Rachelle Girard - Director, IR Tim Gitzel - President and CEO Bob Steane - SVP and COO Grant Issac - SVP and CFO Alice Wong - SVP and COO Sean Quinn - SVP, CLO and Corporate Secretary

Andrew Quail - Goldman Sachs Amer Tiwana - CRT Capital Ralph Profiti - Credit Suisse Dan Scott - Connor, Clark & Lunn Edward Sterck - BMO Capital Markets

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

Thank you, John and good afternoon everyone. Thanks for joining us. Welcome to Cameco's 2015 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; Bob Steane, Senior Vice President and Chief Operating Officer; Alice Wong, Senior VP and Chief Corporate Officer; and Sean Quinn, Senior VP, Chief Legal Officer, and Corporate Secretary. Tim will provide comments on our financial results and the industry. Then we'll open it up for your questions. Today's conference call is open to all members of the investment community, including the media. During the Q&A session, please limit yourself to two questions and then return to the queue. 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 MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I will turn it over to Tim.

Well thank you, Rachelle, and welcome to everyone who has joined us on the call today to discuss Cameco's second quarter results. We appreciate you taking the time to join us. And I hope you're all having a good summer. Before I begin my comments I wanted to first note that we've had a change in Cameco's executive team. Ken Seitz our Chief Commercial Officer has resigned to take a CEO role for the company outside the nuclear industry. I'm assigning his responsibilities to other members of the executive team. All of us wish him much success in his new role and thank him for his years of contribution and service to Cameco. Now turning to the market, this tends to be a slower time of year for our industry as I'm sure many of you are aware and we've certainly seen that again this year. There has not been a lot change in the market which is continuing to be flat throughout the first half of the year. There were no significant changes in uranium prices and we believe fuel buyers’ requirements remained generally well covered for the moment. We’re still waiting for reactor restarts in Japan but there has been movement. Five units have now made it through the Nuclear Regulatory Agency’s safety review and two of those are expected to restart very soon. Kyushu has loaded fuel into the Sendai 1 reactor and expects to start it sometime next month and Sendai 2 is expected to follow closely in the fall. And all 25 reactors have applied for a restart in Japan now that’s about three quarters what we expect so that tells us it's still game on for nuclear in Japan even if the process is taking longer than everyone thought. On the supply side there were disruptions that reduced overall supply but not enough to cause a change in demand from utilities. However, the continued weak uranium prices are having an impact on future supply potential over the long-term. In the current low price environment it's difficult to justify the economics of projects which is leading to deferrals or even cancellations. We saw this recently with the cancellation of the planned mine expansion in Australia. Each of these new challenges to supply means a widening of the gap between supply and demand which we know was coming. Especially as we see reactor growth causing an increase in demand at the same time. 64 reactors are under construction around the world today and new reactors have been coming online, four in China so far this year. So there are things happening that continue to strengthen the long-term outlook and that keeps us excited. In the meantime, we continue to focus on executing on our strategy to remain a competitive low cost producer. We are on-track to deliver on our production in sales guidance for the year, however we did see some cost increases in the quarter. Direct administration costs were up largely as a result of the timing of planned expenditures for the year. And cost of sales was up in our uranium segment but still in line with our outlook. On the production side we returned strong results. At Cigar Lake to the end of the second quarter we mined 4.8 million pounds and the McClean Lake mill packaged 3.1 million pounds, our share of that is 1.6 million pounds. And I'm happy to see we’re on track to hit our target of between 6 million pounds and 8 million pounds for the year. We also received all of the approvals needed to increase our production at McArthur River to 25 million pounds per year. That brings our license capacity there in line with Key Lake. Of course any production expansion in McArthur will be dependent on market conditions. In other operational news there was a as you know a serious forest fire situation in Northern Saskatchewan where many of our operations are located. We were fortunate that none of our operations were directly threatened by the fires and we did not need to stop operations. However we did suspend shipments of uranium from our mills as well as other non-essential freight, so it's not the tie up the two main roads in the North. I'm happy to say that the fire situation has been improving over the past few weeks, so we've been able to resume our regular shipments and we don't expect there to be any effect on our annual production guidance. But even more importantly the approximately 13,000 people that had to be evacuated from their homes due to the fires have now been able to recurring home. I know it was very difficult for those families to be away from home having to stay in shelters for many weeks. Many of those people are our employees or/are family members of employees so this hits us very close to home. And I would like to thank the many employees who stepped up to help out, helping with fire fighting efforts, volunteering at the shelters or making donations of clothing and all of the other things evacuates needed to be a little bit more comfortable. I have to say I'm very proud of our Cameco team and their response to this difficult situation. So with that I'll stop there we would be happy to answer any questions you might have.

