because of this property U-235 plays a key role in the creation of nuclear energy. A typical pellet of uranium weighs about 7 grams (0.24 ounces). It can generate as much energy as 3.5 barrels of oil, 17,000 cubic feet of natural gas, or 1,780 pounds of coal. While fission does not occur in most atoms because a binding energy holds the nucleus together, some atoms like U-235 have big unstable nuclei that can be broken apart. When struck with a neutron under certain conditions U-235 divides and produces two lighter atoms. The mass of these two lighter atoms added together is less than the original U-235 atom, the mass that seems to have vanished has been converted to energy. According to Einstein s formula E=mc² that small amount of mass can be magnified by a huge number (c², the speed of light squared) to create enormous amounts of energy. Once one U-235 nuclei has been split some free neutrons make other U- 235 atoms split, releasing more energy and more neutrons. This leads to a chain reaction that continues as long as there are uranium atoms present. In a nuclear power plant control rods prevent the number of neutrons in the reactor from growing too large or too rapidly by absorbing excess neutrons. This is accomplished simply by lowering or raising the control rods within the reactors core.

4 Mining Uranium can take many chemical forms, but in nature it is generally found as an oxide, Triuranium octoxide (U3O8) which is the most stable form of uranium oxide and is the form most commonly found. Uranium is an abundant element, however concentrated uranium ores are found in just a few places, usually in hard rock or sandstone. The concentration of uranium varies according to the substances it is mixed with and the places where it is found. For example, when uranium is mixed with granite that covers 60% of the Earth s crust, there are approximately four parts of uranium per million, i.e. 999,996 parts of granite and four parts of uranium. High-grade orebody - 2% U or higher Low-grade orebody - 0.1% U Granite Sedimentary rock Average in Earth s continental crust Seawater 20,000 ppm* U 1,000 ppm U 4 ppm U 2 ppm U 2.8 ppm U ppm U Concentrations of uranium that are economical to mine are considered ore. Uranium is present in low concentrations in many rocks and bodies of water, but extraction is only economically viable from richer deposits. The decision to mine is a function of many factors including extraction method, market prices and social and environmental considerations. Although Uranium is found all over the world, High-grade deposits are only found in Canada. Uranium ore is removed from the ground in one of three ways depending on the characteristics of the deposit. Uranium deposits close to the surface can be recovered using the open pit mining method, and underground mining methods are used for deep deposits. In some circumstances the ore may be mined by in situ recovery, a process that dissolves the uranium while still underground and then pumps a uranium-bearing solution to the surface. 1) Open Pit Mining- When uranium ore is found near the surface, generally less than 100 metres deep, it is typically extracted by the open pit mining method. Open pit mining begins by removing overburden (soil) and waste rock on top of the orebody to expose the hard rock. Then a pit is excavated to access the ore. The walls of the pit are mined in a series of benches to prevent them from collapsing. To mine each bench, holes are drilled into the rock and loaded with explosives, which are detonated to break up the rock. The resulting broken rock is then hauled to the surface in large trucks that carry up to 200 tonnes of material at a time. 2) Underground Mining-The first step in underground mining is to access the ore. Entry into underground mines is gained by digging vertical shafts to the depth of the orebody. Then a number of tunnels are cut around the deposit. A series of horizontal tunnels, called drifts, offer access directly to the ore and provide ventilation pathways. All underground mines are ventilated, but in uranium mines, extra care is taken with ventilation to minimize the amount of radiation exposure and dust inhalation. In most underground mines the ore is blasted and hoisted to the surface for milling. In some cases, due to the potential for radiation exposure from the high-grade ore, processing systems must ensure worker safety. As a result, the ore is processed underground to the consistency of fine sand, diluted with water and pumped to the surface as slurry or mud.

5 3) In Situ Recovery- a few places geological conditions allow uranium to be dissolved directly by pumping mining solutions underground, bringing it back to the surface, and extracting the dissolved uranium. With this in situ recovery (ISR) process there is limited surface environmental disturbance. The surrounding rock remains in place while the dissolved uranium is pumped to the surface then circulated through a processing plant for extraction. ISR is suitable for certain deposits such as Cameco's US operations and is the mining method at the Inkai project in Kazakhstan. Milling After mining, ore is transported to a nearby mill for processing. In Saskatchewan, Cameco's mills at Key Lake and Rabbit Lake process ore from the McArthur River and Eagle Point orebodies. The Key Lake mill processes ore transported by truck 80 km from the McArthur River mine. Uranium ore is a mixture of valuable minerals and waste. The first step in milling is to crush the ore, unless it is in a solution already, and treat it with acid to separate the uranium metal from unwanted rock material. Then it is purified with chemicals to selectively leach out (dissolve) the uranium. The uranium-rich solution is then chemically separated from the remaining solids and precipitated (condensed) out of the solution. Finally, the uranium is dried. The resulting powder is uranium oxide concentrate, U3O8, commonly referred to as yellowcake because it is often bright yellow. Refining and Conversion After milling, yellowcake requires further processing. First it is refined to remove impurities which produces high-purity uranium trioxide (UO3). Then, depending on the type of reactor for which it will be used, the UO3 is converted into powdered uranium dioxide (UO2) or uranium hexafluoride (UF6). If converted to UO2, the fuel is now ready to be fabricated into fuel pellets for Candu reactors. If converted to UF6, it must undergo two more steps, enrichment and subsequent conversion to enriched UO2, before it can be finally pressed into usable fuel pellets for light water reactors. If the processing is completed by Cameco, refinement to UO3 is carried out at our refinery in Blind River, Ontario. Uranium trioxide is trucked 600 km to the Port Hope conversion facility, also in Ontario, for further processing into UO2 or UF6. Enrichment Naturally occurring uranium is made up of two different uranium isotopes, approximately 99.3% U-238 and 0.7% U-235. Most commercial reactors require uranium fuel to have a U-235 content of 3-5%. Uranium enrichment is the process that increases the U-235 concentration from 0.7% to 3-5%. Enrichment involves separation of the lighter U-235 atoms from the heavier and more predominant U- 238 atoms in order to concentrate the U-235 portion.

