Rachelle Girard Timothy S. Gitzel - Chief Executive Officer, President and Director Kenneth A. Seitz - Chief Commercial Officer and Senior Vice-President Robert A. Steane - Chief Operating Officer and Senior Vice President Grant E. Isaac - Chief Financial Officer and Senior Vice President

Greg Barnes - TD Securities Equity Research Ralph M. Profiti - Crédit Suisse AG, Research Division Edward Sterck - BMO Capital Markets Canada Oscar Cabrera - BofA Merrill Lynch, Research Division Peter Homans Tyler J. Langton - JP Morgan Chase & Co, Research Division David Snow Blair Veenema Greg Fontana David Stadlin

Good day, ladies and gentlemen, and welcome to the Cameco Corporation Second Quarter Results Conference Call. I would now like to turn the meeting over to Ms. Rachelle Girard, Director, Investor Relations. Please go ahead, Ms. Girard.

Thank you, Donna, and good afternoon, everyone. Thanks for joining us. Welcome to Cameco's second quarter conference call to discuss the financial results. With us today on the call are Tim Gitzel, President and CEO; Grant Isaac, Senior Vice President and Chief Financial Officer; Ken Seitz, Senior VP and Chief Commercial Officer; Bob Steane, Senior VP and Chief Operating Officer; and Alice Wong, Senior VP and Chief Corporate Officer. Tim will begin with comments on Cameco's second quarter results and current industry conditions. After, we will open it up for your questions. Today's conference call is open to all members of the investment community, including the media. [Operator Instructions] Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. Please refer to our annual information form and the MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I'll turn it over to Tim. Timothy S. Gitzel: Well, thank you, Rachelle, and welcome to everyone, who has joined us on the call today as we discuss Cameco's second quarter results. We certainly appreciate you taking the time to join us today. Overall, I characterized our financial and operational results as consistent and as expected. I'm happy to say our financial results were up across the board this quarter with revenue, gross profit and net earnings all increasing over the second quarter of 2012. For the first 6 months of the year, our net earnings are below what they were in 2012. That's mainly because of the light first quarter we had in 2013 which, you'll remember, occurred as expected due to a very light delivery schedule and lower earnings from Bruce Power. You can see that earnings from Bruce Power were low again this quarter, but that was expected, as the utility continued with its planned outages. Overall, for the year, we expect earnings from Bruce Power to be only 5% to 10% lower than they were for 2012, and we are on track to deliver on our outlook in general as uranium deliveries increase over the next 2 quarters. Turning to production, it was down this quarter from 2012. The decrease was a result of some planned maintenance shutdowns at McArthur River, Key Lake and at Rabbit Lake. Both operations are on track to deliver on their production targets for the year. At Cigar Lake, we continue our journey toward first production. As we pointed out in our MD&A, our capital expenditures at Cigar will increase by 15% to 25%. That's mainly because of some scope changes at the mine and at the AREVA mill, as well as the same upward pressure being felt on cost across the mining industry. In addition, the previous estimate only included our expenditures to first ore and not the capitalization of startup costs. However, Cigar Lake remains an important source of what will be low cost production, and our team keeps making solid progress toward first packaged pounds in the fourth quarter. I was at Cigar Lake recently, and I am consistently impressed with both the quality and the tenacity of our team. They're a talented and an enthusiastic bunch, who are committed to getting this job done safely and efficiently. The Cigar Lake project is a big part of our strategy to increase supply to 36 million pounds per year by 2018 and remain a successful low-cost producer. On the subject of remaining a low-cost producer, we took further steps this year to ensure that we are continually improving our position over both the near and long term. We made changes that target increased capital efficiency and a sustainable 10% reduction in future expenditures. The changes were necessary given the current market environment, which requires us to be leaner and more efficient in order to stay competitive, but they will also help us continue to grow the company profitably over the long term. Today, the importance of increased efficiency cannot be overstated. The uncertainty resulting from the continued shutdown of Japan's reactors and the resulting inventories remains the biggest issue. It's the primary reason we continue to see downward pressure on uranium prices, along with discretionary buying from utilities, who remain well covered for the time being. There have also been some other unforeseen developments like the 4 reactor shutdowns in the U.S., as well as the shutdowns in South Korea for safety reviews. There's no doubt that the market conditions continue to be challenging. But today, I would also say that we're starting to see some tangible movement. In July, Japan's Nuclear Regulatory Authority finalized their new safety regulations, and 4 utilities have applied to restart 12 reactors. The next few months, as the reviews progress, will be very informative as to what we can expect for Japan's nuclear fleet and should provide some certainty around how the inventories those utilities hold will be managed. Of course, we'll be watching that closely, but our focus is certainly not limited to the near term. Ours is a long-term business, and those long-term fundamentals remain very strong. We're expecting average annual growth in uranium consumption in the order of 3% per year out to 2022. That's being driven by the growth in reactors around the world from 430 to date, to more than 520 by 2022, 67 of which are under construction today. China alone has 6 reactors planned to come online this year. One of those has been connected to the grid, and the others are getting close. So this growth is not just something we think will happen, it's happening as we speak. As we've said before, it's just a question of how long it will take for that growth to become the more dominant force in the market than the challenges currently being faced. We know it will happen. We continue to prepare for it, but I can assure you that we also continue to adapt to remain efficient and profitable throughout this period of uncertainty. So with that, we'd be pleased to answer any questions.