Thank you. We’ll now take questions from investors, analysts and media. In order to respect everyone's time on the call today, we’ll take our question and allow one follow-up question, then if you have further questions please return to the queue and we’ll get to them after others have their chance. [Operator Instructions] Our first question is from Andrew Quail from Goldman Sachs. Please go ahead.

Just wondering if you could outline where the increase came from in G&A?

Increase in G&A, I am going to thank you Andrew and I'm going to turn that over to Grant Issac.

Yes a number of factors were in that and actually there is some good news there in those G&A increases, we had some planned activities for the year at our corporate office that got off to a good start which meant we were spending money sooner that’s good because I think those projects will finish sooner. Also in there we made a note about some collaboration agreements we have with some northern communities bearing there were some milestone payments and the success of Cigar Lake has triggered those milestone payments. So all-in-all it just reflects a good level of activity so far in the year, I just would note that our outlook -- in our outlook table is what we’re still guiding to and so we’re not expecting that increase to be indicative right across the rest of the remaining quarters.

So those milestone payments are one off in nature and so next year sort of no more is expected to what we would expect in the usual environment?

Sure, that’s the right way to think about it.

Thank you. The following question is [Jim Astra] from [PLAAS]. Please go ahead.

I just would appreciate some comments here about the decline in production and sales during at least second quarter. Production and sales respectively down 18% and 27%. What were the reasons and what -- and again just to make sure, what is the outlook for the rest of the year on production and sales?

No real story there, this is mostly a timing piece. On sales we've guided sales of 31 million pounds to 33 million pounds this year, we’re still clearly on track for that. Production is down a bit again that’s a timing piece for the most part. And so as I say if you look at our guidance table and our MD&A we’re on track for that in any variances are really just a timing issue.

Briefly can you elaborate a bit on timing, what’s those entail what are the issues there?

On the sales side it's when our customers call for deliveries and I think you've seen our sales and our deliveries in the first and second quarter and I think we've stated that Q3 will be about similar and then Q4 has been the habit around here a little heavier. On the production side no real change there, Bob can talk both McArthur there was a in the first quarter a bit of an issue that we have dealt with now and so we plan to catch that up with Cigar is going well, Bob, do you have any comments on that?

Yes sure, Jim, it's the timing matter for bearing last year, this year was the timing of -- we did have some maintenance shutdown planned in Key at a different time than we had last year and we did have a couple of unplanned interruptions in McArthur that also contributed to the lower production in the first half, but looking 2014-2015, we see no reason that we won't hit our production targets this year.

[Operator Instructions] We do have a question from Amer Tiwana from CRT Capital. Please go ahead.

I was hoping that when you look at the uranium market if you take a step back and think about where you're in the cycle obviously you're projecting some good growth over the coming years, how do you think about the industry from a consolidation perspective, do you have any interest, do you think assets are trading at the right price? And secondly, if you could address capital structure a little bit are you comfortable with how it stands today, do you think there are things you can do there that could be meaningful to the equity?