6 Fuel Production Fuel manufacturing is the last stage of the front end of the nuclear fuel cycle before the uranium fuel is ready for use in a reactor. The process begins by pressing powdered UO2 into small cylindrical shapes and baking them at a high temperature ( C) to make hard ceramic pellets. In a light water reactor, the fuel pellets are packed in thin tubes called fuel rods. The rods are grouped together into a bundle called a fuel assembly. A typical 1,100 megawatt pressurized water reactor contains 193 fuel assemblies composed of nearly 51,000 fuel rods and approximately 18 million fuel pellets. This illustration shows a cross-section of a typical fuel assembly used in light water reactors. Fuel pellets are inserted into fuel rods, which are grouped together in a fuel assembly. In a Candu reactor, fuel pellets are loaded into 28 or 37 half-metre long rods grouped into a cylindrical fuel bundle. Twelve bundles lie end to end in a fuel channel in the reactor core. A Bruce 790 megawatt Candu reactor contains 480 fuel channels composed of 5,760 fuel bundles and over 5 million fuel pellets. In Candu reactors, fuel pellets are inserted into fuel rods and grouped together in bundles which are loaded into fuel channels in the reactor core. Market Insight The next phase of the industry overview will cover industry fundamentals and provide market insight. Unlike many other commodities, the only significant commercial use for uranium is to fuel nuclear power plants for the generation of electricity. Nuclear utilities, the ultimate users of nuclear fuel, may purchase uranium at any of the steps in the production process from mining to enrichment. It s

7 common for a fuel buyer to contract separately with suppliers at each step of the fuel cycle, sometimes the fuel buyer may purchase enriched uranium product, the end of the first three stages, and contract separately for fuel fabrication/manufacture the fourth step. Cameco s involvement comprises of selling uranium in the first two steps, however in some cases they have unique supply and trading arrangements with customers to manage the 3 rd and 4 th steps in the cycle. There are fewer than 100 companies that buy and sell uranium in the western world, and among them only a few are publicly traded. The global trading of uranium has evolved into two distinct marketplaces shaped by historical and political forces. The first is the West and comprises the Americas, Western Europe and the Far East. A separate marketplace comprises countries within the former Soviet Union, Eastern Europe, and China. Most of the fuel produced in a market will be sold in the market, however that trend is beginning to be sidestepped as demand for Uranium continues to outstrip supply and more and more nuclear facilities are being built or entering the approval/planning phase. Nuclear Industry Trends The nuclear energy industry is experiencing stable growth in the form of capacity expansion and factor improvements at plants, power rates increasing, refurbishments or improvements to plants, life extensions/plant renewals and, and in the developing world aggressive new-build programs. In the United States at the end of 2008, the US Nuclear Regulatory Commission (NRC) had received 17 applications for combined construction and operating licenses for 26 new nuclear reactors. The NRC has stated that starting in 2009, it expects to receive additional applications for approval to construct at least seven reactors. Of these applications, its expected that four to eight new reactors will be constructed in the US over the next decade. The United Kingdom formally announced a decision in support of new nuclear power plants with the goal of 10 coming online by Italy has also altered their stance on nuclear power and is showing renewed interest in construction of nuclear plants after just coming out last month to reverse a long held position that stated no reactors could be built in Italy after the Chernobyl disaster. It seems as though the direction that public perception is headed into the future favors the nuclear industry. With no carbon emissions, the nuclear industry has been able to gain support over the past several years from public opinion. Case in point a November 2008 US national public opinion survey by Bisconti Research for the Nuclear Energy Institute indicates public support for nuclear electricity reached a record high of 74%. This compares to 63% in April Those strongly in favor of nuclear energy outnumber those strongly opposed by nearly four to one (38% to 10%).Support for nuclear energy in Canada continues to grow. Canadians expressed support for nuclear energy in a national poll (Ipsos Reid) conducted for the Canadian Nuclear Association in September Support for nuclear energy was up 15% since February National support for refurbishing reactors and new builds are at historic levels: 67% support refurbishment and 49% support new build. Supply and Demand During the past 23 years, uranium consumption has exceeded mine production by a significant amount, with the difference being made up from various types of inventory and recycled products, known as secondary (HEU and re-enrichment) sources. The cumulative demand for uranium consumption over the next ten years is expected to reach ~2.0 billion pounds, while the total existing mine supply and secondary supplies are expected to meet ~80% of this demand. Thus the remaining 20% or roughly 400

8 pounds must come from new supplies, so there would have to be expansions of existing mines, and new mines coming online. These graphs below demonstrate the disparity between Uranium demanded for consumption over what is produced annually. Supply Mine Production It is estimated that world mine production in 2008 was ~130 million pounds U3O8, up 10% from 115 million pounds in 2008, and production is expected to total in the range of 135 to 140 million pounds in With higher uranium prices, new mines will start up at an increasing rate, but the lead time before they enter commercial production is likely to be lengthy, often up to 10 years, depending on the location and type of mine. As a result, primary supply will be less than world consumption in the nearterm so secondary supplies will be forced to fill that gap. The level of increase in primary mine production is dependent on a number of factors, including: The strength of uranium prices The efficiency of regulatory regimes in various regions The quality and size of the mineral reserves The availability and sufficiency of required infrastructure and skilled workforce Currency exchange rates in producer countries compared to the US and European dollar Prices for other mineral commodities produced in association with uranium The availability of financing for exploration and mine development.