[Operator Instructions] And the first question is from Greg Barnes from TD Securities. Greg Barnes - TD Securities Equity Research: Ken, a question for you. Clearly, the uranium spot market's under pressure, but my understanding is a lot more volume's been done in the mid-term market now than even the longer-term market. Can you give us some idea of what the dynamics are around spot mid-term and long-term contracting purchases, inventory builds, whatever? Kenneth A. Seitz: Yes. Absolutely, Greg, so thanks for the question. Yes, the dynamic at the moment, you're looking at a substantial spread between the term market at around $55 and the spot price of around $34.50. And it has a lot to do with the fact that, indeed, there is very little demand in the long-term market. If you look at year-to-date numbers, we're just a little bit below 9 million pounds long-term contracted through 2013, and that's well below what we would have seen in previous years. And so there's, in terms of exercising the buy-and-hold, in other words, buying spot volume today, if needed, so very low prices and holding it through and delivering it into a $55 contract. There's just not that many opportunities to do that in a low-demand environment, long-term demand environment that we're seeing today. There are a few mid-term deals being done, that's true. But there's some -- quite a bit of negotiation around what the mid-term price is today. Is it discounting the long-term price back or is it escalating the spot price forward? So there's a little bit of that being done today, but not much. Because if there were significant volumes, you would expect increased pressure on the spot price. Then just moving to the spot market, we're in what we call our summer doldrums, when a lot of fuel buyers, a lot of people on vacation over the summer coming back to look at their budgets in the fall. So we have that dynamic. We have very little on the way of demand over the summer here, and yet some material that people are moving. And we've seen some deals done, traders moving some materials, as well as a few producers, and hence, the drop in the uranium price. As we head into the fall here, we'll see how that dynamic unfolds. I will say that just in the last few days, we've seen these very low spot prices draw out an excess of 1.5 million pounds worth of demand. So we've hit this $34.50, and now we're seeing some substantial new spot demand. So Greg, probably it doesn't answer the question perfectly. There is it that dynamic taking place at the moment, but I think it's all in the context of anyone looking to buying uranium is in a little bit of a wait-and-see mode, as prices fall the end demand somewhat discretionary continuing to stay out of the market, and looking for that inflection point when prices turn and then I can expect that we'll see more demand coming into the market. Greg Barnes - TD Securities Equity Research: Okay, that's great. Just my follow-up question is around the Cigar Lake CapEx increase. You mentioned scope changes at the mine and mill. I was wondering what exactly that involves? Timothy S. Gitzel: Yes, thanks, Greg. I'll ask Bob Steane to talk about those scope changes that we referred to. Bob? Robert A. Steane: Yes, sure. Greg, the 2 aspects. The first, I'll say I was at the mine up in Cigar Lake, often weekly, and assure everyone that things are progressing on schedule. We'll be starting, and everything's looking very, very good at the site. There's some other scope changes at the Cigar Lake mine site. As we've been into this final press and putting things together. We've had some of those, some additional piping. We've recognized that we have increased our surface squeeze area. We needed some additional squeeze capacity, we've added that. We've had some different development that we've had to do based upon the ground conditions we've encountered, and that's changed some of the scope at Cigar Lake. And that JEB mill assets, the mill is related to the expansion, so it's the post 2014, '15, '16. The expansion of the JEB mill, some of the scope changes, they're in that stages of design, it's still a work in progress. But as they're going into this design, they're seeing some changes in some of the equipment sizes, some of the building geometry, perhaps some of the site infrastructure, relocating some ammonia tanks from one location to the other, that type of thing. And both sites, I have to say, the biggest cost to -- one of the biggest cost drivers is escalation. We're seeing it at Cigar and the mill changes are further out in time for the expansion to the JEB mill, the escalation compounding. And so that's the backdrop to that escalation in scope change. Greg Barnes - TD Securities Equity Research: Okay. So none of this is going to increase the actual capacity of the mine to produce something [ph] of 18 million pounds a year though? Robert A. Steane: No. This is -- these are all to do the 18 million pounds.

The next question is from Ralph Profiti from Credit Suisse. Ralph M. Profiti - Crédit Suisse AG, Research Division: Tim or Ken, in previous pullbacks in the uranium price, we've seen producers like Cameco willing to step in as buyers, either to support the price or just for opportunistic purposes. This type of activity seems to be noticeably absent in the recent pullback. So I'm just wondering, has Cameco been less active than usual? And can you discuss how you think your own strategy may evolve over the next 3 to 6 months as prices would seemingly want to trend lower from here? Timothy S. Gitzel: Well, Ralph, we'll see where things go. I'd say, Cameco is always around the market, in and out, sometimes to a greater extent than at other times. We continue to watch the market. We haven't been overly active, I would say, right now. And for all the reasons that Ken gave, we've seen the spot price slip. So I think throughout summer, it's not surprising to us that things, as Ken described it, are in the summer doldrums. More interesting for us, will be probably the fall around the World Nuclear Association, a big symposium in London mid-September. When we see how utilities start to react to the market, HEU coming to an end. Chinese build continues. The Japanese restarts will help even better information then. What's maybe a bit encouraging to us, I guess, is the point Ken made about when the prices hit this level. You did see some demand come out of the woodwork and 1 million plus pounds, I think. So through the summer, I'd say we're not overly concerned. We'll wait and see how things turn out. We're more interested in what happens probably in the next quarter and into the end of this year. Ralph M. Profiti - Crédit Suisse AG, Research Division: My second question is on Cigar Lake. And now that we have a more defined capital cost estimate, I'm wondering about operating costs. And as you cite, scope and scale changes at the mine and the mill, how are you shaping up to meet the $18 a pound long-term cash cost target? Timothy S. Gitzel: Yes. I think there's been no change from the information we've put out on that. We're sticking to the numbers we've put out, which is around the $18 per pound. Sorry, Grant's just reminding me it's $18. Grant E. Isaac: $18.60. Timothy S. Gitzel: Yes, $18.60 per pound. No change to that at all.