Yes, thanks very much for the question, we are I think in the depths of the cycle as far as uranium goes these days it's been a tough run and especially post Fukushima we're four years and four months and change post Fukushima hasn't been an easy run. Yet that said I can tell you here we're optimistic, we're very optimistic for the future. We see 64 reactors under construction. We see 82 net new by 2024, an increase in uranium demand some 3% to 4% per year today. We -- where the world consumes about 165 million pounds, we see that going to 230 million pounds over the next 10 years. Those are good numbers for us and so we're optimistic. Now just with respect to I think M&A or acquisitions or consolidation, we're quite happy with our position. We are also watching to see what's going on in the market. We made some moves early in this down cycle which we’re very pleased with, that they are going to be very good for us going forward and so I would say we're not aggressive today, we are happy with that we've got, we've got some great projects in our bullpen as we call it, that we’d love to bring out and bring into production and we'll do so when the market calls for it. So that's where we're on that side. I am going to ask Grant to just say a few words on the capital side.

Yes, happy to do that. I mean we very much take a balanced approach to our capital structure. We navigate by our investment grade rating that's certainly important for us. We obviously want to balance being prudent in this short-term down cycle with positioning for growth. I mean the goal of the Company is to be more than a price play if you will. When uranium market recovers obviously there will be some momentum. But we also want to have the operating leverage that comes from it, so you see that's continuing to invest in Tier 1 asset where we can leverage ground field infrastructure what we've done that very prudently. Our CapEx has come down as a result. When we think about those investments each investment we make needs to demonstrate that it can meet our risk adjusted return criteria, that's a competitive process, not every investment opportunity makes it through just to time that back to the comments we made about M&A. I mean if we look externally, our external projects have to compete with what we already have in our portfolio and we think our portfolio is pretty darn good, so yes we do take a balanced approach to that capital structure.

Sure, maybe I can follow-up with one more question, it seems to me that there may be a little bit of cash build for you guys and one, what is the comfortable cash position to operate the business, and if there is excess cash what do you expect to do with it?

It's a good question what I'll try to provide is a bit of a framework for how we think about that as opposed to for a safe number or a target. The previous question got at the fact that our deliveries can vary from quarter-to-quarter and as a result our working capital can swing from quarter-to-quarter, so we like to keep that in mind when we think about what an optimal cash position is and we have make it through those periods where deliveries our customers might be requiring less deliveries and then in anticipation of higher deliveries. So that variability that we can see from quarter-to-quarter is obviously top of mind when we think about the cash position, when we think about investing that cash, we really apply quite a rigorous capital allocation process to that. And we basically say that once we have our cash from operations pretty well understood, we have to net out a couple of factors we've got a dividend out there as a commitment to our shareholders. We net that out we know we have some interest payments on some long-term debt, we net that out which gives us kind of a residual or investible capital amount. That amount can go in one or two directions it can either go investing into our business or it can go back to our owners and what I would just say is over the last couple of years we’re seeing very compelling reasons to invest in our business. Ours is a business where we think the long-term fundamentals are very strong and positioning ourselves for a share of that value is precisely what we've been doing. If that view changed then it would go in a different direction we would think about the returns to our owners. But right now we think that there is very compelling case to invest in the great assets that we have in this space.

Thank you. The following question is from Ralph Profiti from Credit Suisse. Please go ahead.

Just following up on the last question, Tim or Grant would it be safe to say that sort of the CRA risk is kind of the one impediment for share buybacks and dividends being higher in the pecking order of capital allocation?

Well Ralph we’re confident and comfortable in our position with the CRA it's going to take some time to play that out. So we’ll see how that goes. But we as you heard from us before we think we’re very well covered with our available cash and access to capital to cover that the eventuality should it go wrong which we don't think it will. So I think we’re fine in any event.

Thank you. The following question is from Brian Birkin from Connor. Please go ahead.

Hi it is actually Dan Scott. Last fall we saw Cameco come into the market and make a big purchase in uranium and then we haven't had a whole lot of color on contracts right now short or long-term. Can you give us some color on the behavior you are seeing from the utility especially ahead of the Japanese restarts?

I am just scratching my head to remember what that big purchase was we've been in and out of the market all the time we always are making purchases, we’ll -- we watch the market when we think it makes sense for us to do that we’ll do that so.

Actually in the Exelon I am sorry about that about.

Sorry which one?

Actually I meant Exelon was in the market during the fall making a big purchase.