9 Secondary Sources Secondary sources of supply consist of surplus US, Russian and other military materials, excess commercial inventory and recycled products. Recycled products include reprocessed uranium, mixed oxide fuel and re-enriched tails material. Some utilities use reprocessed uranium and mixed oxide fuel recovered from used reactor fuel, but this figure is very small in scope. In recent years, another source of supply has been re-enriched depleted uranium tails generated using excess enrichment capacity. It s estimated these recycled products could account for about 5% of world requirements over the next 10 years. With the exception of recycled products, secondary supplies are finite. Currently, most recycled products are a high-cost fuel alternative and are only used by utilities in only a few countries. One of the largest sources of secondary supply is the uranium derived from Russian highly enriched uranium (HEU) as a result of the Megatons to Megawatts program with the United States and counterpart USEC (USU). As a result of the 1993 HEU agreement between the US and Russia to reduce the number of nuclear weapons, additional supplies of uranium have been available to the market. Under the 20-year agreement, weapons-grade HEU is blended down in Russia to low enriched uranium capable of being used in western world nuclear power plants. Estimates show that uranium derived from Russian HEU could meet about 6% of world consumption over the next 10 years based upon deliveries under the current Russian HEU commercial agreement. All deliveries are scheduled to be made by 2013, when the 1993 HEU agreement expires. In parallel, the US has made some of its military inventories available to the market, although in quantities much smaller than those derived from the 1993 HEU agreement. Analysts expect ~3% of world demand through 2018 will be met from this source. Interestingly, as shown above, although there has been an increase in demand for Uranium, actual production levels have fallen. This is largely due to the HEU agreement. Once the agreement has expired what will happen to the Uranium supply? According to the Q earning call, there seems to be no interest in the American or Russian government to prolong the HEU agreement. For the past 20 years, the Uranium industry has relied on the HEU agreement to bridge the gap between supply and demand coming from the Uranium power plants. The only answer to this question that seems viable at this time is for there to be a shift in the price of Uranium causing demand to dampen- at least until mine production can ramp up. Demand People need electricity regardless of world economic conditions, and nuclear power is an affordable and sustainable source of clean, reliable energy. The demand for uranium is expected to continue to grow, and along with it, the need for new supply to meet future customer requirements. As is explained in the recent nuclear industry trends portion of this report, it is apparent that there has been somewhat of a shift in attitude towards the nuclear industry. Coupled with the world s movement toward green energy, or more specifically the need for non-carbon emitting energy sources, there seems to be a strong case for the development of nuclear energy (especially with the amount of power uranium can produce). The International Atomic Energy Agency (IAEA) released its 2009 edition of Energy, Electricity and Nuclear Power Estimates for the period to The report estimates nuclear power generation in 2030.

10 The high case estimates worldwide nuclear capacity in 2030 at 748 gigawatt electric (GWe), about twice the current level of 372 GWe. To meet this demand for electricity, countries are vastly expanding their nuclear power plant construction. Currently there are 436 reactors operating worldwide and a total of 115 new reactors under construction or planned for completion within the next 10 years The largest area of incremental growth can be seen in the Non-OECD countries of China and India. Their growing demand for energy, especially clean energy has caused them to turn to nuclear power plants. If 115 new reactors do come online by 2020 there will be an enormous amount of demand for all services and products along the nuclear fuel cycle.

11 Uranium Markets Utilities secure a substantial percentage of their uranium requirements by entering into long-term contracts with uranium suppliers. These contracts usually call for deliveries to begin two to four years after the contracts are finalized. In awarding contracts, utilities consider the terms offered, including price, and the producer s record of performance and provable uranium reserves. There are a number of pricing formulas, including fixed prices adjusted by inflation indices and market referenced prices (spot and/or long-term indicators). Many contracts also contain floor prices, ceiling prices and other negotiated provisions that affect the amount ultimately paid. Utilities acquire the remainder of their uranium requirements through spot purchases from producers and traders. Spot market purchases are those that call for delivery within one year. Traders and Investors are active in the market and the generally source for trading uranium comes from organizations holding excess inventory, including utilities, producers and governments. The Spot Market Uranium does not trade on an open market like other commodities. Buyers and sellers negotiate contracts privately. Prices are published by independent market consultants Ux Consulting and TradeTech. The industry average spot price (TradeTech = currently $40.50/lb and Ux Consulting (UxC)= currently $40.75/lb) is currently $40.63 per pound (6/05/10), down from an all-time high of $136 in 2007 Historically, the volumes traded in the spot market account for ~15% of annual consumption. Long-Term Uranium Market To mitigate risks associated with foreign currency on its sale of uranium products, Uranium suppliers enter into forward sales contracts to establish a price for future delivery of the Uranium. It is important to remember one of the reasons why uranium isn t traded on an open market it due to the lack of market participants. When supplier of U3O8 enter into long-term agreements, the data can be aggregated into an index, but individual contracts by supplier can widely vary.

12 The Nuclear Advantage(s) -About one-third of U.S. electricity comes from emission-free sources. The United States generates most of its electricity by burning fossil fuels, a process that produces sulfur dioxide, nitrogen oxides and carbon dioxide. Emission-free sources provide only 30 percent of America s electricity, and 70 percent of that comes from nuclear power plants. -Nuclear power plants don t burn anything. Nuclear power plants don t burn anything, so they produce no combustion byproducts. Nuclear plants help protect our air quality and have been an important tool in meeting Clean Air Act goals in many states. Coupled with renewable energy options, nuclear energy is critical to meeting the country s environmental and energy goals. -The United States needs abundant electricity and clean air. Given the country s growing demand for new sources of electricity, as much as 30 percent by 2030, according to the Energy Information Administration s 2009 forecast, the United States will need all new sources of generation available: renewables, coal, natural gas and nuclear energy. Nuclear energy is the only large-scale, emission-free energy source that can be widely expanded. -Emissions prevented by nuclear power plants nearly equal those produced by all U.S. passenger cars. By using nuclear power instead of fossil fuel-based plants, the U.S. nuclear energy industry prevents millions of tons of carbon dioxide emissions every year. The volume of greenhouse gas emissions prevented at the nation s 104 nuclear power plants is equivalent to taking nearly all passenger cars off America s roadways.