Our next question is from Edward Sterck from BMO. Edward Sterck - BMO Capital Markets Canada: I've got a couple of questions today. The first is just in the light of this weak uranium price environment, is there sort of any move to rethink the Double U strategy and sort of trim production output in the future or expect production outputs? Timothy S. Gitzel: So, Ed, you'll recall, we did pullback on that in October of last year. At the end of October, we rethought our Double U strategy, which had us getting to the 40 million pounds by 2018, and then continuing on up from there. And so today, we're looking at a revised strategy where we're focused on our brownfields operation expanding, where we're already producing and getting to 36 million pounds by 2018. So we're constantly looking at that as well. Right now, we still think that's a good strategy. Cigar Lake, of course, is the bulk of that strategy. And so we continue on that path and we'll watch very closely as this market evolves. Edward Sterck - BMO Capital Markets Canada: And then just as my follow-up question. Although sort of group CapEx has increased for this year, mainly due to Cigar Lake, obviously, it looks as though you've reduced your guidance for next year and the year after. But where is the CapEx being reduced and what are the savings? I mean, are there any compromises that are being made by -- through that CapEx reduction? Timothy S. Gitzel: Ed, that was a part of our exercise to really look at the organization in these challenging times and looking at our costs, our G&A, our administrative costs, our operating costs and our capital costs. And so it's pretty much across the spectrum that we've tried to pull back our costs or defer capital where we could in this difficult environment, so I think it's pretty much across the board.

Our next question is from Oscar Cabrera for Merrill Lynch. Oscar Cabrera - BofA Merrill Lynch, Research Division: Just following up on Cigar Lake. Could you please provide the capital spend to date in the project? And then what should we expect to -- for this CapEx to be over the next 2 to 3 years once you have all the 15% increase as you described in your release? Timothy S. Gitzel: Okay, Oscar, thank you very much. And I'm going to ask Grant Isaac to comment on that. Grant E. Isaac: Thank you, Oscar. The cost as at December 31, 2012, so, of course, we have some additions to that. Cameco has invested about $911 million in our share of the construction cost to that point. We also did have some remediation expenses as part of reclaiming the mine after the flood. So that was at $86 million, and then we did have some standby costs as well, which were also expense to $63 million. You'll recall from the technical report that -- the last technical report we put out on Cigar Lake, our share of the construction cost was $1.1 billion. And of course, with what Tim was talking about earlier, based upon our view of potential scope changes and anticipated escalation at both Cigar Lake and AREVA's McClean Lake mill, this takes us out to 2015. We've put out a range of an additional 15% to 25%. So that really takes us from that $1.1 billion to $1.3 billion to -- sorry, $1.27 billion to $1.38 million for the Cigar Lake project, for the construction phase of it taking us out to 2015. And as I said, that's mine and mill. Oscar Cabrera - BofA Merrill Lynch, Research Division: That's mine and mill, okay. Great, that's very helpful. And my follow-up on this is you are trying to -- the expansion at McArthur River, are you seeing a similar type of increases in CapEx? Timothy S. Gitzel: Oscar, we're seeing some cost pressure in Saskatchewan, in general. I think we have been to date. The other industries have been busy. The oil sands, the potash, at least to date, have been busy as well. So there are those cost pressures. But from McArthur, we haven't changed any forecast that we've put out or any of the information in our technical report that we put out about 1 year ago. Oscar Cabrera - BofA Merrill Lynch, Research Division: Are we to imply that there hasn't been any material change to -- despite the EBIT cost pressures that you've seen? Timothy S. Gitzel: Not to date, there hasn't.

Our next question is from Peter Homans from Arthur Wood.

I have 2 questions. I'll ask them both in the beginning and you can take them as you wish. First is, can you describe sort of the mechanics of Russia ending their HEU contracts. In other words, on December 31, as the contract expires on that date, is there still product in the conversion pipeline which continues to flow into the market into 2014, or does it stop there, et cetera? In other words, is it going to provide incremental inventory beyond the date of the expiration? And it's important, because that amount, annual amount as a percentage of worldwide consumption is a meaningful percentage, and if I understand it correctly, equal to or slightly more than your annual production. Then secondly, you are -- your goal now is 36 million pounds per year by 2018, and I'm not familiar, perhaps you said it on a previous call, but in fact, between 24 million pounds and 36 million pounds, how much of that 12 million pounds differential increase is Cigar Lake meant to provide? Timothy S. Gitzel: Peter, thanks very much. It's Tim. Maybe I'll start with the second question. First, and so of our increase to 36 million pounds, of course, 9 million pounds will be from Cigar Lake. The project that once up at full speed will produce 18 million pounds and our share at Cigar is 50%, so 9 million pounds. Then there's some increased production we're expecting from McArthur River, a little bit from the U.S. We've got some product coming out of Finland, Talvivaara. So those things will get us up to the 36 million pound end-mark by 2018. I'm going to turn the first question on the Russian HEU piece over to Ken, just to say that you're right, that has provided about 24 million pounds of product onto the market every year. It does end this year. Our last delivery is this year. But Ken, you may want to give us a bit of the details of how that's going to wind up. Kenneth A. Seitz: Yes -- no, it's certainly relevant, Peter. And so I can tell you that some of the closing celebrations, you can find it around the HEU agreement. One of which is actually a delegation going over the port St. Petersburg to watch the last HEU cylinder loaded on a boat and coming west.