[Multiple Speakers] Because we’re in and out of the market all the time, so Exelon India has been in the news lately that was an interesting piece for us in the quarter I am not sure we said too much about that. And then their recent announcement to perhaps build a strategic inventory of some 5,000 tonne maybe even more to 10,000 tonne so that’s going to take some product off. So there has been if we look back we were looking this morning that the long-term contracting over the last two and a half years so that would be '15, '14, and '13 and it is kind of shockingly low compared to what an average year would be maybe 150 to 175 which matches what an annual year of consumption would be, I think two years ago it was down in the 30 million pound range and maybe 50 or something the last year or this year about the same. So that has been something we've watched very closely. There has been a dirt of long-term contracting covered by some spot purchases some of this medium-term business that’s come up in the last two years but certainly not to cover what would be normal business. So that’s why we say we’re waiting for the utilities we see, the uncovered requirements opening up in the next few years utilities have to come back to cover that and that’s going to be another catalyst along with Japan, along with China, along with supply disruption that’s going to really be useful for our market.

So you don't think that’s a fundamental change in the contracting behavior of utilities going forward due to persistent lower prices?

Yes I think it has been post Fukushima, I think they had the luxury in that period to just watch the market see where things are going, see where Japan is going, now that -- and we’ll see where Japan is going to be slow ramp-up I think but we waited for years now to see the first one and we’ll see that appears imminent and we’ll see hope that they ramp-up. We are encouraged by the Japanese government's commitment to 20% to 22% nuclear by 2030. So I think utilities have had the luxury of just sitting on the sidelines and watching picking off toms. I'm not sure that luxury will continue going forward as we see new reactors under construction Japan come back on if you look at the 64 reactors under construction and then add the 25 from Japan that are in the queue for review and hopefully restart that’s going to be a nice bump for our market.

Thank you. The following question is from Edward Sterck from BMO Capital Markets. Please go ahead.

Just wanted to revisit something on Cigar Lake and more specifically the McClean Lake mill, in your Q1 results you indicated that CapEx for this year was going up and there may be an increase for 2016 as well. I was wondering and firstly if you could provide any color on that. And then secondly whether perhaps the recent announcements today they need another €5 billion of capital beyond the EDF deal, whether that might create any kind of opportunity for yourselves?

Well I nod my head and thanks a lot for the question I am going to ask Bob Steane to answer that.

Well on the mill the things are still on track so what we had in Q1 it is still on track for Q2 including the AREVA is working towards the completion of what the work program was for this year which required that additional work on capital for the additional piping and instrumentation, and all that matters I talked about and the labor to put that in, and they are very much on track for what we guided there and announced in Q1, and they are still -- they haven't turned some attention, but they haven't got the results of next year’s what it would entail next year, so we're waiting for AREVA to work that too and come with next year. So it's pretty much still the thing. I would add a few I think a little color. I am happy to say Cigar, the Cigar jet and the jet mill is running with the facilities that are there it is not the expansion facilities and they're running well and getting extractions, good processing as expected so there is no surprises there on the technical processing. The Cigar Lake mine, the jet boring is going well and I am happy at how well it is going. It's becoming routine sort of operation and there is still these early days commissioning the balancing between mine, mill and we're still working on that, but overall the color around Cigar and the jet mill, the existing jet mill is working quite well with handling the high grade Cigar Lake water.

And just as a second part of that question with them needing a capital raise, I mean that's really kind of outside our per view here certainly they're funding their share of costs capital operating here and so we're watching to see how that turns out as well, but it hasn't affected anything here.

This will conclude the questions on the telephone lines. I would like to turn the meeting back over to Mr. Tim Gitzel for his closing remarks.

Well, thank you very much operator. I am just going to close by noting that you know through all this the Company, our Company Cameco continues to perform well both financially and operationally despite the challenging market that we talked about. As you can expect we are waiting patiently for the industry to recovery but that doesn't mean we're being complaisant. We remain focused on keeping cost down and running our operations safely and efficiently. In order to maintain the flexibility needed to respond quickly as the market improves. So with that, I'll say thank you. Have a safe summer and thank you for your continued interest in Cameco. Have a great day. Thanks.

Thank you. The Cameco Corporation fourth 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.