13 - Nuclear power plants produce relatively little waste. A typical large nuclear power plant produces enough electricity for more than 750,000 homes but only about 20 metric tons of used uranium fuel each year. In terms of volume, that is roughly equivalent to the cargo area of a small truck. Commercial reactors in the United States together produce about 2,000 metric tons of used fuel annually. The used fuel is highly radioactive and must be contained safely. Used fuel at nuclear plant sites is managed securely in special buildings that house the fuel in steel-lined, concrete pools filled with water. After the used fuel cools, it can be stored on plant property in huge steel or steel-lined concrete containers. This is called dry cask storage and one is shown to the left. -The United States will need nearly 300 new power plants by The U.S. Department of Energy forecasts the United States will need about 260,000 megawatts of new electric generating capacity by 2030, equivalent to 260 new large power plants. This rising electricity demand, along with concerns about greenhouse gases and pollution, make new nuclear plants vital to our energy mix. Energy companies are developing license applications to build as many as 30 new commercial nuclear reactors in the United States. Several companies already have submitted applications for new reactors that the NRC is reviewing under its new licensing process. The federal government is planning for future electricity needs. The Energy Department and the industry are participating in Nuclear Power 2010, a jointly funded program that has two major goals. The first is to test the NRC s new licensing process for nuclear power plants. The second is to complete first-of-a-kind design and engineering on two reactor designs so electric utilities can obtain the firm cost estimates they need for decision making purposes. -U.S. companies are rebuilding infrastructure for new reactors. Suppliers expect they can meet the needs of the first few new reactors. They have launched new initiatives, however, to develop the manufacturing base for new plants and to ensure the industry has the right construction management, engineering expertise and skilled labor needed for the future. New-plant construction will provide thousands of additional jobs. Building a new nuclear plant will create 1,400 to 1,800 jobs during construction, with peak employment as high as 2,400 jobs. Also, each year, the average nuclear plant generates approximately $430 million in sales of goods and services in the local community and nearly $40 million in total labor income. These figures include both direct and secondary effects. The direct effects reflect the plant s expenditures for goods, services and labor. The secondary effects include subsequent spending attributable to the presence of the plant and its employees as plant expenditures filter through the local economy (such as restaurants and shops buying goods and hiring employees). The average nuclear plant generates total state and local tax revenue of almost $20 million each year. These tax dollars benefit schools, roads and other state and local infrastructure. Each nuclear plant generates federal tax payments of roughly $75 million each year.

14 COMPANY OVERVIEW Cameco Corp. is the world s largest uranium miner, accounting for approximately 16% of the world s production in 2009 with about 500 million pounds of proven and realizable mineral reserves of uranium. Cameco is involved in three business segments: -Uranium -Fuel Services -Nuclear Electricity Generation Cameco strives to be a dominant nuclear energy company, producing uranium fuel and generating clean electricity. Their key strategy to realizing this is to sustain and grow uranium production in a way that is safe, clean, cost-effective and community supported, with a profitable integrated fuel service business. The major stages in the production of nuclear fuel are uranium exploration, mining and milling, refining and conversion, enrichment and fuel fabrication. Once a commercial uranium deposit is discovered and mineral reserves delineated, regulatory approval to mine is sought. Following regulatory approval, the mine is developed, and ore is extracted and processed at a mill to produce uranium concentrates. Mining companies sell uranium concentrates to nuclear electricity generating companies around the world on the basis of the amount of uranium (U3O8) contained in the concentrates. These utilities then contract with converters, enrichers and fuel fabricators to produce the required reactor fuel.

15 Uranium The only significant use for uranium is to fuel nuclear power plants for the generation of electricity. In recent years nuclear power generated about 15% of the world s total electricity consumption. The company controls the world s largest high-grade uranium mineral reserves and low-cost operations based in northern Saskatchewan. Cameco operates four mines located in Canada and the United States, and has two mines under development, one in Canada and the other in Kazakhstan. Cameco retains an optimistic perspective for nuclear energy around the world, due to industry fundamentals discussed more vigorously in the industry overview. Nuclear energy is widely recognized as a critical component of the solution to global environmental issues and concerns about energy security or foreign energy dependency. Operational Properties include McArthur River and Key Lake Rabbit Lake Smith Ranch-Highland Crow Butte Inkai Millenium Developmental Properties Include Cigar Lake Projects Under Evaluation Inkai Blocks 1, 2, and 3 McArthur River expansion Kintyre Fuel Services The company is an integrated uranium fuel supplier with refining facilities at Blind River and fuel services facilities (conversion and fuel manufacturing) at Port Hope and Cobourg, all located in Ontario, Canada. The Blind River facility refines uranium concentrates into uranium trioxide (UO3), an intermediate product in the uranium conversion process. The Port Hope conversion services plants chemically change the form of the UO3 to either uranium hexafluoride (UF6) or uranium dioxide (UO2). The Port Hope UF6 plant has the licensed capacity to produce about 20% of the world s annual requirements of UF6 used in making fuel for light water reactors. Port Hope is the world s only commercial producer of natural UO2, the fuel used by all Canadian-designed Candu reactors. Cameco manufactures fuel bundles for use in Candu reactors and participates in all stages (from uranium exploration and production to fuel fabrication) of the Candu nuclear fuel cycle. The 10 year toll conversion agreement with Springfield fuels is due to expire in The Cameco Fuel Manufacturing Plant manufactures fuel bundles and reactor components that will eventually be used by power plants to produce energy. Enrichment On June 20, 2008, Cameco entered an agreement with entities owned and controlled by General Electric and Hitachi Ltd. whereby Cameco provided $124 million in cash and issued a promissory note in the amount of $73 million to acquire a 24% interest in Global Laser Enrichment LLC (GLE), a uranium enrichment development company based in Wilmington, North Carolina. GLE is developing a third-generation uranium enrichment process using laser technology to commercially enrich uranium for nuclear power plants. In 2009, the test loop phase is planned.