You have an attendee? Kenneth A. Seitz: Yes. Well, yes, and it's gelling. So in any event, it's relevant. And I can tell you, that source of uranium is ending this year. It doesn't continue into next year and those sorts of things. Now could there be HEU-related material? Could there be Russian-origin material finding its way into the market in 2014? That's possible. But that's just a case of inventory policy and what people are holding as inventory. We've long said, we hold 5.5 to 6 months worth of inventory that would be various origins of material. Some of that could be HEU. But I think to your question, it ends this year.

So just to be certain that I understand, the demand -- the expectations on the part of utilities, who currently are receiving from your other folks some portion of their supply from this source, they are looking at sort of a hard cutoff, more or less, on January 1? Kenneth A. Seitz: That's right, Peter. Yes.

And why does that, in your opinion, not affect the spot market given the expectations for this year's worldwide consumption? Timothy S. Gitzel: That's a great question. Peter, we think it's one of the factors, one of the catalysts that I think utilities are probably pretty well covered. They've seen this coming. This has been telegraphed pretty well, and so they've seen it coming. I think they're covered for the next few years, but this is one of the catalysts, I think, along with China, Japanese restarts, some of the supply deferral and disruption we're seeing that are going to have some impact on the price going forward.

[Operator Instructions] Our next question is from Tyler Langton from JPMorgan. Tyler J. Langton - JP Morgan Chase & Co, Research Division: Just had a follow-up on Cigar Lake. Can you talk a little bit about how much of the remaining CapEx is fixed versus variable? And sort of just any commentary where there is a risk to see additional inflation at this point? Timothy S. Gitzel: Tyler, we're not quite sure we understand between fixed and variable. Grant, do you have any comment on that? Grant E. Isaac: Yes. Well, on a construction CapEx, so the new range we put out, so think of it as going from 1.1 billion to 1.27 billion to 1.38 billion to encompass mine and mill completion -- construction completion up to 2015, that's based on packages of work, obviously. Those are packages that we deemed are required in order to bring these assets into full capacity. And so I guess from that point of view, you might think of them as fixed. Once it's in commercial production, then we will have more typical categorizations of sustaining replacement and growth capital at that Cigar Lake project like we would have at any mine asset. But of course, we're not in that commercial production phase yet. So I guess, if I understand your question right, I would just sort of think of those work packages as we've redeemed them as required in order to get the assets into full production. So think of it as fixed. Tyler J. Langton - JP Morgan Chase & Co, Research Division: Okay. I guess I was wondering -- so it means, there is not some terms where there's sort of labor cost where you can't control it from this point where -- that, that could see inflation or something like that, I guess, is what I was getting at. Grant E. Isaac: Well, I'm sorry, certainly, there's the productivity impacts that might happen because you have a hot labor environment and you're competing with other projects for trades or you may have worker turnover affecting productivity. Absolutely, that's, in part, captured in the escalation that we're signaling with this guidance of 15% to 25% increase. Of course, we'll work very hard to make sure that, that's the appropriate range and do even better than that, quite frankly, yes. But you're right, those are some of the pressures that we could see. Tyler J. Langton - JP Morgan Chase & Co, Research Division: Okay. And just a follow-up on in just cash. I'm just wondering over the last quarter, whether they've seen any increase or decrease in other deferrals or request to buyback inventories? Timothy S. Gitzel: Ken, have you seen anything? Kenneth A. Seitz: Nope. No, we haven't. No and I think it's just a lot of clarity coming out of the country now in terms of the political process and of course, the regulatory process. And so any utility with a fleet that's on the restart schedule on -- growing confident, since they're going to need that volume. So we haven't had additional discussions.

Our next question is from David Snow from Energy Equities, Inc.

This could have just been asked, but I'm trying to see if you have any more possible deferrals of contracts to future years at a higher price as you've done in the past. And also, if you are likely to hold back on some of the spot sales that you normally do in this weak environment? That's my first question. And the second one is on your release, you mentioned other projects have been reaffirmed, especially sovereign. I'm wondering if you could tell us a little bit more about who that is or what that is? Is it cash extend? Or what are you -- who could be included in those, as well as who might still drop some volumes in this weakening market? Timothy S. Gitzel: Yes. So David, certainly, again, I'll start with the second question as producers. We did mention the Husab project that the Chinese appear to be moving forward. We'll -- we're watching to see how that's going to progress. Those are not easy projects to move forward and we'll see. I think we've put some timelines out, we'll see. But we assume if they say they're going forward, they'll go forward with that. Let me tell you on the other side, there's probably a larger list, and we think that some of the other pieces, including our own Kintyre piece that we've said just in this price environment, don't make any sense, and we've seen from our competitors the same type of language. So it's a bit of a mix as to who's moving ahead. But I can tell you at $34.50, I think, you won't see a whole lot of projects moving ahead in that environment. So on the other piece, I'll just ask Ken to comment. Kenneth A. Seitz: Right. Yes, so I think there was 2 questions there on deferrals and spot sales. And so on deferrals, I think it's fair to say that the ones that we've done in the past are, as we've said, they make sense for Cameco and for Cameco's shareholders. And while we're not receiving those requests today, would we entertain them? Well, only to the extent that they make sense and they make sense for our shareholders. And that could mean something like deferring out, as you said, at higher prices, recognizing and take on little bit of risk with later deliveries. And so we need to be compensated for that. So those are the kinds of things that we would look at. But again, we're not in those discussions today. With respect to spot sales in this environment, I'll just say that we do have a portion of our long-term portfolio that's being delivered and referenced in the spot price. We have no interest in seeing the spot price go lower. We'll make sales, fortunately, where we have a contract portfolio that we can lean back on today that's giving us average realized prices well above the current spot market. And we are in not -- in no way backed into a corner having to make spot sales. You would -- you probably won't see Cameco making a bunch of spot sales on this market.