16 This is the next important milestone for the technology, which is intended to verify performance and reliability data necessary to support the construction of a commercial scale enrichment facility. In June 2008, when the agreement was announced, GLE expected to achieve commercial production in Nuclear Electricity Generation Cameco generates electricity through its 31.6% interest in the Bruce Power Limited Partnership (BPLP), which operates the four Bruce B nuclear reactors and manages the overall site located in southern Ontario. Cameco acts as the fuel procurement manager for uranium, conversion services and fuel fabrication for BPLP s four B nuclear reactors and for the two operating Bruce A reactors. Cameco provides 100% of the uranium concentrates for BPLP and under an agreement executed in Cameco also supplies BPLP and BALP with all of their conversion services and fuel fabrication requirements. BPLP s four B reactors have a combined net generation capacity of about 3,260 megawatts (MW), supplying about 15% of Ontario s electricity. Production Overview With the push for clean energy and Uranium s reputation as a reliable source of power, Cameco is in a position for growth and continued profitability. With the large gap between Uranium demand and Uranium production, Cameco's potential for profitability is rather high. The following is a break down of the production table for Cameco: McArthur River - world's largest, high-grade uranium deposit with proven and probable reserves of million pounds U3O8 (Cameco's share million pounds). Key Lake - largest high-grade uranium milling operation in the world - production capacity of 18.7 million pounds U3O8 (Triuranium octaoxide) annually. Rabbit Lake - second largest uranium milling operation in the world with a capacity of 12 million pounds - 100% owned by Cameco. Cigar Lake - world's largest undeveloped high-grade uranium deposit; proven and probable reserves of more than million pounds U3O8 at an average grade of 20.7% (Cameco's share million pounds). Inkai (Kazakhstan) - owned and operated by Joint Venture Inkai (JVI) which is owned by Cameco (60%) and KazAtomProm (40%); reserves of million pounds U3O8 (Cameco's share 85.1 million).

17 PORTER S FIVE FORCES Threat of Competition: Low to Moderate The Mining of Uranium is very challenging and over time few companies have focused on finding and setting up quality mines. Also the Nuclear Industry is loosely consolidated with firms usually serving large individual clients (utilities or governments) who purchase fuel at of the stages during refining process one with large long-term contracts. While there are several Uranium miners as well as millers, converters, and enrichers, there are few who are adequately vertically integrated in the nuclear fuel cycle space. For example, Cameco is the only western country operating business that produces the highly valued compound UF6 that is necessary for the light water Candu reactors. For this reason there are not really any pure play Uranium businesses that are as comprehensive as Cameco. Threat of New Entrants: Low As stated earlier it is very difficult to establish a uranium mine or to operate in any phase of the nuclear fuel cycle for many reasons, including: -Extremely capital intensive for a firm to enter the industry -Must have intelligent and experienced workers to operate -It can take 10 to 15 years to get a Reactor on line & almost as long to get a uranium mine up and running. -The industry must consistently deal with numerous regulatory bodies due to the nature of nuclear material. Threat of Substitutes: Moderate While there is no other fuel source on the planet that can make energy as efficiently as nuclear can, there are definitely are other sources of energy. Nuclear power and thereby uranium will always be in demand because if its cost effectiveness and the long operating lives Nuclear Reactors. The issue with Uranium is that it is not as widely accepted as other types of fuels, namely fossil fuels such as oil, coal, and natural gas. In many cases it is cheaper to drill an oil well or mine for coal due to their abundancy, but as previously stated, there seems to be a shift in perception towards nuclear fuel due to its ultra-low emissions and high power producing output. Power of Suppliers: Moderate CCJ is not only the largest producer of Uranium in the world, but they also have their foot in other areas of the Nuclear Energy business. This is beneficial for them as long as they do not over extend themselves. There seems to be some sentiment in the market that believes that Cameco should stick to its roots in the Uranium mining and milling space, but if done correctly, Cameco will be able to realize significant synergies in through the vertical integration program that they have been pursuing. Key issues come into play when suppliers of certain types of acids for example can choose to hold out on companies who use the acids for milling or enrichment of uranium, and if they do the nuclear fuel cycle will stall. This can be the case with more types of companies than just acid producers. However the power of suppliers is limited due to the size and presence of Cameco in the nuclear fuel cycle business. In reality, the relationship between suppliers of certain products and services to the fuel cycle tend to be relatively specialized so in essence they depend on large players like Cameco to survive. Power of Buyers: Low The buyers of Uranium or nuclear services are either Utilities or Governments. If they are in the market, then it s more than probable that they are already operating nuclear facilities or will be soon.

18 Thus they must acquire the fuel source in order to operate the reactor, and the only one that can do that is U-235. Its nice to be in Cameco s position, supplying 15% of the worlds uranium, while boasting the highest-grade uranium ore deposits in the world and at the same time being prudent when managing their reserves yet still very effective. Nuclear power is the lowest cost producer of energy in the world (exclude hydro) and its defiantly not going away anytime soon. So as Demand for Uranium continues to outstrip the amount produced from primary sources (with secondary sources on their way to depletion) the bargaining power of those with reserves is only growing, while those who demand it will experience the opposite effect. That s why I choose to classify the power of the buyers in the market to be low. t w CRITICAL ISSUES The Financial Crisis and Difficult Economic Times Cameco has strong fundamentals and is fully capable of weathering difficult economic times. This is largely due to the nature and diversity of the products they produce, sell, and invest in. CCJ s chief product is uranium, which is used to provide some of the lowest cost electricity on the planet. Many other forms of electricity generation have substantially higher fuel costs and may be curtailed or shut down as a result of deteriorating economic conditions. Furthermore Cameco has good relationships with its customers and is locked in to long-term contracts that will continue to serve as source of revenue for the company. It also worth noting in 20 years of operations Cameco has never had a customer default on a contract Commodity Price Risk As a significant producer and supplier of uranium, nuclear fuel processing and electricity, Cameco bears significant exposure to changes in prices for these products. A substantial change in prices will affect the company s net earnings and operating cash flows. Prices for Cameco s products are volatile and are influenced by numerous factors beyond the company s control, such as supply and demand fundamentals, geopolitical events and, in the case of electricity prices, weather. Cameco s sales contracting strategy focuses on reducing the volatility in future earnings and cash flow, while providing both protection against decreases in market price and retention of exposure to future market price increases. To mitigate the risks associated with the fluctuations in the market price for uranium products, Cameco seeks to maintain a portfolio of uranium product sales contracts with a variety of delivery dates and pricing mechanisms that provide a degree of protection from pricing volatility. Political Risks Operating in the Nuclear Energy Industry means Cameco is constantly forced to abide by the terms that regulators set. This exposes them to substantial risk in regards to changes in policies towards the Uranium Mining Industry or the Nuclear Power Industry. Also, CCJ operates in multiple countries worldwide which increases their exposure to geopolitical risk, especially in the Kazakhstan where they are a partner under contract with the government of Kazakhstan where they are working on a gold mine. Foreign Currency Risk The relationship between the Canadian and US dollars affects financial results of the uranium business

19 as well as the fuel services business. Sales of uranium and fuel services are routinely denominated in US dollars while production costs are largely denominated in Canadian dollars. Cameco attempts to provide some protection against exchange rate fluctuations by planned hedging activity designed to smooth volatility. Cameco also has a natural hedge against US currency fluctuations because a portion of its annual cash outlays, including purchases of uranium and fuel services, is denominated in US dollars. At December 31, 2009, the effect of a $0.01 increase in the US to Canadian dollar exchange rate on our portfolio of currency hedges and other US denominated exposures would have been a decrease of $11,000,000 in net earnings for CONCLUSION & Recommendation Operating as the world s bellwether for the Uranium and Nuclear Industry Cameco finds itself very well positioned to benefit from a renaissance in Nuclear power production. As the public and regulatory bodies continue to gain exposure to and learn more about the profound benefits that nuclear power has to offer over other sources of energy, the marketplace for companies operating in the industry will grow at an accelerating rate over time. I believe that Cameco has an outstanding management team and board, that has set the company on an excellent course to realize stable long term growth. Management has consistently demonstrated sound and prudent financial decision making during times when many other companies in the industry took on too much risk, levered up, and got railed for it with many going under after the spike in U3O8 price in This played out all too well in Cameco s favor, as they were able to take advantage of their healthy financial position and aquire positions in companies over the past year that should add substantial synergies to their business, as they strive to achieve their goal of being a dominant player in an industry full of potential going into the future. The only question that I have is their potential leverage to the upside in the price of Uranium. The supply/demand dynamics for the commodity are quite impressive and seem to point to an eventual spike in the price for Uranium. With Cameco s conservative hedging and long-term contracting strategies seem to not fully take advantage of the Uranium market. In addition, with Cigar Lake coming online in 2013 in what I expect to be favorable pricing conditions, I am worried about their long-term contracting cutting into potential margins. At the same time there is some wisdom in their decision making that played out in the economic recession. This company is the same company that we brought into the fund last summer and if anything, they have reverted to their core operating business, uranium production and services, by selling their stake in Centerra Gold. I am recommending a Hold position on this reasoning. I do not believe that this stock will double in price, but at the same token I do not believe there is any risk of bankruptcy. With production scheduled to see a major increase in 2013, I see potential for this stock to outperform the market. HOLD 2.93% Equity Position

20 PROS TO RECOMMENDATION Highest-grade uranium ore on Earth Supply & demand dynamics No carbon emissions Increased Construction of New Reactors Mans insatiable demand for energy Nuclear Power is the most cost effective fuel source on the planet Bargaining Power CONS TO RECOMMENDATION Geopolitical Risk Volatility in Uranium prices Disposal of Nuclear Waste Economic Uncertainty Increased Competition Flooding at Cigar Lake ANALYST RECOMMENDATIONS Analyst Recommendations and Revisions Analyst Recs. Current 1 Month Ago 2 Months Ago 3 Months Ago (1) Buy (2) Outperform (3) Hold (4) Underperform (5) Sell No Rating Mean Rating *Source: Reuters

21 Competition USEC Inc. USEC Inc. is a global energy Company. It is a supplier of low enriched uranium (LEU) for commercial nuclear power plants. LEU is a component in the production of nuclear fuel for reactors to produce electricity. It supplies LEU to both domestic and international utilities for use in about 150 nuclear reactors worldwide; is an agent for the U.S. government under a nuclear nonproliferation program with Russia, known as Megatons to Megawatts; perform contract work for the United States Department of Energy (DOE) and its contractors at the Paducah and Portsmouth gaseous diffusion plants (GDPs), and provide transportation and storage systems for spent nuclear fuel and provide nuclear and energy consulting services. Its product and services include: low enriched uranium and contract services. Low Enriched Uranium - The majority of the Company s customers are domestic and international utilities that operate nuclear power plants. Its revenue is derived from sales of the SWU component of LEU, sales of both the SWU and uranium components of LEU and sales of uranium. Contract Services - The Company performs contract work for DOE and DOE contractors at the Paducah and Portsmouth GDPs, including infrastructure support services and maintenance of the Portsmouth GDP in a state of cold shutdown in preparation for decontamination and decommissioning. Through its subsidiary NAC, it provides nuclear energy services and technologies, which deals in designing, fabrication, and implementation of spent nuclear fuel technologies, nuclear materials transportation and nuclear fuel cycle consulting services. Rio Tinto PLC Rio Tinto plc and Rio Tinto Limited operate as one business organization (Rio Tinto). Rio Tinto is a mining and exploration company. The Company s business is finding, mining and processing mineral resources. Its major products include aluminum, copper, diamonds, energy products, gold, industrial minerals (borates, titanium dioxide, salt and talc), and iron ore. Rio Tinto s activities are represented in Australia and North America. There are also businesses in South America, Asia, Europe and southern Africa. The Company s product groups comprise: Aluminum; Copper and Diamonds; Energy and Minerals, and Iron Ore. Rio Tinto's business support groups include Exploration and Technology and Innovation. In January 2009, the Company completed the sale of its 50% equity share of the Alcan Ningxia aluminum joint venture in China to Qingtongxia Aluminium Group Co Ltd. In April 2008, Hecla Mining Company completed the transaction to acquire the Rio Tinto subsidiaries that held a 70.27% interest in the Greens Creek silver mine and joint venture located near Juneau, Alaska. As a result of the transaction, Hecla subsidiaries hold 100% of the Greens Creek joint venture. On September 11, 2008, Rio Tinto acquired a 14.9% stake in Kalahari, and a 10.9% stake in Extract Resources, in which Kalahari's subsidiary Kalahari Uranium Limited holds a 39.11% interest. In October 2008, Alcan Global Pharmaceutical Packaging, a division of Alcan Packaging, a business unit of Rio Tinto Alcan, acquired the Chakan flexible packaging plant from Associated Capsules Private Limited in India.