Well, would that mean that the -- roughly half of the total sales could be subject to some downward discretionary curtailment then? Kenneth A. Seitz: Well, you -- I just refer you to our price table on our MD&A, which actually delineates that along very well. And it is true that we have some exposure to spot prices, but that's all subject to those market-related contracts bonding in the floors, for example. And I'd also say our market-related contract is not just subject to spot prices. Half of those market-related volumes are delivered at long-term prices, which today is at $55. So there's some simplifying conservative assumptions in our price table, but it generally reflects our portfolio performance.

And just one follow-up on the -- do you see any indication that Kazakhstan might slow down its rate of ISR oil field additions? Timothy S. Gitzel: Well, I clearly think -- It's Tim. I clearly think they'll slow down the rate of growth that they've had. The last -- we talk to them all the time. The last numbers that we saw come out were at the -- they would go from the 20,900 ton they produced last year. I think they were looking to increase about 25,000 ton over the next, I think, 4 or 5 years. So those were the numbers. We'll see. They're very prudent, very market savvy and good partners. And so we'll see where they take that, but that was last we'd heard.

Our next question is from Emily Meredith from Nuclear Intelligence Weekly.

I was just wondering if you could talk a little bit about the Cigar Lake ramp up? And is there any conceivable price scenarios where perhaps you would adjust the ramp up there? Timothy S. Gitzel: No, the ramp up is -- well, Steve said, is -- or the construction, at least, is going very well. We're on schedule, on track. We have a ramp-up schedule that we plan to stick to. This is material that we need, at least Cameco needs, and we know our partners need, replacing some of the HEU that is ending this year. There's -- we've been beneficiaries of that HEU for many years, and so we need to replace that. And the Cigar Lake, all our share of the Cigar Lake for product is a great replacement for that. So we plan to ramp up as planned.

Okay. And then just in regards to NUKEM and revising on the sales volumes, $8 million to $10 million, can you just talk a little bit about that decision and whether or not that means anything for your inventories? Timothy S. Gitzel: We just thought that in this market environment it was prudent to not to put inventory pounds onto the market at that price, that's our thinking there. We put in our MD&A, the effect of that. And we -- I think, we'll just hang on till the market improves before we put some of those inventory pounds on the market.

[Operator Instructions] And our next question is from Edward Sterck from BMO. Edward Sterck - BMO Capital Markets Canada: So I've got 2 question again. The first is just regarding the 10% cost reduction from next year and onwards. Is that a target or is that a sort of definitely achievable -- is it a definitely achievable target or is it some aspirational target? Timothy S. Gitzel: Well, it's achievable. I can tell you, we've worked very hard over the last 6 months and taken some really, I'd say, difficult decisions here in the house, but decisions that we're required to take to remain, as we say, streamlined and lean. And so we very much believe we will achieve those goals. Edward Sterck - BMO Capital Markets Canada: Okay. And then just as a follow-up question, if the uranium price continues or the spot uranium price continues to slide at all, I mean, is there any level at which you'd need to look at impairing some of your assets? I mean, I guess, some of the acquisitions like Kintyre that occurred when uranium prices were substantially higher in a sort of more of a broad market's acquisition-type scenario? Timothy S. Gitzel: Thanks, Ed. Grant, you're on that all the time. Grant E. Isaac: That, of course, is an annual exercise to go through your asset portfolio and see how it shakes out compared to where the current market is at. We saw not just for Cameco, but for a lot of mining companies. One of the effects of International Financial Reporting Standards, you saw us taking impairment charge on our Kintyre asset. Because as an advanced exploration project, you have to use the fair value less cost to sell approach, which, if we think about it conceptually, you're pounding a for-sale sign into the ground and trying to sell the asset today. So you are really rooted in today's price, in today's price dynamics and quite de-linked from your strategic intent. So we'll go through that process again as part of our annual review. I don't want to prejudice what those evaluations might turn out to be, but that is work that we'll certainly do through year end.

Our next question is from Blair Veenema from Manning & Napier.

I wanted to get a little language from you guys on the conversations that you're having out in the market right now with non-Japanese base utilities, specifically. Given the clarity or the improvement and clarity that we're starting to see in the path towards restarts and just HEU falling off, and in general, seeing the potential for the supply-and-demand dynamics to tighten a little, is there a utility sitting there, actually waiting still for some form of inventory liquidation? Or is there more that you're hearing from your counterparties? Timothy S. Gitzel: Thank you very much, Blair. We talk to them all the time. We're always out with our customers, talking to them. Right now, as Ken mentioned, not a lot of long-term contracting going on, because they may be looking to where the market is going and thinking it might be going lower. We certainly have to -- perhaps have an opposite view. So not a lot of contracting going on. But Ken, do you have any comments on that? Kenneth A. Seitz: Yes, a fair question. I think there are a number of utilities who are watching Japan quite closely and with a little bit of clarity. And demand being, I'll say, somewhat discretionary. It could be that if someone is looking to layer on volumes, they may do it sooner rather than later. And this is this infection point that I talked about in terms of seeing that additional demand and prices turning. I'll also say though, it has been our experience that in the past, in a low-priced environment, utility is in terms of inventories tend to feel quite comfortable, and then there's a sense that there's a lot of cheap uranium around. And in a rising-price environment, tend to layer on additional inventories, with the sense that there's not as much uranium around. So at the moment, I think that utility is somewhat discretionary demand, waiting to see what happens in Japan and comfortable with inventory levels in a low-price environment. Again, we haven't seen those large demand numbers coming out. And so just from my -- in my mind, a question of when.

Okay, great. And one follow-up. With the recent move we had down from kind of that line of support at $40 down breaking $35 or I'm not sure where we're at today, actually. But other mines beyond just your own out there from a cash cost or from an all-in cash cost and maintenance CapEx standpoint, are you seeing -- what do you see in terms of global supply that potentially is operating at a loss or moving towards operating at a loss and the potential for any mine closures or curtailments? Timothy S. Gitzel: Yes, thanks, Blair. at $34.50, we know it's tough out there for a lot of producers. We know our own costs and you have a sense of what some of the other ones are. And it is a very tough market. Now in our case, we're fortunate to have the basket of contracts, the strong sales, the portfolio that we have that is certainly at a much higher level than the spot price. So we're okay. We're, as we say, we're keeping our heads down and our spirits up in trying to really watch our costs here. Other producers, I think, would be in a -- if they have a nice portfolio, they're probably okay. If they don't, then they'd be in a tougher position. And then as to how long you keep going at that rate, it depends on what it cost you to shut down and a lot of other variables. So it's tough to say, it's tough for us to say for others. But I can just -- we can just speak for Cameco and say that, in this market, our basket of contracts, our portfolio is doing us a good service.

[Operator Instructions] And our next question is from Greg Fontana from Convergent Capital Partners.

Yes, that's convenient because my question's related to the one that was just asked. And so, I don't know, maybe 2 questions on that topic. One is, if you look at the capacity out there today, what is the sensitivity to, say, another $3 or $2 drop in the price of uranium to coming offline? I mean, if it's in the order of 2% or 5% or 15%? And another question related to this is, if you say there's 67 plants under construction, to -- what percentage of their initial load has been purchased to date? When will we see demand coming from that catalyst? Timothy S. Gitzel: Yes, those are both tough questions. I would say the sensitivity to a $3 drop in price, you'd have to go probably company-by-company or project-by-project and ask that question. I can just say, in our case, again, if you look at our price table, you can get some sense as to what price we would receive in a $20 market, $40, $60, and that gives you some of our numbers. And we're not overly sensitive to that $3 drop. But again, for the other projects, I'd really hesitate to comment on others. The 67 units under construction, I think 28 of those, Ken, are in China; 10 in Russia; I think, 7, South Korea, numbers like that. And again, that would be country-by-country. I'm not sure we have any real precise numbers on initial core. Ken, do you have any [indiscernible]? Kenneth A. Seitz: Yes, it's really difficult to say. For example, 28 units in China, I think, we know that the Chinese have been doing a lot of buying, obviously, over the last 5 years in anticipation of this large buildout. And so it's boiled down to inventory policy in each of these places. How many pounds they want sitting behind each reactor and so on. I think we fall back to -- we expect uranium demand to grow on our business at about an average of 3% per year. And so we translate all of these initial core demands and requirements and add it all up and we get to this 3% per year growth average annual growth in uranium demand.

Our next question is from Oscar Cabrera from Merrill Lynch. Oscar Cabrera - BofA Merrill Lynch, Research Division: Just like to focus on the uranium market, if I can. In your previous conference call, you had talked about a possible 6 reactors getting started in Japan. Just curious if you still maintain that view after you've seen so far in the utility -- the Japanese utility that are looking for their restarts. Timothy S. Gitzel: Yes, thanks, Oscar. we were speculating at that time. This situation is really starting to firm up in Japan. And I think back, I was just looking at some notes this morning to last September when different government planning to phase out nuclear power in Japan by the 2030s, with an s, we were pretty glum here, I could tell you, at that time. Today, new government in place, controlling both houses. Pro-nuclear. Has the NRA, the regulatory authority, in place. Standards have been set now and we have 4 utilities with 12 reactors in the queue or at least brought their projects forward for restart. So certainly, more clarity. I guess the piece we don't know is how long that review or those reviews will take. We know the NRA has 3 teams set up to look at the different projects being brought forward. We've heard it could take 6 months to do the reviews. I think the Ohi reactors that were reviewed were done in much less than that. So I guess, we're just -- rather than speculating, we're just waiting and watching, day-by-day, the situation in Japan. But I would say, it's certainly a lot better than it looked some months ago. Oscar Cabrera - BofA Merrill Lynch, Research Division: Great, that's great color. And then as a follow-on, with respect to the U.S., you commented on the 4 reactors being shut. How do you see the market evolving over there? Like, I mean that based on the numbers I have here, the U.S. accounts were about 1/3 of demand in terms of uranium. Do think that this number of reactors that we have in operation right now will decline further? Or we have one starting soon, so how do you see that market evolving to 2012? I believe that was a number that you gave us. Timothy S. Gitzel: Yes, so some of us -- and I'm certainly heavily involved with the Nuclear Energy Institute, which gives us a chance to meet with all the utility CEOs on a regular basis. And I know Ken was just down there. He can maybe even speak about his visit to the Vogtle site and the Summer site to seeing the new construction better. We believe that the U.S. will continue to have nuclear energy as an important part of their energy strategy going forward. I do think, and we're seeing it, that some of the merchant plants are under pressure from a cost point of view and, quite frankly, a regulatory point of view as well. But the regulatory burden is not light. And so I think we'll see, as we've heard, several of the units closing down, but there are also some coming back up. So we think it'll be flat. Clearly, I'd be remiss not to mention natural gas in the United States, which today seems to be the answer to everything. But I would say on that, if you build a gas plant, the price of gas is very, very important to your electricity price. And so we've even seen, I think, in the south, the price go up from $2 and something in mmBTU to $4 something. So that can swing a bit. So bottom line, we think nuclear will continue to play an important role in the United States. And Ken, do you want to just say anything about your visit down there? Kenneth A. Seitz: Yes, absolutely. So to mention, I, just a few weeks ago, was at both the Summer sites and the Vogtle sites in Southern U.S. And obviously, very encouraged to see a couple really substantial new nuclear projects in the U.S. And by every measure, I think things are going quite well at those sites. And I think importantly, if we look at the U.S., I'd like to talk about gigawatts as opposed to units. Because as Tim mentioned, there are these, and we've seen smaller merchant plants up in single units, but smaller. And so you have in terms of gigawatts, these thousand-megawatt units are being built at Summer and Vogtle, a total of 4 of them. And so on a net basis, as Tim said, we're looking at the U.S. and saying they're going to be in this for a long time and sort of on a net basis, maintaining their gigawatts.