22 1 RATIO ANALYSIS Ratios Current RTP Industry Profitability ROA 7.31% 7.75% 6.42% 14.97% 15.30% 5.50% 0.21% ROE 13.71% 15.17% 12.81% 22.70% 19.76% 22.97% 1.00% Net Margin 20.51% 18.02% 15.74% 47.49% 43.90% 26.10% N/A Valuation Price to Earnings 40.49x 16.07x 30.97x 14.27x 16.40x 17.00x 24.38x Price to Sales 8.31x 2.89x 4.88x 6.78x 5.40x 1.98x 1.78x Price to Book 5.55x 2.44x 3.97x 3.24x 1.95x 0.34x 3.29x Price to Cash Flow 36.39x 8.35x 22.65x 22.74x 7.20x 3.00x 17.82x Debt Utilization Total Debt to Equity 72.92% 79.88% 95.51% 48.19% 21.00% 52.00% 14.80x Financial Leverage 1.88x 1.96x 2.00x 1.52x 1.50x 2.20x N/A Liquidity Ratios Current Ratio 2.70x 1.89x 1.50x 3.31x 4.50x 1.60x 4.55x Quick Ratio 1.87x 1.25x 1.25x 2.72x 3.30x 1.00x N/A Asset Utilization Asset Turnover 0.36x 0.43x 0.41x 0.32x 0.30x 0.40x 0.21x Inventory Turnover 2.71x 2.77x 3.81x 2.92x 2.60x 5.90x 3.51x DuPont Analysis Net Profit Margin 20.51% 18.02% 15.74% 47.49% 43.90% 26.10% N/A Asset Turnover 0.36x 0.43x 0.41x 0.32x 0.30x 0.40x 0.21x Financial Leverage 1.88x 1.96x 2.00x 1.52x 1.50x 2.20x 3.51x

23 ROE 13.71% 15.17% 12.81% 22.70% 19.76% 22.97% 1.00% Profitability It is a positive sign to see ROA increasing for the past four years culminating with an ROA that is more than double what it was in Since ROA is a measure of how profitable the company s assets are, it is usually used as a good metric to measure management performance. When a company has a lot quality assets on it s balance sheet it is a good sign for long-term growth. Net margin is actually an interesting metric to look at for Cameco because you can see an enormous jump from 2008 to After looking at the income statement the numbers can be attributed to the quality of earnings in 2009 and The increase in margin is a result of two key drivers, gains on derivatives as well as a large amount of earnings from discontinued operations. Valuation The P/E ratio might not be the most accurate measure of value for Cameco, especially for reasons that relate to the quality of earnings mentioned above. These numbers will tend to skew the price to earnings ratio and as you can see there is significant volatility in Cameco s P/E. Leverage This ratio is actually quite important for capital intensive companies such as Cameco. On the one hand you can finance business using debt, increasing risk through increases in interest payments to debt holders. At the same time the leverage potential on earnings is much stronger through increased debt loads. A lower ratio shows a more conservative approach and as is evidence above, Cameco s leverage ratios are much lower than the industry average. This probably relates back to management s conservatives approach to business operations. Liquidity As a follow up to the leverage ratios, liquidity shows how easily a firm can service their debt. Due to it s relatively low volume of debt, they are much more financially stable and are in a stronger position to repay their creditors. Asset Utilization Asset turnover is not going to be very high for mining stocks because most of their assets are very longterm and related to ore extraction. These assets usually generate a high return, but the rate at which they turn will not be the same as say a high volume grocery store. DuPont After combining ROA, Asset Turn, and Leverage, Cameco produces a Return on Equity that is slightly lower than the industry average. I wouldn t consider this an alarming fact due to the relatively low amount of debt that they hold. If the economy goes into another recession expect Cameco to be in a much stronger financial position than most other miners.

24 PROFORMA ASSUMPTIONS Revenue When forecasting revenue I knew that between 60% and 70% of revenue was driven by uranium production. The company has given guidance out to 2012 as to the production volumes in pounds of Uranium coming from their current mines in operation. Because their estimates have been accurate to within 5% over the past several years I decided that this would be a good metric to forecast revenue with. I took the future s prices of Uranium and then multiplied them by the production volume to get projected revenue from uranium production. I also broke out the other revenue centers and forecasted them at an average year over year growth rate. I also set up a bull/bear case scenario, opting for the bull case. I believe the historical market activity shows that the price of uranium can easily increase 25%, and it seemed as though the supply and demand dynamics were in order to achieve this. Operating Expenses Each line item was forecasted differently based on what I thought was the appropriate forecasting technique. Say for instance products and services sold was based off of a three year average of products and services sold as a percentage of revenue. Depreciation, Depletion and Amortization I figured that depreciation, depletion and amortization would be a function of how much they are spending on the equipment to get the ore out of the ground. Depreciation was based off a historical average of its percentage of revenue. Income taxes I was actually very conservative in income tax forecasting. Management had expected the effective tax rate to be in the low teens for the foreseeable future. I decided to factor in a more conservative number at 15% into the future because I know the tax rate will not be sustainable into the future. Shares outstanding I kept the shares outstanding constant due to the fact that although there have been slight increases from year to year, there is also the option in the 10-K for management to retire some shares. There is not buy-back or secondary offering plan to date so I thought that a constant shares outstanding would be appropriate. Dividend If you look at the historical pattern of dividends paid you will notice that the dividend has consistently increased by 1 Canadian cent. Using that rate into the future as well as the Bloomberg dividend projection function I was able to apply the proper growth rate (currency conversion affected) to the most recent U.S. dollar equivalent dividend. VALUATION ASSUMPTIONS Risk Free Rate I used 4.5% as the Risk Free rate as is standard by the Educational Investment Fund. Market Risk Premium I used the Educational Investment Fund standard market risk premium of 5.7%.