Our next question is from Peter Homans from Arthur Wood.

As a follow-up to the -- my previous questions on demand, et cetera. Do you have either -- do you have recently hard estimates of what worldwide production versus worldwide consumption will be this year? And what -- and production including -- or not including HEU? And what worldwide production versus consumption will be in estimated terms for next year? And then secondarily to that, you mentioned, Tim, I think that the utilities were, "pretty well covered for next couple of years." Does that mean that they have 2 years worth of inventory, and therefore have absolutely no reason to buy anything for 2 years? Or I would think that they want to be in a position of -- just as you do, you have inventories to cover for 5 or 6 months. I would think that the utility would also have something that is sort of a base case inventory level. So the question is, if they're covered, does that mean they're not buyers under any circumstances until 2 years passes? Timothy S. Gitzel: So Peter, thanks for the question. Just back to the first piece, our forecast production numbers for this year, both 158 million pounds, that's not with the HEU. And then in consumption, we see around 170 million. So then you see with the HEU, the market's probably well supplied this year. Now if you take the 24 million pounds out of the market and your consumption is growing by 3% a year over the next 10 years, you can see that, clearly, fresh production's going to be needed in order to fill a gap. And as I said, utilities foresaw this to some extent. And so that blends into the next question, and that is the inventory policies of the utilities. And as we go from maybe west to east, we've -- I think, I often said that in the U.S., we see utilities holding inventories 1.5 year to 2 years; Europe, maybe 2 to 3; and then the Far East, 3 to 4 years of inventory just as a really general rule of thumb. And so the piece maybe to answer your question is that utilities will not wait till months before they need the material to come to the market, unless it's just a small piece that they'll get on [indiscernible]. Okay, the big utilities will normally come 3 to 4 years in advance of meeting big quantities. If they're coming to us, we'll say, we'd like to put a 10-year contract on the table, starting deliveries in about 2017, if they came today, because we're sold down to the end of 2016. And then that contract would run from 2017 to 2027 or something in that order. So that's, Ken, I think a typical contracting situation for us. So we're expecting as we see that our portfolio, we're heavily committed, as we say, to the end of 2016. So we know we have utilities committed as well. But we know their needs open up in the '17 period to going forward. And so we expect that they won't wait too long now to start coming back to the market to sign new long-term contracts.

So as a follow-up to that, isn't what's going on with utilities and the departure of the Russian contract sort of -- and given their inventory policies, as you described them, isn't what's happening sort of a game of chicken? No one -- you're going to be in sort of balanced supply-and-demand situation once HEU is gone. And given these lead times that you're talking about, someone interested in acquiring products for 2017 would like not to have to have the spot price go up, because to the extent the contracts are written on that, or related to that, that would hurt them. So is there some sense in which everybody is kind of waiting with bated breath to see who moves first? Timothy S. Gitzel: Yes, I think that's the case. I would just say this, in the market that today consumes about 170 million pounds going to 220 million pounds by 2022, in a market that produces fresh production from the mines, 158 million pounds, that is not rising very quickly going forward. New production has to be brought on. Today, we are not, as one of the producers getting signals from the market to invest in new production. Unfortunately, we're not very good at bringing on new production in a hurry. It takes us 7, 8, 9 years. So the longer we have to wait to get that signal to bring on new production, the longer it's going to be at the other end when we bring it on. So that's the -- those are the fundamentals of the market that we are encouraged by. And here we are today in the doldrums just waiting to see what's going to happen with the market, but something has to happen going forward.

But even next year, you're going to have a supply demand either equality or in balance?

Yes, Peter, I'm going to have to ask you to get back into the queue. That's -- we certainly allow [indiscernible] questions. Sorry.

Our next question is from David Snow of Energy Equities, Inc.

158 million pounds of mine production this year, do you any estimate for what it may look like next year? Timothy S. Gitzel: I'm not sure if we put those numbers out. I'm looking at Rachelle. I don't think we do. I think it probably -- we'll see what happens with the existing mine and what mines and what decisions are being taken. But it might be a similar nature next year.

Even with your Cigar Lake expansion? Timothy S. Gitzel: Yes. Well, David, it's going to take us several years, about 4 years, a little over 4 years to ramp up to full production. So there will be a bit more coming from Cigar, but that will take us some time to ramp up.

And then I'm wondering, can you tell us in pounds of U3O8, how much HEU deliveries you're getting this year? Timothy S. Gitzel: We get -- in any normal year, we would get about 7 million pounds of HEU. This year, the number is closer to 10 million pounds.

Okay. And then...

Sorry, David. We're really going to have to try and limit people to 2 questions.

The next question is from David Stadlin from PCO Capital.

I have a question. I'm just trying to go through your MD&A amongst other earnings reports today. You talked about inventories going up $369 million but production volumes were up 4.4 million pounds -- were 4.4 million pounds and sales volumes was 6.4 million pounds. So I'm just trying to understand how I square the production versus sales and the inventory increase that you saw in the quarter? Grant E. Isaac: Yes, the way to just think about that is we can have significant swings from quarter-to-quarter in our sales volumes. As we do note in our MD&A that our customers determine when they want deliveries. And so at the beginning of the year, we wait for those delivery notices to come in, but we continue to produce on our mine plants on an annual basis. So we have periods where the inventory is built up, and then we have a period where we make a lot of deliveries and the inventory will come back down. In addition, if you're comparing year-on-year numbers, you'll also detect that there's some -- there's higher values driven by the NUKEM inventory as well. And as we said at the outset, we made the decision not to sell down some NUKEM pounds just because the price isn't there to support it. So all of that is baked into those numbers, which kind of disassociates them, if you will, from the production number.

Okay. And then just so I understand it, did NUKEM close in the first quarter or in the second quarter? Grant E. Isaac: First quarter, January 9.

[Operator Instructions] And our next question is from Emily Meredith from Nuclear Intelligence Weekly.

Just quickly, this is to follow up from last time to see if you have seen any effects to your own deliveries because of the issues with licensing gearing in imports into China? And if not, have you seen those issues sort of resolved? Timothy S. Gitzel: Yes. Thanks, Emily, that's a good question. Ken is going to answer that. Kenneth A. Seitz: Yes, thanks, Emily. As you may know, the material is flowing into China again. It's true that we were facing some delays. But with the material flowing in both from Kazakhstan, Uzbekistan, we expect to actually deliver, for the first time, Canadian-origin uranium this fall. We fully expect that we will be within our guidance of 31 million to 33 million pounds of deliveries for the year.

Okay. So the licensing issues are -- you don't expect those to be a problem for that, this fall? Kenneth A. Seitz: We don't expect those to impact our guidance, no.

Our next question is from Edward Sterck from BMO. Edward Sterck - BMO Capital Markets Canada: Just regarding China, and I apologize if this has already been asked and answered. I understand that aside from the imports issues, the Chinese have been somewhat absent especially from the spot market, are they seems to be returning anytime soon in your view. And could you also comment on levels of inventory in China at present? Kenneth A. Seitz: Yes. Thanks, Ed. So I think a couple of things are going on in China. One, we all know that they hit the pause button post Fukushima, and assessed their greenfield program, and now have restarted all of that. And so sort of revisiting inventory policy in China and questions about layering on new volumes, I can tell you that we have sold material to China this year, and I can tell you that there are discussions about longer-term volumes with China at the moment. And so a question on inventory policy, we believe that the Chinese are taking a view that they want to have sufficient inventories, multiple years of inventories behind each new unit along with initial cores and all those things for these 28 units that are under construction. So we just continue to see them in the market. And with an eventual 50 million pounds a year being consumed in that part of the world, we expect to just, on an ongoing basis, see them in the market. Edward Sterck - BMO Capital Markets Canada: And then just a final follow-up question regarding Bruce Power and the second quarter contract sales. In the MD&A, it didn't define how -- what percentage of Bruce Power's output was sold into financial contracts. Could you just give me that percentage? Kenneth A. Seitz: Edward, I'm not sure we have that. But we will follow up on that with you.

Our next question is from David Snow from Energy Equities, Inc.

Yes, I think you just answered that, but I was thinking when you mentioned the numbers of years of inventories in the different regions, you've asked beyond the inventory that's bought a little bit in advance to fabricate the initial fuel loading, is that right? Timothy S. Gitzel: Yes, David, that would normally be the case. We use as a rule thumb that for initial cores on a new unit, the utility would come to the market probably 3 or 4 years before. If it was 1,000-megawatt unit, they'd probably be looking for about 1.5 million pounds to get it fired up. So that's pretty general, but that's what we use.

And so beyond that is what you're talking about. Is it 2 years, did you say, for the west? And 3 to 4 for China? I just... Timothy S. Gitzel: Yes. Well, China, that's a little bit of a different bird. Because we don't know that one so well yet. They're just really getting started. We were thinking more of the Japanese, Korean situation.

This will conclude the questions from the telephone lines. I would like to turn the meeting back over to Mr. Tim Gitzel for his closing remarks. Timothy S. Gitzel: Well, thank you, operator, and thank you to everyone who has joined us on the call today. As you could see from the many topics we went over today and the questions we discussed, there's a lot going on in our market, but still not a lot of clarity. It's difficult to know what to expect next, when Japanese reactors might start, when the uranium price might increase, when the long-term contracting might pick up. And while no one can tell you exactly when those things will occur, I can tell you what you can expect from Cameco. You can expect us to take the kinds of actions you've seen us taking over the past 2 years, monitoring the market and adapting as needed in order to stay competitive and stay profitable. That has meant adjusting our growth plans when the market called for it, making acquisitions when it made sense and restructuring the business when it was needed. Our decision-making, we believe, has been thoughtful, strategic and disciplined, and will continue to be during times of uncertainty, as is the case now, and during the times of growth we see ahead for the industry. So again, thank you for joining us and have a great day, everyone.

Thank you. The Cameco Corporation's second quarter results conference call has now ended. Please disconnect your lines at this time. We thank you for your participation, and have a great day.