25 Beta I selected a Beta of 1.48, which is slightly equal to the analyst average. Estimated 2012 P/E I looked at historical P/E levels which were suppose to be an indicator of future economic growth. In the past four years the range has been from 40X to 8X. But the deciding factor with which I decided to place my multiple was the fact that in 2013, production is set to increase by 40% with the opening of the Cigar Lake mine. As 2012 rolls around I expect investors to buy into the stock pushing price and P/E levels around 20X. This current industry average is 17X and I would expect as the mine is preparing to come online that the stock trades at a premium to 2012 earnings. Estimated EPS My model is showing CCJ with EPS of $1.37, $1.45, $1.55 from 2010 to The is adjusted for future currency rates using a currency futures table. Recent Price I used a price of to reflect the close price for 6/7/10

26 RECENT NEWS World's leading uranium producer Cameco set to double production (May 25, 2010) Cigar Lake uranium mine expected to resume construction soon (photo showing a shaft facility connecting the underground work area and the ground level). Cameco Corporation, the world's largest producer of uranium, plans to double its production from the current 20 million pounds to 40 million pounds by In addition to a plan to start operation of the Cigar Lake uranium mine in Saskatchewan, Canada in mid-2013, the company aims to expand the production capacity of mines in the United States and Kazakhstan in which it owns interests. Cameco will also consider purchasing interests in other new mines. Tim Gitzel, who took office as the new president of Cameco on May 13, explained, "Nuclear energy will generate a great demand for uranium in the future. We will prepare ourselves to ensure a sufficient supply to meet the demand." He described the Cigar Lake mine development project, in which the company holds a 50% stake, as "the most important project in our production expansion plans." Spelling out the company's prospects for the Millennium uranium deposit situated also in the province of Saskatchewan, Gitzel said, "We will complete the feasibility study by the end of next year, and the result is expected to be positive. We are hopeful of being able to start the first production between 2017 and 2018." Cameco is also planning to increase output from existing mines it owns in the U.S. and Kazakhstan, and is considering acquiring interests in other new mines, he said. Cameco learned lessons from mine flood: CEO Last Updated: Thursday, May 27, :57 AM CST Comments9Recommend8 CBC News

27 Cameco president and CEO Jerry Grandey, seen here in a 2009 file photo, spoke with the media at the company's annual shareholders meeting in Saskatoon on Wednesday. (CBC) It's taken two years of work and $64 million, but Cameco says it's learned some valuable lessons fixing its flooded uranium mine at Cigar Lake. Water has been pumped out of the underground mine in northern Saskatchewan, and if everything goes according to plan, the mine will be open and in production in mid-2013, the Saskatoon-based company says. Cameco president Jerry Grandey said this week there'll be no repeat of the scenario that caused the company's showcase mine to flood in For one, Cameco will have enough of the right kind pumps underground to handle any future flooding. It plans to increase its pumping capacity this year to 2,500 cubic metres per hour the equivalent of one Olympicsized swimming pool per hour. "We'll have double the amount of pumping capacity than we would anticipate would ever be needed," Grandey said. "And we hope it would never be needed." Meanwhile, even with the immediate problem out of the way, Cigar Lake and its sister mine at McArthur River are presenting unique engineering challenges. The ore bodies contain the world's richest deposits of uranium, but to reach them, miners must drill through water-saturated sandstone. They're doing that by freezing the rock around the uranium. "Instead of developing so close to water-saturated sandstone, we will take the tunnels lower to create a greater margin of safety between where the tunnel and mine development is and that sandstone," Grandey explained. Cameco finally drained the last of the water in February. Workers have been underground since then, cleaning up and taking a look at what needs to be done. The company says it expects Cigar Lake to be a key part of its plan to double its annual uranium production to about 18 million kilograms by 2018.

28 Cameco (TSE:CCO) China Uranium Opportunity May Leading Canadian uranium producer Cameco Corp. (TSE:CCO)(NYSE:CCJ) should benefit strongly from the growing economic ties between Canada and China, as leaders of three Canadian provinces head to the middle kingdom to drum up even more business. Alberta, Saskatchewan and British Columbia are represented by the contingent, and they're loaded with resources ready and available to those willing to invest in them, and China is definitely the leading country with demand for commodities at this time. Executives from Cameco are traveling with Saskatchewan premier Brad Wall, meeting with the largest nuclear power firm in China, which is looking to expand to meet the growing energy needs of the country. Uranium reserves in Saskatchewan account for 26 percent of global production, making the province the top choice for those needing the material for nuclear energy. Cameco should profit greatly if some deals are struck, which is highly likely, as Canada is doing business right with the Chinese by removing bureaucracy and making quick deals ahead of their competitor nations who try to impress the world by making it hard to do business with the Chinese. May 31, 2010 Mining industry now a safety leader : Awards chair John T. Ryan National Safety Trophy handed out to mines in Saskatchewan, Alberta and the Northwest Territories Cameco s McArthur River uranium mine in Saskatchewan has been awarded the John T. Ryan National Safety Trophy for best performance in the metal mine category for Last year, the mine recorded one reportable injury for 756,990 working hours. Tim Gitzel, Cameco s senior vice-president and chief operating officer, said awards like this one are a reflection of the Saskatoon-based company s commitment to safety. We are proud of our employees, who have helped make our mines and facilities among the safest in Canada, said Gitzel. The awards were handed out at the Canadian Institue of Mining, Metallurgy and Petroleum (CIM) conference in Vancouver this month.

29 SOURCES 1. Google Finance 2. Yahoo Finance 3. Seeking Alpha 4. Fool.com 5. WSJ.com 6. IAEA (international atomic energy agency) 7. Reuters.com 8. Morningstar 9. UBS research 10. Cameco.com Investor Relations 11. Cameco.com Uranium 101

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